STANDARD  MANUAL 
OF  THE  INCOME  TA) 

1919 


PUBLiSHED  BY 
STA  NDARD  STAT  IS  TIGS  CO..  In 
NEW  YORK.  U.S.A. 


Standard  Manual 

of  the 

Income  Tax 

1919 


Published  by 

ATisncs 

47  West  Street,  New  York 


STANDARD   STATISTICS  COMPANY,  Inc. 


Copyright  1919 

STAITDARD  STATISTICS  CO.,  Inc. 

New  York 


Table  of  Contents 

SECTION  I. 

Page 
Condensed  Digest  and  Changes  of  the  War  Revenue  Law 

of  1918 11 

Full  Text  of  the  Act  with  Marginal  Notations 51 

General  Index .— Buff  pages 

Detailed  Digest  of  the  Law-_ 177 

SECTION  II. 

Page 

High  and  Low  Prices  of  Securities  as  of  March  1,  1913—  1003 

Treasury  Decisions,  Court  Decisions  and  Other  Income 

Tax   Data 1201 

Collection  Districts — Complete  List 1365 

Additional  Income  Tax  Schedules  for  Previous  Years 1371 


d  1  i'rOA   t 


The  information  contained  here- 
in, while  not  guaranteed,  has 
been  carefully  compiled,  and  is 
believed   to   be   correct. 


Section  I 


CONTENTS. 

Condensed  Digest  of  Law. 
Full  Text  of  Act. 
General  Index. 
Detailed  Digest  of  Law. 


[On  the  following  pages  will  bb  foui»d  a  digest  «f'th*«. 
New  Revenue  Law.  This  digest  wa's  prejpatfed  to  'familiar-' 
ize  the  user  of  this  book  with  the  general  provisions  of  the 
Act,  particularly  the  changes  therein,  and  to  serve  as  a 
groundwork  for  utilizing  the  more  detailed  information 
which  begins  on  page  177.] 


DIGEST  AND  CHANGES 

OF  THE 
REVENUE  ACT  OF  1918 


INDIVIDUALS. 

The  first  taxable  year  shall  be  the  calendar  year  1918  or  any  fiscal 
year  ending  within  the  taxable  year. 

Individuals,  partnerships,  and  certain  personal  service  corporations 
are  exempt  from  the  Excess  Profits  Tax. 

Members  of  partnerships  are  liable  for  Income  Tax  on  the  net 
profits  of  the  partnership  whether  distributed  to  them  or  not.  This 
same  provision  applies  to  the  stockholders  of  a  personal  service  cor- 
poration. 

Every  individual  having  a  net  income  for  the  taxable  year  of 
$1,000  or  over,  if  single  or  if  married  and  not  living  with  husband 
or  wife,  or  the  head  of  a  family;  or  $2,000  or  over  if  married  and 
living  with  husband  or  wife,  will  be  required  to  render  a  return. 
Therefore,  every  single  individual  with  a  net  income  of  $19,24  per 
week  or  over,  or  a  married  individual  with  a  net  income  of  $38.47  per 
week  or  over,  must  make  a  return. 

In  the  year  1917  there  were  two  income  tax  laws  in  force.  Under 
the  Act  of  September  8,  1916,  as  amended,  the  exemption  for  a 
single  person  was  $3,000,  and  for  a  married  person  $4,000.  Under 
the  Act  of  October  3,  1917,  the  exemption  for  a  single  person  was 
$1,000,  and  for  a  married  person  $2,000. 

Husband  and  Wife. 

If  the  combined  net  income  of  husband  and  wife,  living  together, 
and  dependent  children  equaled  or  exceeded  $2,000,  all  such  income 
must  be  reported,  either  on  one  return  or  on  separate  returns.  If 
separate  returns  are  made,  the  exemption  of  $2,000  may  be  divided 
between  them  or  the  husband  can  take  the  full  exemption  and  the 
wife  pay  the  tax  on  her  entire  net  income,  or  vice  versa.  The 
combined  amount  of  exemption  taken  must  not  exceed  $2,000.  If 
the  individual  net  income  of  either  the  wife  or  husband  exceeds 
$5,000,  separate  returns  must  be  filed  as  the  additional  tax  of  each 
is  computed  separately.  Separate  returns  must  also  be  filed  if  the 
husband  and  wife  are  not  living  together  and  the  net  income  of 
either  is  $1,000  or  more. 

11 


Individual  Liability  to  Make  ReturiL 

WhtDever,i^  the  judgment  of  the  Commissioner  necessary,  he  may 
require  any  person,  by  notice  served  upon  him,  to  make  a  return 
or  such  statements  as  he  deems  sufficient  to  show  whether  or  not 
such  person  is  liable  to  tax. 

Returns  may  be  made  to  the  collector  of  internal  revenue  for  the 
district  in  which  the  taxpayer  has  his  legal  residence  or  in  the 
district  in  which  is  located  his  principal  place  of  business.  (Under 
the  previous  Act  the  taxpayer  was  requested  for  administrative 
purposes  to  file  the  leturn  in  the  district  in  which  he  resided.) 


STATUS  OF  TAXES  DUE  THE  UNITED  STATES. 

The  tax  due  on  income  has  the  status  of  a  debt  due  to  the  United 
States,  and  persons  receiving  property  charged  with  such  indebted- 
ness must  answer  for  the  debt. 


PAYMENT   OF  TAX. 
Payment  of  Tax  in  Installments. 

The  tax  may  be  paid  in  four  installments,  covering  the  entire 
year,  up  to  December  15th,  1919.  The  first  payment  is  due  at  the 
time  of  filing  the  return,  that  is,  March  15th,  1919,*  if  the  return 
is  made  on  the  basis  of  the  calendar  year  1918.  The  second  payment 
is  to  be  made  on  June  15th,  the  third  payment  on  September  15th 
and  the  fourth  and  final  payment  on  December  15th. 

♦Unless  this  date  is  automatically  extended  <?ue  to  delay  in  the  passage 
of  the  Act. 

Extension  of  Time  for  Installment  Payments. 

If  an  extension  of  time  for  filing  the  return  is  requested  and 
granted,  the  time  for  the  payment  of  the  first  installment  shall  be 
postponed  until  the  date  of  the  expiration  of  the  extension;  but  the 
time  for  payment  of  the  other  installments  shall  not  be  postponed 
unless  the  Commissioner  of  Internal  Revenue  so  provides  in  granting 
the  extension. 

When  the  time  for  the  payment  of  any  installment  is  thus  post- 
poned at  the  request  of  the  taxpayer  there  shall  be  added  as  part  of 
such  installment  interest  at  the  rate  of  one -half  of  one  per  cent  per 
month  from  the  date  of  installment  would  have  been  due  if  no 
extension  had  been  granted,  until  paid;  thus,  if  a  taxpayer  whose 
tax  ii  $500  secures  an  extension  of  30  days  from  March  15th  to  April 
15th  for  filing  the  return,  the  first  installment  of  $125  would  be  due 
on  April  15th,  and  if  paid  on  that  date  there  must  be  added  interest 
at  the  rate  of  one-half  of  one  per  cent,  or  03  cents,  to  the  payment; 
the  second  payment  of  $125  would  then  be  due  June  15th  on  which 
no  interest  would  be  paid,  the  third  payment  of  $125  on  September 
15th  and  the  fourth  or  final  payment  of  $125  on  December  15th.  If 
the  date  of  each  of  the  four  installments  were  set  back  30  days  there 
would  be  added  to  each  installment  interest  at  the  rate  of  one  half 
of  one  per  cent  per  month  from  the  time  they  would  hare  been  due 
without  the  extension,  until  paid.^ 

13 


If  any  installment  is  not  paid  wlreto  due,  the  whole  amount  of  the 
tax  unpaid  becomes  due  and  payable  upon  notice  and  demand  from 
the  collector  and  if  not  paid  within  ten  days,  a  5  per  cent,  penalty 
accrues  with  interest  at  the  rate  of  1  per  cent,  per  month  for  each 
full  month  until  paid. 


Payment  of  the  Tax  in  Full. 

If  the  taxpayer  desires,  the  tax  may  be  paid  in  full  on  or  before 
the  date  fixed  for  filing  the  return,  March  15,  unless  this  date  is 
automatically  extended  due  to  delay  in  the  passage  of  the  Act. 

In  this  case  the  full  amount  of  the  tax  becomes  due  and  payable 
on  the  date  the  return  is  due,  and  if  it  is  not  paid  on  this  date,  a 
notice  and  demand  is  issued  by  the  colllector  and  if  not  paid  within 
ten  days  from  the  date  of  the  notice  and  demand,  a  5  per  cent,  pen- 
alty accrues  with  interest  at  the  rate  of  1  per  cent,  per  month  for 
each  full  month  until  paid. 

If  an  extension  of  time  has  been  granted  in  which  to  file  the  re- 
turn, the  date  of  the  expiration  of  the  extension  shall  be  the  due 
date  of  the  tax. 

(This  differs  from  the  previous  law  in  the  fact  that  payment 
had  to  be  made  on  June  15th  of  the  year  following  that  for  which 
the  return  was  made  and  a  discount  was  allowed  for  any  advance 
payment  at  the  rate  of  3  per  cent,  for  365  days  for  any  payment 
made  in  advance  of  the  due  date,  and  in  the  case  of  instalment  pay- 
ments the  first  instalment  was  due  not  later  than  30  days  after  the 
expiration  of  the  taxable  year. 


Payment  of  Taxes  by  Uncertified  Checks  or  U.  S.  Certificates  of 
Indebtedness. 

Payment  of  all  taxes  except  those  payable  by  stamps  may  be 
made  by  uncertified  checks  or  by  United  States  certificates  of  in- 
debtedness. Certificates  of  indebtedness  may  be  purchased  at  any 
Federal  Reserve  or  other  bank  and  are,  in  effect,  short  term  loans 
to  the  Government  bearing  interest  at  rates  varying  from  4% 
to  41/3%. 

Only  certain  issues  of  these  certificates  are  acceptable  in  payment 
of  taxes.  A  list  of  the  certificates  which  have  been  issued  for  the 
purpose  of  paying  taxes  may  be  secured  from  any  collector  of  inter- 
nal revenue  or  Federal  Reserve  Bank. 

When  taxes  are  paid  by  these  certificates,  the  taxpayer  is  given 
credit  for  the  accrued  interest  from  the  date  of  issuance  of  the 
certificates  or  upon  coupons  attached  maturing  on  or  before  the  date 
the  tax  is  due. 

If  taxpayers  are  located  in  a  district  which  is  distant  from  the 
district  in  which  they  are  required  to  pay  the  tax,  they  may 
deposit  the  certificates  of  indebtedness  in  the  Federal  Reserve  Bank 
in  the  district  in  which  they  are  located  after  first  securing  the 
permission  of  the  collector  for  the  district  in  which  the  tax  is 
payable.  The  Federal  Reserve  Bank  will  deposit  the  certificates  to 
the  credit  of  the  Treasurer  of  the  United  States  and  forward  a 
copy  of  the  certificate  of  deposit  to  the  collector  for  the  district 

13 


in  which  the  tax  is  payable,  setting  forth  the  name  and  address  of 
the  taxpayer  and  a  statement  that  this  deposit  has  been  made  in 
payment  of  income  or  excess-profits  taxes. 

The  taxpayer  should  detach  from  the  certificates  any  coupons 
maturing  on  or  before  the  date  the  tax  is  due.  Any  accrued  interest 
to  the  date  the  tax  is  due  not  covered  by  coupons  detached  will  be 
remitted  to  the  taxpayer  by  the  Federal  Reserve  Bank  by  check. 


NORMAL  TAX  AND  ADDITIONAL  TAX. 

NORMAL  TAX. 

The  normal  tax  is  6  per  cent,  on  the  first  $4,000  over  the  per- 
sonal exemption  and  13  per  cent,  upon  the  net  income  in  excess 
of  the  first  $4,000. 

(The  normal  tax  under  the  old  law  consisted  of  two  taxes  of 
2  per  cent,  each;  there  being  two  laws  in  force — the  Act  of  Sep- 
tember 8th,  1916,  as  amended,  and  the  Act  of  October  3rd,  1917.) 

To  illustrate,  assume  that  a  citizen  who  is  married  and  living  with 
his  wife,  has  an  income  of  $8,000  for  the  calendar  year  1918;  his  tax 
would  be  as  follows: 

Net   Income    $8,000 

Exemption    2,000 

Amount  subject  to  normal  tax $6,000 

—CALCULATION  OF  NORMAL  TAX: 

6%  on  first  $4,000 $240 

12%  on  balance  of  $2,000 240 

Total  normal  tax $480 


—ADDITIONAL  TAX: 

Net  Income $8,000 

Exemption 5,000 

Amount  subject  to  additional  tax $3,000 


—CALCULATION  OF  ADDITIONAL  TAX: 

From  $5,000  to  $6,000  —  $1,000   @  1% $10 

From  $6,000  to  $8,000  —  $2,000  @  2% 40 

Total    $50 


-AMOUNT  OF  NORMAL  AND  ADDITIONAL 
TAXES  PAYABLE: 

Normal    $480 

Additional    50 

Total    -  $530 

14 


RETURN  OF  HUSBAND  AND  WIFE. 

If,  in  the  case  of  this  same  taxpayer,  the  income  was  divided 
as  follows,  the  tax  would  be  materially  different: 

Assume  that  John  Doe  and  his  wife,  living  together,  had  a  joint 
income  of  $8,000,  but  of  this  amount,  $5,000  was  his  income  and 
$3,000  was  his  wife's  income.  The  tax  then  would  be  as  follows: 
In  the  form  of  a  joint  return: 

Income  of  John  Doe  and  wife $8,000 

Marital  exemption  2,000 


Net  income  subject  to  normal  tax $6,000 

Amount  of  normal  tax  (6%  on  first  $4,000) $240 

12%  on  balance  of  $2,000 240 


Total  normal  tax $480 

In  the  form  of  separate  returns. 

Wife— $3,000.     Husband— $5,000. 

Husband  and  wife  dividing  the  exemption  of  $2,000.     ($1,000  each.) 

Wife $3,000  Husband   $5,000 

Share  of  exemption 1,000  Share  of  exemption 1,000 


Amount  taxable $2,000  Amount  taxable $4,000 

Wife  or  husband  first  $4,000  @  6% $240 

Balance  of  wife  or  husband's  net  income — $2,000  @  12% 240 

$480 

No  Additional  Tax  Liability. 

The  surtax  is  actually  an  additional  tax,  being  levied  in  addition 
to  the  normal  tax,  and  when  referred  to  as  either  additional  or  sur- 
tax, has  the  same  meaning. 

As  the  husband's  income  is  $5,000,  he  is  not  liable  for  any  ad- 
ditional tax,  his  income  not  being  in  excess  of  $5,000.  As  the 
wife's  income  is  only  $3,000,  no  additional  tax  is  due  unless  her 
income  exceeds  $5,000;  therefore,  no  additional  tax  would  be  paid 
upon  the  joint  income  of  the  husband  and  wife,  only  the  normal 
tax  being  assessable. 

No  additional  tax  is  due  upon  the  joint  income  of  husband  and 
wife  unless  either  his  or  her  income  exceeds  $5,000  individually. 


ADDITIONAL   TAX  RATES. 

The  additional  tax  rates  are,  from  $5,000  to  $6,000 — 1%;  from 
$6,000  to  $8,000—2%,  and  upon  every  $2,000  additional  up  to 
$100,000  the  rate  increases  1%,  the  rate  between  $98,000  and  $100,- 
000  being  48%;  from  $100,000  to  $150,000—52%;  from  $150,000  to 
$200,000—56%;  from  $200,000  to  $300,000—60%;  from  $300,000  to 
$500,000—63%;  from  $500,000  to  $1,000,000—64%,  and  upon  any 
income  in  excess  of  $1,000,000 — 65%. 

U 


Th«  additional  tax  on  amounts  (a« 
income  up  to  $1,000,000  follows: 


Amount 

Net  Income  Taxable 

A  B  C 

$5,000  to       $6,000 $1,000 

6,000  to         8,000 2,000 

8,000  to        10,000 2,000 

10,000  to        12,000 2,000 

12,000  to        14,000 2,000 

14,000  to        16,000 2,000 

16,000  to        18,000 2,000 

18,000  to       20,000 2,000 

20,000  to       22,000 2,000 

22,000  to       24,000 2,000 

24,000  to       26.000 2,000 

26,000  to        28,000 2,000 

28,000  to       30,000 2,000 

30,000  to        32,000 2,000 

32,000  to       34,000 2,000 

34,000  to        36,000 2,000 

36,000  to       38,000 2,000 

38,000  to       40,000 2,000 

40,000  to       42,000 2,000 

42,000  to       44,000 2,000 

44,000  to       46,000 2,000 

46,000  to       48,000 2,000 

48,000  to       60,000 2,000 

60,000  to        62,000 2,000 

62,000  to       64,000 2,000 

64,000  to        66,000 2,000 

66,000  to        68,000 2,000 

68,000  to        60,000 2,000 

60,000  to       62,000 2,000 

62,000  to       64,000 2,000 

64,000  to       66,000 2,000 

66,000  to       68,000 2,000 

68,000  to        70,000 2,000 

70,000  to        72,000 2,000 

72,000  to        74,000 2,000 

74,000  to        76,000 2,000 

76,000  to        78,000 2,000 

78.000  to        80,000 2,000 

80,000  to        82,000 2,000 

82,000  to        84,000 2,000 

84,000  to        86,000 2,000 

86,000  to        88,000 2,000 

88,000  to        90,000 2,000 

90,000  to        92,000 2,000 

92,000  to        94,000 2,000 

94,000  to       96,000 _  2,000 

96,000  to        98,000 2,000 

98,000  to      100,000 2,000 

100,000  to      150,000 60,000 

160,000  to     200,000 60,000 

1« 


shown  in  column  B)   of  net 


Total 

Additional 

Amount 

Tax  on 

Taxed 

Additional 

Am'ntin 

At 

Tax 

Column  B 

D 

E 

F 

1% 

$10 

$10 

2% 

40 

60 

3% 

60 

110 

4% 

80 

190 

5% 

100 

290 

6% 

120 

410 

7% 

140 

660 

8% 

160 

710 

9% 

180 

890 

10% 

200 

1,090 

11% 

220 

1,310 

12% 

240 

1,550 

13% 

260 

1,810 

14% 

280 

2,090 

15% 

300 

2,390 

16% 

320 

2,710 

17% 

340 

3,050 

18% 

360 

3,410 

19% 

380 

3,790 

20% 

400 

4,190 

21% 

420 

4,610 

22% 

440 

6,050 

23% 

460 

5,610 

24% 

480 

6,990 

26% 

600 

6,490 

26% 

620 

7,010 

27% 

640 

7,560 

28% 

660 

8,110 

29% 

680 

8,690 

30% 

600 

9,290 

31% 

620 

9,910 

32% 

640 

10,560 

33% 

660 

11,210 

34% 

680 

11,890 

36% 

700 

12,590 

36% 

720 

13,310 

37% 

740 

14,050 

38% 

760 

14,810 

39% 

780 

16,690 

40% 

800 

16,390 

41% 

820 

17,210 

42% 

840 

18,050 

43% 

860 

18,910 

44% 

880 

19,790 

46% 

900 

20,690 

46% 

920 

21,610 

47% 

940 

22,550 

48% 

960 

23,610 

62%- 

26,000 

49,610 

66% 

28,000 

77,610 

Total 
Additional 
Amount      Tax  on 
Amount    Taxed     Additional   Am'nt  in 
Net  Income  Taxable       At  Tax        Column  B 

A  •        B  C  D  E  F 

200,000  to      300,000 100,000    ^'60%  60,000         137,510 

300,000  to      500,000 200,000         63%         126,000         263,510 

500,000  to  1,000,000 500,000        64%         320,000         683,510 

Exceeding  1,000,000 65%         

The  total  surtax  as  shown  in  the  above  table  is  58  3/10  per  cent, 
on  an  income  of   $1,000,000. 

Under  the  previous  Act  the  rate  per  cent,  of  the  surtax  on  an 
income  of  $1,000,000  was  43  5/10  per  cent. 


DEFINITION  OF  GROSS  INCOME. 

(jrross  income  includes  gains,  profits  and  income  derived  from 
salaries,  wages  or  compensation  for  personal  service  (including  in 
the  case  of  the  President  of  the  United  States,  the  judges  of  the 
Supreme  and  inferior  courts  of  the  United  States,  and  all  other 
officers  and  employees,  whether  elected  or  appointed,  of  the  United 
States,  Alaska,  Hawaii,  or  any  political  subdivision  thereof,  or  the 
District  of  Columbia,  the  compensation  received  as  such),  of  what- 
ever kind  and  in  whatever  form  paid,  or  from  professions,  vocations, 
trades,  businesses,  commerce,  or  sales,  or  dealings  in  property 
whether  real  or  personal,  growing  out  of  the  ownership  or  use  of  or 
interest  in  such  property;  also  from  interest,  rent,  dividends,  secur- 
ities, or  the  transaction  of  any  business  carried  on  for  gain  or  profit, 
or  gains  or  profits  and  income  derived  from  any  source  whatever. 


SALARIES  PAID  BY  STATES  AND  MUNICIPALITIES. 

The  present  law  does  not  specifically  exempt  the  salaries  of  State 
or  municipal  employees;  therefore  unless  this  exemption  is  corrected 
by  appropriate  Treasury  decision  all  State  officials  and  employees 
such  as  governors,  county  officials,  etc.,  as  well  as  municipal  officials 
and  employees  such  as  mayors,  judges,  etc.,  will  be  required  to  file 
returns  and  pay  the  tax. 


Unconstitutionality  of  Taxing  State,  County  or  Municipal  Salaries. 

Under  a  decision  handed  down  by  the  United  States  Supreme  Court 
in  the  year  1871,  in  the  case  of  the  Collector  vs.  Day,  it  was  held 
that  Congress  did  not  hare  the  power  to  levy  a  tax  upon  State  or 
municipal  salaries  under  the  Constitution  and  it  is  possible  that  in 
the  absence  of  a  precedent  under  existing  law  that  the  department 
will  administer  the  present  Act  in  such  a  manner  as  to  eliminate 
the  necessity  of  litigation  and  refunding  which  would  result  if  this 
taxing  power  is  assumed  under  the  provisions  of  the  Revenue  Act  of 
1918.  This  Act  is  authorized  by  the  16th  amendment  to  the  Con- 
stitution, which  does  not  empower  Congress  to  levy  a  tax  of  this 
nature,  and  which  is,  in  the  words  of  a  former  Attorney  General 
"repugnant  to  the  Constitution." 

17 


INCOME  EXEMPT  FROM  TAX. 

The  following  items  should  not  be  included  in  gross  income: 

(1)  Proceeds  of  life  insurance  policies  paid  upon  the  death  of 
the  insured  to  individual  beneficiaries  or  to  the  estate  of  the  insured. 

(2)  The  amount  received  by  the  insured  as  a  return  of  premium 
or  premiums  paid  by  him  under  life  insurance,  endowment  or 
annuity  contracts  either  during  the  term  or  at  the  maturity  of 
the  term  mentioned  in  the  contract  or  upon  surrender  of  the 
contract. 

(3)  The  value  of  property  acquired  by  gift,  bequest,  devise,  or 
descent  (biit  the  income  from  such  property  shall  be  included  in 
g^oss   income). 

(4)  Interest  upon  the  obligations  of  a  State,  Territory,  or  any 
political  subdivision  thereof,  or  the  District  of  Columbia;  or  seciir- 
ilies  issued  under  the  provisions  of  the  Federal  Farm  Loan  Act  of 
July  17th,  1916,  or  obligations  of  the  United  States  or  its  posses- 
sions; or  bonds  issued  by  the  AVar  Finance  Corporation. 

In  the  case  of  obligations  of  the  United  States  issued  after 
September  1st,  1917,  and  bonds  issued  by  the  War  Finance  Cor- 
poration, the  interest  shall  be  exempt  only  if  and  to  the  extent 
provided  in  the  respective  Acts  authorizing  the  issue  thereof. 

All  Liberty  Bond  interest  is  exempt  from  the  normal  taxes  of  6 
per  cent,  and  12  per  cent.,  but  is  subject  to  the  additional  taxeS. 


Liberty  Bonds. 

The  exemption  of  interest  received  after  January  1,  1918,  upon 
Liberty  Bonds  is  as  follows: 

Interest  upon  the  first  issue  of  SVgS  is  totally  exempt.  If  bonds 
of  the  first  non -taxable  issue  have  been  converted  into  the  second, 
third  or  fourth  issues,  they  then  have  the  status  of  "obligations  of 
the  United  States  issued  after  Sept.  1,  1917"  and  the  interest 
received  upon  the  converted  bonds  and  the  bonds  of  the  second, 
third,  and  fourth  issues  is  exempt  from  taxation  to  the  following 
extent:  If  the  taxpayer  holds  no  bonds  of  the  fourth  issue,  the 
interest  on  an  aggregate  amount  of  the  second  and  third  issues. 
not  exceeding  $5,000  of  principal,  is  exempt. 

As  an  example,  assume  the  taxpayer  has  $10,000  of  the  second 
issue  upon  which  he  receives  $400  interest  and  $10,000  of  the  third 
issue  upon  which  he  receives  $425;  the  interest  upon  a  total  of 
$5,000  of  the  entire  holding  of  the  first  and  second  issues  or  $206.25 
of  the  total  of  $825  interest  received  would  be  exempt. 

If  the  taxpayer  holds  any  of  the  fourth  issue,  then  the  interest 
on  an  amount  of  bonds  of  this  issue,  the  principal  of  which  docs 
not  exceed  $30,000,  is  exempt  from  tax.  The  interest  on  bonds  of 
the  second  and  third  issues,  either  converted  or  unconverted,  is 
exempt  up  to  one  and  one-half  times  the  amount  of  the  bonds  of 
the  fourth  issue  originally  subscribed  for  and  held  by  the  taxpayer 
at  the  time  of  making  his  income  tax  return,  not  to  exceed  an 
aggregate  principal  amount  of  $45,000. 

Upon  bonds  of  the  first  issue  of  SVgS  which  have  been  converted 
into  the  fourth  issue  for  the  purpose  of  securing  any  of  the  ex- 
emption privileges  arising  out  of  the  ownership  of  bonds  of  the 

18 


fourth  issue,  the  interest  is  exempt  from  taxation  to  an  amount 
of  principal  not  exceeding  $30,000. 

The  above  exemptions  are  in  addition  to  the  exemption  of  an 
aggregate  amount  of  $5,000  of  principal  of  the  second,  third,  and 
fourth  issues,  which  is  provided  for  in  the  Acts  authorizing  the 
respective  issues.  ^^ 

These  privileges  will  remain  in  effect  until  two  years  after  the 
date  of  the  termination  of  the  present  war  with  Germany  as  fixed 
by  proclamation  of  the  President  and  are  accorded  to  all  taxpayers 
whether  individuals,  partnerships,  associations  or  corporations. 

As  set  forth  in  the  above  explanation,  it  is  possible  for  a  tax- 
payer to  secure  exemptions  on  Liberty  Bonds  to  a  total  of  $110,000 
principal  amount,  as  follows: 

Fourth  issue $30,000 

Second  and  Third 45,000 

First  converted  into  Fourth , 30,000 

Original  exemption  on  Second,  Third,  Fourth 5,000 

Total    $110,000 

If  the  owner  of  the  bonds  holds  less  than  $30,000  worth  of  the 
fourth  issue,  the  amount  of  the  second  and  third  issues  exempt 
is  one  and  one-half  times  the  amount  of  the  fourth  issue  held,  plus 
the  further  privileges  as  outlined  above. 


Foreign  Government  Income  Exempt. 

(5)  Income  of  foreign  governments  received  from  investments 
in  the  United  States  owned  by  such  foreign  governments,  or  from 
interest  on  deposits  in  banks  in  the  United  States  of  moneys  belong 
to  such  foreign  governments,  or  from  any  other  source  within  the 
United  States. 


Accident  or  Health  Insurance  Exempt. 

(6)  Amounts  received  through  accident  or  health  insurance,  or 
under  Workmen's  Compensation  Acts  as  compensation  for  personal 
injuries  or  sickness  plus  the  amount  of  any  damages  received 
whether  by  suit  or  a  claim  on  account  of  such  injury  or  sickness. 

(Amounts  received  through  accident  or  health  insurance  were  held 
to  be  taxable  income  under  the  previous  Act.) 


Soldiers'  and  Sailors'  Salaries  Exempt. 

(7)  So  much  of  the  amount  received  during  the  present  war  by  a 
person  in  the  military  or  naval  forces  of  the  United  States  as  salary 
or  compensation  in  any  form  from  the  United  States  for  active  serv- 
ices in  such  forces,  as  does  not  exceed  $3,500. 

(Under  the  previous  Act  soldiers  and  sailors  and  all  others  in 
military  or  naval  forces  were  taxable  upon  all  income  received, 
in  excess  of  their  personal  exemption.) 

19 


Credits  Allowed. 

The  following  credits  are  allowed  from  net  income  before  the 
normal  tax  is  computed: 

(1)  Amounts  received  as  dividends  from  corporations  which  are 
taxable  upon  their  net  income. 

(2)  Amounts  received  as  interest  upon  obligations  of  the  United 
States  and  bonds  issued  by  the  War  Finance  Corporation  which 
have  been  included  in  gross  income. 

(3)  Single  person,  $1,000;  or  if  head  of  the  family,  that  is, 
actually  supporting  one  or  more  persons,  $2,000. 

(4)  Married  person  living  with  husband  or  wife,  $2,000. 

(5)  Dependents — $200  for  each  person  receiving  the  chief  support 
from  the  taxpayer  if  such  dependent  is  under  18  years  of  age  or 
incapable  of  self-support. 

(In  the  case  of  the  $200  exemption  for  dependents,  under  the 
previous  Act  this  further  exemption  was  only  allowed  if  the  tax- 
payer was  the  sole  support  of  the  dependent.  Under  the  present 
Act  the  taxpayer  is  allowed  the  exemption  for  dependents  if  he  is 
the  chief  support.) 

(6)  Non-resident  aliens  are  allowed  the  personal  exemptions  of 
citizens  only  if  the  country  of  which  they  are  residents  allows  a 
similar  credit  to  citizens  of  the  United  States. 

Non-resident  aliens  were  not  allowed  the  personal  exemption  un- 
der the  previous  Act. 


Items  Not  Deductible  from  Gross  Income. 

In  arriving  at  net  income  for  the  purposes  of  the  tax,  the  fol- 
lowing items  must  not  be  deducted  from  gross  income: 

(1)  Personal  living  or  family  expenses,  such  as  cost  of  main- 
taining a  home,  servants'  wages,  family  life  insurance  premiums, 
allowances  made  as  gifts  to  dependents,  cost  of  purchase  and 
upkeep  of  pleasure  automobiles,  chauffeurs'  hire,  railroad  commu- 
tation fares  to  and  from  place  of  business  and  similar  items. 

(2)  Any  amount  paid  out  for  new  buildings,  or  for  permanent 
improvements  or  betterments  made  to  increase  the  value  of  any 
property  or  estate. 

(3)  Any  amount  expended  in  restoring  property  or  in  making 
good  the  exhaustion  thereof  for  w^hich  an  allowance  is  or  has  been 
made. 

(4)  Premiums  paid  on  any  life  insurance  policies  covering  the 
life  of  any  officer  or  employe  or  of  any  person  financially  inter- 
ested in  any  trade  or  business  carried  on  by  the  taxpayer  when 
the  taxpayer  is  directly  or  indirectly  a  beneficiary  under  such 
policy. 

(5)  Interest  paid  or  accrued  within  the  year  on  money  borrowed  to 
purchase  or  carry  securities  or  obligations,  the  income  from  which  is 
wholly  exempt  from  tax,  such  as  State  or  municipal  bonds,  etc.,  Is 
not  an  allowable  deduction. 


Deductions  Allowed. 

In  arriving  at  net  income,  the  taxpayer  is  allowed  as  deductions 
all  the  ordinary  and  necessary  expenses  paid  or  incurred  during 
the  taxable  year  in  carrying  on  any  trade  or  business,  including 
a  reasonable  allowance  for  salaries  or  compensation  for  personal 
services  actually  rendered,  and  also^  rentals  or  other  necessary 
payments. 

All  interest  paid  or  accrued  on  money  borrowed  within  the  year 
to  purchase  or  carry  securities  or  obligations,  the  income  from  which 
IS  subject  to  tax,  is  a  proper  deduction. 

All  interest  paid  or  accrued  within  the  year  on  money  borrowed  to 
purchase  or  carry  obligations  of  the  United  States  such  as  Liberty 
Bonds,  Certificates  of  Indebtedness,  etc.,  issued  after  September  24th, 
1917,  is  an  allowable  deduction. 

All  taxes  paid  or  accrued  within  the  taxable  year  imposed  by 
the  authority  of  the  United  States  or  any  of  its  possessions,  ex- 
cepting income,  war-profits  and  excess -profits  taxes,  or  taxes  as- 
sessed against  local  benefits  of  a  kind  tending  to  increase  the 
value  of  the  property  assessed. 


All  Losses  Deductible. 

Losses  sustained  during  the  taxable  year,  if  not  compensated 
by  insurance  or  otherwise,  are  proper  deductions  in  arriving  at 
net  income  for  the  purposes  of  the  tax  whether  such  losses  were 
incurred  in  the  taxpayer's  regular  trade  or  business,  or  whether 
they  were  incurred  in  transactions  entered  into  for  profit  though 
not  connected  with  the  taxpayer's  regular  trade  or  business;  also, 
loss  of  property  whether  or  not  such  property  is  connected  with 
the  taxpayer's  regular  trade  or  business. 

This  is  of  specific  interest  to  investors  and  brokers  who  have 
sustained  losses  in  investment  or  speculative  accounts. 

Under  the  previous  law  an  individual  was  only  allowed  to  deduct 
losses  incurred  in  his  own  particular  business.  Any  net  loss  he  sus- 
tained in  transactions  entered  into  for  profit  but  not  connected 
with  his  regular  business  were  not  deductible  from  income  for  the 
purposes  of  the  tax,  but  on  the  other  hand,  any  gains  resulting  from 
these  outside  transactions  had  to  be  included  in  his  statement  as 
income.  Thus,  if  the  taxpayer  was  a  lawyer,  manufacturer  oi 
merchant  and  personally  invested  in  securities  in  the  year  1917  and 
his  own  business  showed  a  profit  for  the  year  of  $100,000  while 
his  personal  investments  showed  a  net  loss  of  $120,000,  he  was 
required  to  report  the  $100,000  profit  from  his  business  for  taxa- 
tion and  was  not  allowed  to  deduct  the  loss  incurred  in  his  in- 
vestments, as  they  were  consistently  held  to  be  losses  incurred  in 
transactions  entered  into  for  profit  but  not  connected  with  his 
regular  trade  or  business  and  thus  not  deductible.  General  business 
was  of  the  opinion  that  this  appeared  to  be  putting  a  tax  upon 
losses. 


War  Losses  Deductible  Against  Prior  Year's  Income. 

A. new  departure  in  Federal  legislation  is  disclosed  in  Section  204 
of  the  Act  which  allows  the  net  losses  of  one  year  to  be  deducted 

21 


from  the  net  income  of  the  preceding  year.  Under  all  previous 
Acts  the  losses  of  one  year  were  confined  to  the  year  in  which 
they  were  incurred. 

If  the  taxpayer,  whether  individual,  partnership,  or  corporation 
can  produce  evidence  satisfactory  to  the  Commissioner  of  Internal 
Revenue  that  during  the  calendar  or  taxable  year  beginning  on  or 
after  November  1,  1918,  and  ending  prior  to  January  1,  1920,  he 
(or  it)  sustained  a  net  loss  from  the  operation  of  his  regular  busi- 
ness or  through  the  bona  fide  sale  of  plant,  buildings,  machinery 
or  other  equipment  installed  or  acquired  on  or  after  April  6,  1917 
(the  date  of  declaration  of  the  present  war),  for  the  production  of 
articles  contributing  to  the  prosecution  of  the  present  war,  the 
amount  of  the  loss  will  be  allowed  as  a  deduction  in  computing  the 
net  income  of  the  preceeding  year.  If  the  taxpayer,  individual,  part- 
nership, corporation  has  sustained  such  a  loss  in  any  taxable  year, 
beginning  after  October  31,  1918,  and  ending  prior  to  January  1, 
1920,  he  (or  it)  may  upon  the  production  of  satisfactory  evidence 
secure  the  permission  of  the  Commissioner  of  Internal  Revenue  to 
make  a  new  return  for  the  year  1918  and  take  credit  for  the  loss 
incurred  as  a  deduction  against  the  income  for  the  year  1918  and 
have  the  tax  for  that  year  redetermined;  and  any  amount  found  to 
be  due  the  taxpayer  by  reason  of  this  new  computation  shaU  be 
credited  or  refunded,  or  if  the  amount  of  the  loss  incurred  is  found 
to  be  in  excess  of  the  net  income  for  that  year,  the  balance  or  excess 
of  the  loss  may  be  deducted  from  the  net  income  for  the  succeeding 
year  before  the  taxes  for  that  year  are  computed,  and  if  there  re- 
mains any  balance  or  excess  of  loss,  it  shall  be  refunded  to  the  tax- 
payer. 

These  benefits  shall  be  accorded  to  the  members  of  partnerships 
or  the  beneficiaries  of  estates  or  trusts  in  proportion  to  their  dis- 
tributive interests,  if  such  partnerships  or  estates  shall  have  sus- 
tained losses  of  this  character. 


FISCAL  YEAR. 

Individual  taxpayers  are  now  allowed  the  privilege  of  filing  their 
returns  on  the  basis  of  a  fiscal  year  instead  of  the  calendar  year 
as  they  were  required  to  do  under  previous  law.  In  order  to  avail 
themselres  of  this  privilege,  the  following  method  must  be  observed: 

Assume  that  John  Doe,  a  merchant,  is  the  sole  proprietor  of  his 
business  and  for  trade  reasons  desires  to  keep  the  accounts  of  his 
business,  as  well  as  his  own  personal  accoimts,  on  the  basis  of  a 
fiscal  year  beginning  July  1,  1918,  and  ending  June  30,  1919.  Ho 
must  first  secure  tJhe  permission  of  the  Commissioner  of  Internal 
Revenue  through  the  collector  for  the  district  in  which  he  intends 
to  file  his  return.  To  establish  the  fiscal  year  ending  June  30,  1919, 
the  notification  of  his  intention  must  be  sent  to  the  collector  not 
later  than  thirty  days  prior  to  the  time  his  return  would  be  due 
if  filed  on  the  basis  of  the  calendar  year.  As  the  return  on  the  basis 
of  the  calendar  year  is  due  March  15,  1919  (unless  this  date  is 
automatically  extended  due  to  delay  in  the  passage  of  the  Act),  the 
notice  must  be  given  on  or  before  February  13,  1919.  If  the  date 
for  filing  returns  is  extended  to  April  15  the  notice  would  then  be 
given  before  March  15. 

The  return  must  then  be  made  on  or  before  March  15,  1919,  for 
the  period  from  January  1,  1918,  to  June  30,  1918.    The  return  for 

22 


the  period  of  the  fiscal  year  would  not  then  be  due  to  be  filed  until 
September  15,  1919,  and  payments  of  the  tax  due  for  the  period 
from  January  1,  1918,  to  Jime  30,  1918  (the  six  months  period  prior 
to  the  beginning  of  the  new  fiscal  year)  would  be  made  as  follows: 
One-fourth  of  the  total  tax  on  March  15,  1919,  the  time  of  filing  the 
return;  one-fourth  on  June  15,  1919;  one-fourth  on  September  15, 
1919,  and  the  balance  on  December  l^th,  1919. 

The  payments  of  the  tax  based  on  the  fiscal  year  from  July  1, 
1918,  to  June  30,  1919,  w^ould  be  made  as  follows:  One-fourth  on 
September  15,  1919,  the  time  of  filing  the  return;  one-fourth  on 
December  15,  1919;  one-fourth  on  March  15,  1920,  and  final  pay- 
ment on  June  15,  1920. 

The  obvious  advantage  of  this  may  be  seen  in  the  fact  that  the 
taxpayer  has  nine  months  in  which  to  pay  the  tax  upon  the  six 
months'  income  for  the  period  from  January  1,  1918,  to  June  30, 
1918,  the  final  payment  on  the  taxes  for  this  period  being  made 
on  December  15th,  1919,  and  the  taxes  due  upon  the  period  of  the 
fiscal  year  ending  June  30,  1919,  are  payable  in  four  installments 
extending  over  a  period  of  nine  months  from  September  15.  1919, 
to  June  15th,  1920. 

The  taxes  for  the  two  separate  periods  embracing  18  months  may 
be  made  in  eight  payments,  extending  over  a  period  of  15  months — 
March  15th,  1919,  to  June  15,  1920. 

When  a  taxpayer's  fiscal  year  falls  within  two  calendar  years  in 
which  the  rates  of  tax  are  different,  any  personal  exemption  or  other 
specific  exemption  that  has  already  been  allowed  in  the  preceding 
year  shall  not  be  again  allowed  against  that  portion  of  the  net  in- 
come for  the  fiscal  year  which  is  subject  to  the  rates  of  the  preced- 
ing calendar  year. 


Extension  of  Time  for  Filing  Returns. 

If  for  any  rea»on  the  return  cannot  be  made  by  the  due  date 
(March  15th),  upon  application  to  the  collector  of  internal  revenue 
for  the  district  in  which  the  taxpayer  is  located,  setting  forth  the 
facts  as  to  the  taxpayer's  inability  to  file  on  or  before  the  due  date, 
upon  a  reasonable  excu»e,  such  as  absence,  sickness,  etc.,  the  col- 
lector will  grant  an  extension  of  time  not  exceeding  thirty  days  in 
which  to  file  the  return.  If  a  further  extension  of  time  is  required, 
application  is  to  be  made  to  the  Commissioner  of  Internal  Revenue 
at  Washington,  D.  C,  in  the  same  manner.  The  collector  of  internal 
revenue  only  has  the  power  to  grant  an  extension  of  time  not  ex- 
ceeding thirty  days. 

When  an  extension  of  time  has  been  granted,  the  date  of  the 
expiration  of  the  period  of  extension  shall  be  deemed  to  be  the 
time  fixed  by  law  for  filing  the  return.  In  any  case  in  which  the 
time  for  the  payment  of  any  installment  is  thus  postponed  because 
of  an  extension  of  time  for  filing  the  return,  there  shall  be  added 
as  a  part  of  such  installment  interest  thereon  at  the  rate  of  one -half 
of  1  per  cent,  per  month  from  the  time  it  w^ould  have  been  due,  if 
no  extension  had  been  granted,  until  paid. 

If  an  extension  of  time  is  granted  for  making  payment  of  the 
first  installment,  the  time  for  the  payment  of  the  subsequent  install- 
ments is  not  postponed  unless  the  Commissioner  so  specifies  in 
granting  the  extension. 


FIDUCIARIES. 

Executors,  Guardians,  Trustees,  Administrators,  Receivers,  etc.— 

In  tlie  case  of  income  received  by  estates  or  income  on  any  property 

held  in  trust,  the  estate  becomes  a  taxable  entity  in  itself  and  as 

such  is  subject  to  the  same  provisions  of  the  income  tax  law  as 

a  single  individual  with  specific  exemption  of  $1,000. 

Every  fiduciary  such  as  executors,  guardians,  trustees,  adminis- 
trators, receivers  or  conservators  shall  make  a  return  for  the  indi- 
vidual or  the  estate  or  trust  for  which  he  acts  if  the  gross  income 
of  such  individual  is  $1,000  or  more  if  single  or  if  married  and  not 
living  with  husband  or  wife;  or  $2,000  or  over  if  married  and  living 
with  husband  or  wife;  or  if  the  gross  mcome  of  such  estate  or 
trust  is  $1,000  or  over,  or  if  any  beneficiary  of  such  estate  oi 
trust  is  a  non-resident  alien. 

A  return  made  by  any  one  of  two  or  more  joint  fiduciaries  shall 
be  sufficient.  The  tax  is  payable  by  the  fiduciary  when  the  estate 
or  trust  is  undistributed  and  is  taxable  to  the  beneficiary  if  dis- 
tributed. 


DIVIDENDS. 

Dividends  received  (excepting  dividends  of  a  personal  service  cor- 
poration paid  out  of  profits  accumulated  since  December  31,  1917), 
while  exempt  from  all  normal  tax,  are  taxable  to  the  recipient  at 
the  surtax  rates  for  the  year  in  which  received. 

Personal  service  corporations  have  the  same  status  under  the  law 
as  partnerships  for  any  period  beginning  on  or  after  January  1,  1918 ; 
therefore  any  amount  paid  as  dividends  by  them  out  of  earnings 
or  profits  accumulated  since  December  31,  1917,  are  not  to  be  treated 
as  dividends  but  as  partnership  profits,  and  any  distribution  made 
shall  be  deemed  to  have  been  made  from  the  most  recently  accumu- 
lated earnings  or  profits. 

Any  distribution  made  by  a  corporation  shall  be  deemed  to  have 
been  made  from  earnings  or  profits  accumulated  since  February  28, 
1913,  but  any  earnings  or  profits  accumulated  prior  to  March  Ist, 
1913,  may  be  distributed  free  of  tax  provided  the  earnings  or  profits 
accumulated  since  February  28th,  1913,  have  first  been  uistributed. 


DIVIDENDS  PAID   IN   STOCK. 

Dividends  paid  in  stock  are  taxable  to  the  recipient  at  the  rates 
in  effect  for  the  years  in  which  the  earnings  or  profits  were  accumu- 
lated by  the  corporation,  if  the  dividends  were  received  by  the 
stockholder  between  January  1st  and  November  1st,  1918,  both  dates 
inclusive,  or  if  the  stock  dividends  were  authorized  or  declared  by 
the  corporation  during  the  period  from  January  Ist  to  November 
Ist,  1918,  and  are  received  by  the  stockholder  after  November  1st, 
1918,  and  before  the  expiration  of  30  days  after  the  passage  of  the 
present  Act. 

Stock  dividends  authorized  or  declared  by  a  corporation  after 
November  1,  1918,  are  taxable  to  the  recipient  at  the  rates  in  effect 
for  the  year  in  which  received. 


Allocation  of  Dividends. 

Any  distribution  made  by  a  corporation  during  the  first  60  days 
of  any  taxable  year  shall  be  deemed  to  have  been  made  from  earn- 
ings or  profits  accumulated  during  the  preceding  taxable  years;  but 
any  distribution  made  during  the  remainder  of  the  taxable  year 
shall  be  deemed  to  have  been  made  fjpm  earnings  or  profits  of  the 
current  taxable  year  up  to  the  date  of  distribution.  If  the  books 
of  the  corporation  do  not  show  the  amount  of  such  earnings  or 
profits  the  earnings  or  profits  shall  be  deemed  to  have  been  accumu- 
lated ratably  over  the  accounting  period  within  which  the  distribu- 
tion was  made. 

The  above  provision  does  not  effect  the  rate  of  tax  to  be  paid 
by  the  stockholder  in  the  case  of  dividends  paid  in  cash,  or  dividends 
paid  in  stock  of  a  corporation  other  than  the  distributing  cor- 
poration; but  in  the  case  of  dividends  paid  in  stock  of  the  distribut- 
ing corporation  it  serves  to  allocate  the  earnings  or  profits  to  the 
years  in  which  the  corporation  accumulated  the  earnings  distributed, 
as  the  stock  dividends  if  received  within  the  period  above  men- 
tioned are  taxable  to  the  recipient,  not  at  the  rates  in  effect  for  the 
year  in  which  received,  but  at  the  rates  in  effect  for  the  years  in 
which  the  earnings  were  accumulated  by  the  corporation. 

This  differs  from  the  previous  law  in  the  fact  that  all  dividends 
received  diuing  the  taxable  year  were  taxable  at  the  rates  in  effect 
for  the  years  in  which  the  profits  or  surplus  were  accumulated  by 
the  corporation  and  any  distribution  made  was  deemed  to  have  been 
made  from  the  most  recently  accumulated  profits  or  surplus. 


COURT  DECISIONS  IN  REGARD  TO  STOCK  DIVIDENDS. 

Under  the  decision  handed  down  on  January  23,  1919,  by  Judge 
Mayer  of  the  United  States  District  Court  for  the  Southern  District 
of  New  York,  it  was  held  that  the  provision  in  the  Revenue  Act  of 
1916  taxing  dividends  paid  in  stock  was  unconstitutional  on  the 
theory  that  stock  dividends  do  not  constitute  taxable  income  and  to 
tax  such  dividends  is  to  tax  principal  or  capital. 

The  provision  in  the  present  Act  is,  in  effect,  the  same  as  in  the 
Revenue  Act  of  1916  and  specifically  taxes  stock  dividends. 

Until  this  decision  is  upheld  by  the  United  States  Supreme  Court, 
dividends  paid  in  stock  will  have  to  be  returned  as  taxable  income  in 
accordance  with  the  provisions  of  the  present  Act;  and  in  the  event 
of  the  decision  being  upheld,  the  taxes  paid  upon  any  stock  dividends 
will  be  refunded  upon  the  submission  of  proper  claims. 

In  the  decision  handed  down  by  the  United  States  Supreme  Court 
on  January  7th,  1918,  it  was  held  that  stock  dividends  paid  during 
the  years  1913,  1914  and  1915  under  the  Act  of  October  3rd,  1913, 
did  not  constitute  taxable  income. 


NON-RESIDENT  ALIENS. 

Non-resident  aliens  who  derive  any  income  from  sources  within 
the  United  States  will  be  required  to  file  returns,  and  if  the  coun- 
try of  which  they  are  citizens  or  subjects  imposes  an  income  tax 
and  allows  a  credit  similar  to  the  marital  exemption  of  $2,000  and 

25 


the  $200  exemption  for  dependents  to  American  citizens  who  are 
not  reiidents  of  such  country,  then  the  above  credits  will  be  allowed 
to  such  non-resident  aliens. 

Under  the  previous  law,  non-resident  aliens  were  not  allowed  the 
above  exemptions  and  were  taxed  upon  the  entire  amount  of  income 
derived  from  sources  within  the  United  States. 

Non-resident  aliens  are  not  allowed  the  benefit  of  the  6  per  cent. 
rate  of  tax  on  the  first  $4,000  over  the  specific  exemption  of  $1,000 
or  $2,000  as  in  the  case  of  citizens  or  residents,  but  are  taxable  at 
the  flat  rate  of  12  per  cent,  on  all  income  in  excess  of  the  credits 
allowed. 

CITIZENS  OF  UNITED  STATES  POSSESSIONS. 

Any  individual  who  is  a  citizen  of  any  possession  of  the  United 
States,  such  as  Porto  Rico  or  llu'  Phii'Ppine  Islands  (and  not  other- 
wise a  citizen  of  the  U.  S.),  shall  be  ou!  joot  to  income  tax  only 
upon  income  derived  from  sources  within  the  Ignited  States  and 
shall  be  subject  to  the  same  provisions  as  non-resident  aliens. 

Porto  Rico  and  Philippine  Islands. 

Any  individual  who  is  a  resident  or  a  citizen  of,  or  who  derives 
any  income  from  sources  within  Porto  Rico  or  the  Philippine  Islands, 
or  any  corporation  organized  in  or  which  derives  income  from  Porto 
Rico  or  the  Philippine  Islands,  shall  be  taxed  in  these  possessions 
under  the  provisions  of  the  Revenue  Act  of  1916,  as  amended,  and 
the  respective  legislatures  of  Porto  Rico  or  the  Philippine  Islands 
shall  have  the  power  to  amend,  alter,  modify  or  repeal  the  income 
tax  laws  in  force  in  Porto  Rico  or  the  Philippine  Islands. 


INFORMATION  RETURNS. 

Every  person,  corporation  or  partnership  making  payments  of 
gains,  profits  or  income  of  any  description,  which  are  either  fi^ed  or 
determinable,  to  any  other  person,  corporation  or  partnership, 
amounting  to  $1,000  or  more  in  any  year,  is  required  to  make  a 
return  of  such  information  to  the  Commissioner  of  Internal  Rev- 
enue, giving  the  amounts  of  siuh  payments  and  the  names  and 
addresses  of  the  recipients. 

This  does  not  apply  to  the  payments  of  dividends  to  stockhold- 
ers by  a  corporation  or  the  payments  by  a  broker  to  customers  of 
profits  on  transactions.  These  statements,  such  as  dividends  and 
payments  of  profits  by  brokers,  are  only  required  when  requested 
by  the  Commissioner  of  Internal  Revenue,  in  order  to  check  up  indi- 
vidual returns. 

Under  the  previous  law  these  returns  of  information  were  required 
in  the  case  of  payments  during  the  year  amounting  to  $800  or  more. 

PENALTIES. 

There  are  two  distinct  penalties  provided  for  failure  to  file  returns 
or  pay  the  tax.  One  is  a  specific  penalty  and  the  other  a  penalty 
measured  by  the  amount  of  the  tax.    For  failure  to  file  the  return 

26 


within  the  time  prescribed  by  law,  Section  3176  of  the  Revised 
Statutes  provides  a  penalty  of  25  per  cent,  of  the  amount  of  the  tax 
shown  to  be  due  upon  the  return,  and  in  the  case  of  a  fraudulent 
return,  wilfully  made,  a  penalty  of  50  per  cent,  of  the  tax  is  to  be 
added. 

In  the  case  of  a  return  filed  after  the  due  date,  if  it  can  be 
shown  that  the  delinquency  was  due"to  a  reasonable  cause  and  not 
to  wilful  negligence,  the  amount  of  the  penalty  will  be  waived. 

In  addition  to  the  above  penalties.  Section  252  of  the  Revenue  Act 
of  1918  prescribes  a  specific  penalty  of  not  more  than  $1,000  for  fail- 
ure to  make  a  return  or  pay  the  tax  at  the  time  specified,  and  in 
the  case  of  a  taxpayer  who  wilfully  refuses  to  make  a  ret'irn  or  pay 
the  tax,  a  penalty  of  not  more  than  $10,000. 

Under  the  previous  Act  the  penalty  measured  by  the  amount  of 
tax  for  failure  to  file  the  return  on  or  before  the  due  date  was  60 
per  cent,  of  the  tax,  and  the  penalty  in  the  case  of  a  fraudulent 
return  was  100  per  cent,  of  the  tax  and  the  specific  penalty  imposed 
was  from  $20  to  $1,000. 

PRIVACY  OF  RETURNS. 

The  information  contained  in  any  return  made  imder  the  Act  is 
to  be  treated  as  inviolably  confidential  by  all  internal  revenue  offi- 
cers under  severe  penalty  and  is  not  open  to  inspection  by  any 
person  excepting  upon  order  of  the  President  of  the  United  States, 
and  under  rules  and  regulations  prescribed  by  the  Secretary  of  the 
Treasury,  and  approved  by  the  President. 

The  proper  officers  of  any  State,  imposing  an  income  tax  upon 
request  of  the  Governor  thereof,  may  have  access  to  the  returns  of 
any  corporation  in  such  manner  as  the  Secretary  of  the  Treasury 
may  prescribe. 

Stockholders'  Privileges. 

All  bona  fide  stockholders  of  record,  owning  1  per  cent,  or  more  of 
the  outstanding  stock  of  any  corporation,  shall,  upon  making  request 
of  the  Commissioner  of  Internal  Revenue,  be  allowed  to  examine 
the  annual  income  returns  of  such  corporation  and  its  subiidiaries. 
This  privilege  was  not  accorded  stockholders  under  any  of  the 
previous  Acts. 

Penalty  for  Disclosing  Information. 

Any  stockholder  who  examines  the  return  of  a  corporation  pur- 
suant to  the  above  privilege  and  who  makes  knov/n  in  any  manner 
not  provided  by  law  any  particular  of  such  return,  shall  be  guilty 
of  a  misdemeanor  and  be  punished  by  a  fine  not  exceeding  $1,000  or 
by  imprisonment  not  exceeding  one  year,  or  both. 


COPARTNERSHIPS  AND  PERSONAL  SERVICE  CORPORATIONS. 

Every  copartnership  must  make  a  return  showing  the  gross 
income,  the  deductions  allowed  by  law  and  the  net  income;  also 
the  distributive  interest  of  each  partner  whether  such  profits  have 

27 


been  distributed  or  not,  with  the  names  and  addresses  of  the  per- 
sons who  would  be  entitled  to  such  profits  if  distributed.  The 
return  may  be  sworn  to  by  any  one  partner. 


Partnership  Contributions. 

The  partnership  itself  shall  not  be  subject  to  either  excess  profits, 
war  profits,  or  the  income  tax.  In  computing  the  net  income  of  the 
partnership,  no  deductions  shall  be  made  for  contributions  or  gifts 
made  by  the  partnership.  The  partners  shall  take  credit  in  their 
individual  returns  of  their  proportionate  share  of  any  such  contribu- 
tions or  gifts  so  made  by  the  partnership,  not  to  exceed  15  per 
cent,  of  the  individual's  net  income. 


PERSONAL  SERVICE  CORPORATIONS  DEFINED. 

A  personal  service  corporation  is  a  corporation  whose  income  is 
due  primarily  to  the  activities  of  the  principal  owners  or  stock- 
holders who  are  themselves  regularly  engaged  in  the  active  conduct 
of  the  affairs  of  the  corporation  and  in  which  capital  (whether  in- 
vested or  borrowed)  is  not  a  material  income  producing  factor;  for 
instance,  a  corporation  composed  of  commission  merchants  or  adver- 
tising men  where  the  principal  owners  or  stockholders  are  them- 
selves actively  engaged  in  the  conduct  of  the  business  and  the 
income  is  due  principally  to  their  personal  services  and  the  only 
capital  employed  is  for  the  purposes  of  paying  for  office  equipment 
and  employes*  salaries. 

In  the  case  of  a  personal  service  corporation,  if  50  per  cent,  or  more 
of  the  gross  income  consists  of  gains,  profits  or  commissions  derived 
from  Government  contracts,  made  between  April  6,  1917,  and  No- 
vember 11,  1918,  both  dates  inclusive,  it  shall  not  be  treated  as  a 
person  service  corporation  subject  to  the  provisions  which  apply  to 
a  partnership,  but  shall  be  taxed  as  a  corporation. 

Every  personal  service  corporation,  although  not  subject  to  the 
tax,  must  file  a  return  showing  the  gross  income,  the  deductions 
allowed  by  law,  the  net  income  and  the  amounts  distributed,  with 
the  names  and  addresses  of  the  recipients.  Where  a  part  of  the 
net  income  has  not  been  distributed  the  names  and  addresses  of  the 
stockholders  who  would  be  entitled  to  the  profits  if  distributed  must 
be  given,  with  the  portion  assignable  to  each. 

Foreign  personal  service  corporations  shall  not  be  accorded  the 
privileges  of  domestic  personal  service  corporations,  bmt  shall  be 
taxed  as  corporations. 

Stockholders  Taxable  as  Partners. 

The  individual  stockholders  of  personal  service  corporations  shall 
be  taxed  in  the  same  manner  as  the  members  of  partnerships  and 
all  the  provisions  of  the  Act  relating  to  partnerships  and  members 
shall,  so  far  as  practicable,  apply  to  personal  service  corporations 
and  the  stockholders.  Any  portion  of  the  net  income  remaining 
undistributed  at  the  close  of  its  taxable  year  shall  for  the  purpose 
of  taxation  be  assigned  to  the  stockholders  in  proportion  to  their 
respective  shares. 

28 


Partners'  Credits  Allowable. 

A  partner  shall  for  the  purpose  of  the  normal  tax  be  allowed  as 
credits,  in  addition  to  the  specific  exemption  of  $1,000  if  single,  or 
$2,000  if  married,  his  proportionate  share  of  the  dividends,  or  interest 
upon  obligations  of  the  United  States  and  bonds  issued  by  the  War 
Finance  Corporation  as  are  received  by  the  partnership.  If  the  fiscal 
year  of  a  partnership  ends  during  a  calendar  year  for  which  the 
rates  of  tax  differ  from  those  for  the  preceding  calendar  year,  the 
rates  for  such  preceding  calendar  year  shall  apply  to  an  amount 
of  every  partner's  share  of  such  partnership  net  income  equal  to 
the  proportion  which  the  part  of  such  fiscal  year  falling  within  such 
calendar  year  bears  to  the  full  fiscal  year,  and  the  rates  for  the 
calendar  year  during  which  such  fiscal  year  ends  shall  apply  to  the 
remainder. 

Taxes  Paid  Under  the  Revenue  Act  of  1917. 

If  a  partnership  or  a  personal  service  corporation  has  paid  a  tax 
under  Title  II.  of  the  Revenue  Act  of  1917  for  any  period  beginning 
on  or  after  January  1,  1918,  they  should  immediately  file  a  claim  for 
the  refund  of  the  amount  of  tax  paid  for  such  period. 


Partnership  Fiscal  Year  Taxes. 

If  a  partnership  or  a  personal  service  corporation  makes  return 
for  a  fiscal  year  beginning  in  1917  and  ending  in  1918,  it  shall  pay 
the  same  proportion  of  a  tax  for  the  entire  period  computed  under 
Title  II  of  the  Revenue  Act  of  1917  which  the  portion  of  such 
period  falling  within  the  calendar  year  1917  is  of  the  entire  period. 


WAR  CONTRACT  REQUIREMENTS. 

That  every  person  who  on  or  after  April  6,  1917,  has  entered  into 
any  contract,  undertaking,  or  agreement  with  the  United  States, 
or  with  any  department,  bureau,  officer,  commission,  board  or  agency 
under  the  United  States  or  acting  in  its  behalf,  or  with  any  other 
person  having  contract  relations  with  the  United  States,  for  the 
performance  of  any  work  or  the  supplying  of  any  materials  or 
property  for  the  use  of  or  for  the  account  of  the  United  States, 
shall,  within  thirty  days  after  a  request  of  the  Commissioner 
therefor,  file  with  the  Commissioner  a  true  and  correct  copy  of 
every  such  contract,  undertaking,  or  agreement. 

Whoever  fails  to  comply  with  such  request  of  the  Commissioner 
shall  be  guilty  of  a  misdemeanor  and  shall  be  punished  by  a  fine 
of  not  more  than  $1,000,  or  by  imprisonment  for  not  more  than 
one  year,  or  both. 

The  Commissioner  shall  (when  not  violative  of  the  technical  mili- 
tary or  naval  secrets  of  the  Government)  have  access  to  all  in- 
formation and  data  relating  to  any  such  contract,  undertaking,  or 
agreement,  in  the  possession,  control  or  custody  of  any  department, 
bureau,  board,  agency,  officer  or  commission  of  the  United  States 


and  may  call  upon  any  such  department,  bureau,  board,  agency, 
officer  or  commission  for  a  full  statement  and  description  of  any 
allowance  for  amortization,  obsolescence,  depreciation  or  loss,  or  of 
any  valuation,  appraisal,  adjustment  or  final  settlement,  made  in 
pursuance  of  any  such  contract,  undertaking  or  agreement. 


CORPORATIONS. 

Corporations  are  subject  to  three  separate  and  distinct  taxes 
under  the  Act — The  War  Excess  Profits,  the  Corporation  Income 
and  the  Special  Excise  Tax  based  on  the  fair  value  of  the  capital 
stock  for  the  preceding  year  ending  June  30,  1918. 

Personal  service  corporations  are  exempt  from  the  above  taxes. 

Under  the  Revenue  Act  of  1916  which  was  effective  for  the  years 
1916  and  1917  there  was  no  distinction  made  between  "personal 
service  corporations  and  other  corporations,  all  being  taxable  under 
the  Excess  Profits  and  the  Corporation  Income  Tax." 


Method  of  Taking  Inventory. 

Inventories  are  to  be  taken  according  to  rules  and  regulations 
prescribed  by  the  Commissioner  with  the  approval  of  the  Secretary 
and  on  such  basis  as  conforms  as  nearly  as  may  be  to  the  best 
accounting  practice  in  the  trade  or  business  and  as  most  clearly 
reflects  the  income. 

Under  the  previous  Act,  a  taxpayer  was  allowed  to  take  inventory 
at  cost  of  market  value,  whichever  was  lowest. 


Reduction  In  Value  of  Inventory  Not  Due  to  Temporary  Fluctuation. 

If  the  taxpayer  considers  that  a  loss  has  been  sustained  in  the 
taxable  year  1918  by  a  reduction  in  the  value  of  the  inventory  not 
due  to  temporary  fluctuation,  whether  or  not  actually  realized  by 
sale  or  other  disposition,  he  may  file  a  claim  for  abatement  of  the 
amount  of  such  loss  at  the  time  of  filing  the  return;  or,  if  no  such 
claim  is  filed,  but  if  it  is  shown  to  the  satisfaction  of  the  Commis- 
sioner that  a  loss  of  this  character  was  sustained  in  1918  or  1919, 
the  tax  for  the  year  aff'ected  shall  be  redetermined  and  any  amount 
found  to  be  due  the  taxpayer,  shall  be  credited  or  refunded. 

If  a  claim  for  abatement  of  the  loss  is  filed  with  the  return,  a 
bond  in  double  the  amoimt  of  the  tax  covered  by  the  claim,  with 
sureties  satisfactory  to  the  Commissioner,  shall  accompany  the 
claim.  This  will  automatically  suspend  payment  of  the  amount 
of  tax  covered  by  the  claim,  but  in  case  the  amount  of  the  claim 
is  disallowed  by  the  Commissioner,  interest  at  the  rate  of  1  per 
cent,  per  month  will  be  added  to  the  amount  from  the  time  the 
tax  would  have  been  due  had  no  such  claim  been  filed. 

Under  the  previous  Act,  this  reduction  of  inventory  was  not  al- 
lowed except  as  reflected  in  ultimate  sales  and  losses  of  one  year 
could  not  offset  profits  of  another. 

30 


Corporations   Availed    of   to    Prevent   Imposition   of   Surtax   Upon 
Stockholders. 

If  a  corporation  is  availed  of  for  the  purpose  of  preventing  tiie 
imposition  of  the  surtax  upon  its  stockholders  through  the  medium 
of  permitting  its  gains  and  profits  to  accumulate  instead  of  being 
divided  or  distributed,  when  the  Commissioner  is  satisfied  that  in 
his  opinion  such  accumulation  is  unreasonable  for  the  purpose  of 
the  business  and  is  for  the  sole  purpose  of  preventing  the  surtax 
being  levied  upon  the  stockholders,  the  earnings  or  profits  so  ac?- 
cumulated  shall  first  be  subject  to  the  Excess  Profits  Tax  imposed 
under  Title  III.  of  the  present  Act,  and  the  balance  of  the  net  in- 
come shall  be  assigned  to  the  stockholders  in  proportion  to  their 
holdings  and  shall  be  accounted  for  by  them  in  their  individual 
returns;  and  shall  not  be  taxed  as  corporation  dividends  exempt 
from  the  normal  tax,  but  shall  be  taxed  as  a  distribution  of  part- 
nership profits  subject  to  both  the  normal  and  additional  taxes. 


Exempt  Corporations. 

In  addition  to  person  service  corporations  the  following  cor- 
porations are  exempt  from  all  three  of  the  above  taxes: 

(1)  Labor,  agricultural  or  horticultural  organizations. 

(2)  Mutual  savings  banks  not  having  a  capital  stock  represented 
by  shares. 

(3)  Fraternal  beneficiary  societies,  orders,  etc.,  operating  for  the 
exclusive  benefit  of  members. 

(4)  Domestic  building  and  loan  associations  and  co-opere,tive  banks 
without  capital  stock  operated  for  mutual  purposes  and  without 
profit. 

(5)  Cemetery  companies  operated  exclusively  for  the  benefit  of 
members. 

(6)  Corporations  operated  exclusively  for  religious,  charitable, 
scientific,  or  educational  purposes,  or  for  the  prevention  of  cruelty 
to  children  or  animals  where  no  profit  inures  to  the  benefit  of 
stockholders. 

(7)  Business  leagues,  chambers  of  commerce,  or  boards  of  trade 
not  organized  for  profit. 

(8)  Civic  leagues  operated  exclusively  for  the  promotion  of  social 
welfare. 

(9)  Clubs  operated  for  pleasure,  recreation  and  other  non -profit- 
able purposes. 

(10)  Farmers'  or  other  mutual  hail,  cyclone  or  fire  insurance 
companies,  mutual  ditch  or  irrigation  companies,  mutual  or  co- 
operative telephone  companies,  etc.,  the  income  of  which  consists 
solely  of  assessments  and  dues  collected  for  the  purpose  of  meeting 
expenses. 

(11)  Farmers',  fruit  growers'  or  like  associations,  or  co-operative 
societies  operated  for  the  purpose  of  marketing  the  products  of  mem- 
bers, as  defined  in  the  Act. 

(12)  Corporations  organized  for  the  exclusive  purpose  of  holding 
title  to  property  and  turning  over  the  income  thereof  to  organiza- 
tions which  are  exempt  from  the  tax. 

31 


(13)  Federal  land  banks  and  national  farm  loan  associations 
created  under  the  Act  of  July  17,  1916,  to  provide  capital  for  agri- 
cultural development. 


WAR  EXCESS-PROFITS  TAX. 

The  war  excess-profits  tax  is  imposed  upon  corporations  only; 
individuals  and  partnerships  being  exempt. 

Personal  service  corporations  are  also  exempt  unless  50  per  cent, 
or  more  of  the  gross  income  is  derived  from  Government  contracts, 
in  which  case  the  corporation  is  subject  to  the  tax. 

A  corporation  whose  net  income  for  the  taxable  year  is  less  than 
$3,000  is  exempt  from  the  excess-profits  tax,  although  a  return  must 
be  filed. 

In  the  case  of  a  corporation  engaged  in  the  business  of  mining  gold, 
the  net  income  derived  from  such  business  is  exempt. 

A  corporation  which  is  organized  for  religious,  educational  or 
charitable  purposes  and  not  for  profit  is  also  exempt. 


Where  Returns  Are  to  be  Filed. 

Returns  shall  be  made  in  the  internal  revenue  district  in  which 
the  principal  office  or  agency  of  the  corporation  is  located  and  if  it 
has  no  principal  office  or  agency  in  the  United  States,,  then  to  the 
collector  of  internal  revenue  at  Baltimore,  Md. 


When  Returns  Are  to  be  Filed. 

If  the  return  is  made  on  the  basis  of  the  calendar  year  1918,  it 
must  be  filed  on  or  before  March  15th,  1919,  unless  this  date  is  auto- 
matically extended,  due  to  the  delay  in  the  passage  of  the  Act;  if 
on  the  basis  of  a  fiscal  year,  it  must  be  filed  on  or  before  the  fif- 
teenth day  of  the  third  month  following  the  close  of  the  fiscal  year. 


When  Taxes  Are  Payable. 

Payment  of  the  tax  may  be  made  in  the  same  manner  as  applies 
to  individuals,  namely,  in  four  quarterly  installments,  or  in  full. 

If  payment  is  made  in  full,  it  must  be  made  on  or  before  the  date 
fixed  for  filing  the  return,  and  if  payment  is  made  in  installments, 
the  first  installment  of  one-quarter  of  the  tax  must  be  made  on  or 
before  the  date  fixed  for  filing  the  retuin;  second  payment  on  or 
before  the  fifteenth  day  of  the  third  month  following;  the  third  pay- 
ment on  or  before  the  fifteenth  day  of  the  sixth  month,  and  the 
fourth  or  final  payment  on  or  before  the  fifteenth  day  of  the  ninth 
month  following  the  date  of  filing  the  return. 

The  tax  is  levied  upon  net  income  and  is  computed  by  the  use  of 
percentages  of  tho  invested  capital  and  specific  credits  known  as  the 
"Excess-Profits"  adn  the  **War-Profits"  credits  as  ratios  to  determine 
at  what  rates  the  difTerent  portions  of  the  net  income  shall  be  taxed. 

The  total  amount  of  tax  payable  under  the  combined  war  excess- 

38 


profits  and  corporation  income  taxes  ranges  approximately  from  a 
33.2  per  cent,  minimum  to  a  maximum  of  about  70  per  cent,  of  the 
net  income ;  in  some  cases  exceeding  70  per  cent.  The  rate  percentage 
of  tax  depends  entirely  upon  the  proportion  of  the  n«t  income  to  the 
invtsted  capital  and  the  pre-war  earnings. 

In  order  to  simplify  the  interpretation  of  the  method  of  comput- 
ing the  tax,  two  practical  illustrations' are  given  in  subsequent  para- 
graphs showing  the  method  of  calculation,  step  by  step,  with  each 
progression  plainly  indicated. 


COMPUTATION  OF  TAX. 

(The  text  of  the  law  is  given  first  and  the  method  of  computing 
each  bracket  immediately  follows.) 

For  the'purpose  of  comparison,  we  are  assuming  that  the  two  cor- 
porations used  in  the  following  illustrations  were  organized  in  the 
year  1917  and  the  taxes  shown  are  for  the  calendar  year  1918. 

Corporation  "A"  with  a  capital  invested  of  $100,000  and  a  net  in- 
come of  $20,000;  and  Corporation  "B"  with  a  capital  invested  of 
$100,000  and  a  net  income  of  $50,000. 


Corporation  "A." 

Invested  capital $100,000 

Net    income 20,000 


FIRST  BRACKET. 

30  per  centum  of  the  amount  of  the  net  income  in  excess  of  the 
excess-profits  credit  (determined  under  Section  312)  and  not  in  ex- 
cess of  20  per  centum  of  the  invested  capital. 

Section  312 — That  the  excess-profits  credit  shall  consist  of  a  speci- 
fic exemption  of  $3,000  plus  an  amount  equal  to  8  per  centum  of  the 
invested  capital  for  the  taxable  year. 

A  foreign  corporation  sliall  not  be  entitled  to  the  specific  exemption 
of  $3,000. 

Invested  capital $100,000 

8% 

8%  of  invested  capital $8,000 

Specific  exemption 3,000 

Excess-profits   credit $11,000 

Net  income 20,000 

Excess-profits   credit ^ 11,000 

Amount  taxable $9,000 

Invested  capital $100,000 

20% 

20%  of  Invested  capital $20,000 

33 


Excess -profits  credit 11,000 


Amount  of  net  income  in  excess  of  the  excess-profits 
credit  and  not  in  excess  of  20%  of  the  invested  capi- 
tal (taxable  at  30%) $9,000 

30% 


Amount  of  tax  under  First  Bracket ^ $2,700 


SECOND  BRACKET. 

65  per  centum  of  the  amount  of  the  net  income  in  excess  of  20 
per  centum  of  the  invested  capital. 

Net    income $20,000 

20%  of  invested  capital 20,000 

Amt.  of  net  income  in  excess  of  20%  of  invested  capital  None 

Amount  of  tax  under  Second  Bracket None 


THIRD  BRACKET. 

The  sum,  if  any,  by  which  80  per  centimi  of  the  amount  of  the 
net  income  in  excess  of  the  war -profits  credit  (determined  under 
Section  311)  exceeds  the  amount  of  the  tax  computed  under  the 
First  and  Second  Brackets. 

Section  311 — (a)  That  the  war -profits  credit  shall  consist  of  the 
sum  of: 

(1)  A  specific  exemption  of  $3,000;  and 

(2)  An  amount  equal  to  the  average  net  income  of  the  corporation 
for  the  pre-war  period,  plus  or  minus,  as  the  case  may  be,  10  per 
centum  of  the  difference  between  the  average  invested  capital  for 
the  pre-war  period  and  the  invested  capital  for  the  taxable  year. 
If  the  tax  is  computed  for  a  period  of  less  than  twelve  months, 
such  amount  shall  be  reduced  to  the  same  proportion  thereof  as  the 
number  of  months  in  the  period  is  of  twelve  months. 

(b)  If  the  corporation  had  no  net  income  for  the  pre-war  period, 
or  if  the  amount  computed  under  paragraph  (2)  of  subdivision  (a) 
is  less  than  10  per  centum  of  its  invested  capital  for  the  taxable 
year,  then  the  war-profits  credit  shall  be  the  sum  of: 

(1)  A  specific  exemption  of  $3,000;  and 

(2)  An  amount  equal  to  10  per  centum  of  the  invested  capital 
for  the  taxable  year. 

(c)  If  the  corporation  was  not  in  existence  during  the  whole  of 
at  least  one  calendar  year  during  the  pre-war  period,  then  except 
as  provided  in  subdivision  (d)  the  war-profits  credit  shall  be  the  sum 
of: 

(1)  A  specific  exemption  of  $3,000;  and 

(2)  An  amount  equal  to  the  same  percentage  of  the  invested 
capital  of  the  taxpayer  for  the  taxable  year  as  the  average  per- 
centage of  net  income  to  invested  capital,  for  the  pre-war  period, 
of  corporations  engaged  in  a  trade  or  business  of  the  same  general 
class  as  that  conducted  by  the  taxpayer;  but  such  amount  shall  in 
no  case  be  less  than  10  per  centum  of  the  invested  capital  of  the 
taxpayer  for  tlio  taxable  year.     Such  average  percentage  shall  be 

34 


determined  by  the  Commissioner  on  the  basis  of  data  contained  in 
returns  made*  under  Title  II.  of  the  Revenue  Act  of  1917,  and  the 
average  known  as  the  median  shall  be  used.  If  such  average  per- 
centage has  not  been  determined  and  published  at  least  30  days 
prior  to  the  time  when  the  return  of  the  taxpayer  is  due,  then 
for  purposes  of  such  return  10  per  centum  shall  be  used  in  lieu 
thereof,  but  such  average  percentage  "v^hen  determined  shall  be  used 
for  the  purposes  of  Section  250  in  determining  the  correct  amount 
of  the  tax.  ,:; 

(d)  The  war-profits  credit  shall  be  determined  in  the  manner  pro- 
vided in  subdivision  (b)  instead  of  in  the  manner  provided  in  sub- 
division (c),  in  the  case  of  any  corporation  which  was  not  in  exist- 
ence during  the  whole  of  at  least  one  calendar  year  during  the 
pre-war  period,  if  (1)  a  majority  of  its  stock  at  any  time  during 
the  taxable  year  is  owned  or  controlled,  directly  or  indirectly,  by 
a  corporation  which  was  in  existence  during  the  whole  of  at  least 
one  calendar  year  during  the  pre-war  period,  or  if  (3)  50  per  centum 
or  more  of  its  gross  income  (as  computed  under  section  233  for 
income  tax  purposes)  consists  of  gains,  profits,  commissions,  or  other 
income,  derived  from  a  government  contract  or  contracts  made 
between  April  6,  1917,  and  November  11,  1918,  both  dates  inclusive. 

(e)  A  foreign  corporation  shall  not  be  entitled  to  a  specific  exemp- 
tion of  $3,000. 

War-profits  credit  consists  of: 

Specific  exemption $3,000 

10%  of  capital  for  taxable  year 10,000 

War-profits  credit  $13,000 

Net  income  ___     $20,000 

War-profits  credit 13,000 

Net  income  in  excess  of  war -profits  credit $7,000 

80% 

80%  of  net  income  in  excess  of  war-profits  credit $5,600 

Total  tax  under  First  and  Second  Brackets 2,700 


The  sum  by  which  80%  of  the  amount  of  the  net  income 
in  excess  of  the  war-profits  credit  exceeds  the  amount 
of  the  tax  computed  under  the  First  and  Second 
Brackets  (to  be  added  to  the  tax) 

Total  tax  under  First  and  Second  Brackets 

Addition  to  the  tax  to  be  made  under  Third  Bracket 

Total  tax  under  First,  Second,  and  Third  Brackets 


$2,900 


52,700 
2,900 


$5,600 


LIMITATION  BRACKET. 

Section  302  provides  that  the  tax  computed  under  the  Third 
Bracket  shall  not  exceed  the  sum  of  the  following: 

30  per  centum  of  the  amount  of  the  net  income  in  excess  of  $3,000 
and  not  in  excess  of  $20,000  plus  80  per  cent  of  the  net  income 
in  excess  of  $20,000,  and  that  nothing  in  this  section  shall  be  con- 
strued in  such  a  manner  as  to  increase  the  tax. 


35 


Amount  of  taxable  net  income  not  in  excess  of  $20,000 $30,000 

3,000 

Amount  of  net  income  in  excesi  of  $3,000  and  not  in 

excess  of  $20,000 _ $17,000 

30% 

30%  of  the  amount  of  net  income  in  excess  of  $3,000  and 

not  in  excess  of  $20,000 $5,100 

Total  tax  as  shown  by  the  Ist,  2nd,  and  3rd  Brackets $5,600 

Tax   must   not   exceed   amount   shown   by   computation 
under  Section  302  (Limiting  Bracket) 5,100 

As  the  amoirnt  of  tax  as  computed  under  the  brackets  exceeds 
the  amount  shown  under  Section  302,  the  amount  of  war  excess 
profits  payable  is  $5,100. 


Corporation  Income  Tax. 

For  the  calendar  year  1918,  12  per  centum  of  the  amount  of  th» 
net  income  in  excess  of  the  credits  provided  in  Section  236  (interest 
on  obligations  of  the  United  States  and  specific  exemption  of  $2,000). 

Net  income $20,000 

War  excess-profits  tax  (credit) 5,100 

Amount  subject  to  corporation  income  tax $14,900 

Less  specific  exemption 2,000 

Net  amount  subject  to  corporation  income  tax $12,900 

Rate  of  tax 12% 

Amount  of  corporation  income  tax $1,548 

Amount  of  war-excess  profits  tax 5,100 

Total  war-excess  profits  and  corporation  income  tax —  $6,648 

The  total  amount  of  the  combined  war  excess-profits  and  corpo- 
ration income  taxes  in  the  above  case  is  $6,648  on  a  net  income 
of  $20,000,  which  is  33.2  per  cent  of  the  earnings. 

Corporation  '*B." 

Invested  capital _' —       $100,000 

Net  income $50,000 


FIRST  BRACKET. 

Invested  capital  —  $100,000 

8% 

8%  of  invested  capital $8,000 

Specific  exemption 3,000 

Excess  profits-credit  $11,000 

Net  income — $50,000 

36 


Excess-profits  credit 11,000 

Amount  taxable  $39,000 

Invested  capital __  $100,000 

20% 

20%  of  invested  capital $20,000 

Excess-profits  credit 11,000 

Amount  of  net  income  in  excess  of  excess-profits  credit 

and  not  in  excess  of  20%  of  invested  capital $9,000 

Rate  of  tax 30% 

Amount  of  tax  under  First  Bracket $2,700 

SECOND  BRACKET. 

Net  income  $50,000 

20%  of  invested  capital 20,000 

Amount  of  net  income  in  excess  of  20%  of  invested  cap- 
ital (taxable  at  65  per  cent.) $30,000 

65% 

Tax  under  Second  Bracket $19,500 

Plus  tax  under  First  Bracket—^ 2,700 

Total  tax  under  First  and  Second  Brackets $22,200 

THIRD  BRACKET. 

War -profits  credit  consists  of: 

Specific  exemption $3,000 

10%  of  capital  for  taxable  year 10,000 

War-profits  credit $13,000 

Net  income  —  $50,000 

War  profits  credit 13,000 

Net  income  in  excess  of  war-profits  credit $37,000 

80% 

80%  of  the  amount  of  the  net  income  in  excess  of  the 

war-profits  credit $29,600 

Total  tax  under  the  First  and  Second  Brackets 22,200 

The  sum  by  which  80%  of  the  amount  of  the  net  income 
in  excess  of  the  war -profits  credit  exceeds  the  amount 
of    the    tax    computed    under    the    First    and    Second 

Brackets  (this  amount  to  be  added  to  the  tax) $7,400 

Tax  under  the  First  and  Second  Brackets $22,200 

Amount  to  be  added  under  Third  Bracket 7,400 

Total  war  excess-profits  tax $29,600 

37 


LIMITATION  BRACKET. 

Amount  of  taxable  net  income  not  in  excess  of  $20,000 $20,000 

3,000 

Amount  of  net  income  in  excess  of  $3,000  and  not  in 

excess  of  $20,000 $17,000 

30% 

30%  of  the  net  income  in  excess  of  $3,000  and  not  in 
excess  of  $20,000 $5,100 

Net  income $50,000 

20,000 

Net  income  in  excess  of  $20,000 $30,000 

80% 

80%  of  the  net  income  in  excess  of  $20,000 $24,000 

30%  of  net  income  in  excess  of  $3,000  and  not  in  excess 

of  $20',000 $5,100 

80%  of  the  net  income  in  excess  of  $20,000 24,000 

Total    $29,100 

Limit  of  tax  as  computed  under  Section  302 $29,100 

As  the  tax  computed  under  the  three  brackets  is  $29,600,  which 
is  in  excess  of  the  limiting  amount  under  Section  302,  the  amount  of 
tax  payable  is  the  latter  amount,  or  $29,100. 


Corporation  Income  Tax. 

Net  income   $50,000 

War  excess-profits  tax   (credit) 29,100 

Amount  subject  to  corporation  income  tax $20,900 

Specific  exemption  2,000 

Net  amount  subject  to  tax $18,900 

Rate  of  tax 12% 

Corporation  income  tax $2,268 

War  excess-profits  tax 29,100 

Total    taxes    $31,368 

The  total  amount  of  the  combined  war  excess-profits  and  cor- 
poration income  taxes  in  the  above  case  is  $31,368  on  a  net  income 
of  $50,000,  which  is  62.7  per  cent,  of  the  earnings. 

It  will  be  noted  in  the  foregoing  examples  that  Corporation  "A" 
pays  a  tax  equal  to  33.2  per  cent,  of  its  net  income,  while  Cor- 
poration "B"  pays  a  tax  amounting  to  62.7  per  cent.,  both  having 
the  same  invested  capital.  This  is  due  to  the  fact  that  in  the  case 
of  Corporation  "A"  the  not  income  is  20  per  cent,  of  the  invested 
capital,  while  in  the  casi;   of  Corporation  **B,"  the  net  income  is 

38 


50  per  cent,  of  the  invested  capital.  This  increase  of  30  per  cent, 
in  earnings  results  in  an  increase  of  29.5  per  cent,  in  the  rate  per- 
centage of  tax. 

INVESTED  CAPITAL. 

The  invested  capital  consists  of  -two  classes  of  assets:  those 
known  as  "admissible  assets/'  and  those  known  as  "inadmissible 
assets."  Admissible  assets  are  those  which  produce  income  that 
is  subject  to  taxation.  Inadmissible  assets  are  those  which  produce 
income  that  is  exeinpt  from  taxation;  for  instance,  cash,  real  estate, 
bills  receivable  and  other  tangible  assets  which  produce  income 
that  is  subject  to  the  tax  are  admissible  assets  and  assets  such  as 
stocks,  state  or  municipal  bonds  which  produce  income  that  is 
exempt  from  tax  are  inadmissible  assets. 

For  the  purpose  of  computing  lEne  tax,  only  the  admissible  assets 
including  any  profits  or  undivided  surplus  earned  prior  to  the  tax- 
able year  shall  constitute  invested  capital.  Any  profits  or  surplus 
earned  during  the  taxable  year  shall  not  be  included  in  invested 
capital. 

Net  Income  for  Excess  Profits  Tax. 

The  net  income  for  the  pre-war  period  (1911,  1912  and  1913) 
shall  be  computed  in  the  following  manner: 

For  the  years  1911  and  1912  under  the  provisions  of  the  Act  of 
August  5,  1909,  except  that  taxes  imposed  by  such  section  and  paid 
by  the  corporation  within  the  year  shall  be  included. 

For  the  calendar  year  l'>13  under  the  provisions  of  the  Act  of 
October  3,  1913,  except  that  the  taxes  imposed  under  the  Act  of 
August  5,  1909,  and  paid  by  the  corporation  within  the  year  shall  be 
included,  and  except  that  the  amounts  received  by  it  as  dividends 
upon  the  stock,  or  from  the  net  earnings  of  other  corporations  sub- 
ject to  the  tax  imposed  by  the  Act  of  October  3,  1913,  shall  be 
deducted. 

For  the  taxable  year  upon  the  same  basis  and  in  the  same  manner 
as  provided  for  income  tax  purposes  under  Title  IT.  of  the  present 
Act. 


Average  Net  Income  for  Pre- War  Period. 

The  average  net  income  for  the  pre-war  period  shall  be  determined 
by  dividing  the  number  of  years  within  that  period  during  the 
whole  of  which  the  corporation  was  in  existence,  into  the  sum  of 
the  net  income  for  such  years,  even  though  there  may  have  been 
no  net  income  for  one  or  more  of  such  years. 


ADVANTAGE  OF  ASCERTAINING  PRE-WAR  INCOME. 

As  the  present  Act  provides  that  a  part  of  the  war  profits  credit 
shall  be  the  amount  of  the  average  net  income  of  the  corporation 
for  the  pre-war  period,  in  no  case  to  be  less  than  10  per  cent,  of 
the  amount  of  the  invested  capital  for  the  taxable  year,  it  naturally 
follows  that  if  the  average  earnings  of  the  corporation  for  the  years 

39 


1911,  1912  and  1913  were  substantially  larger  than  an  amount  equal 
to  10  per  cent  of  the  invested  capital  for  the  taxable  year,  it  would 
be  decidedly  advantageous  to  the  corporation  to  determine  this  pre- 
war average,  thereby  increasing  the  war  profits  exemption  tending 
to  reduce  the  amount  of  tax  payable  under  the  third  bracket. 


Liberty  Bonds. 

Liberty  bonds  of  all  issues  shall  be  included  in  invested  capital 
if  purchased  with  profits  or  surplus  earned  prior  to  the  taxable 
year.  Liberty  bonds  purchased  with  earnings  of  the  taxable  year 
cannot  be  included  in  invested  capital. 


Inadmissible  Assets. 

Inadmissible  assets  in  addition  to  those  which  produce  income  that 
is  not  subject  to  the  tax  includes  borrowed  capital  and  any  assets 
which  represent  earnings  of  the  taxable  year. 

There  shall  be  deducted  from  invested  capital  that  proportion  of 
the  total  assets  which  the  inadmissible  assets  is  of  the  admissible 
and  inadmissible  assets  held  during  the  year.  In  other  words,  if 
the  total  assets  are  $100,000,  of  which  $25,000  are  inadmissible  assets 
such  as  mimicipal  bonds,  etc.,  the  invested  capital  would  be  $75,000. 


Admissible  Assets. 

Admissible  assets,  that  is  those  which  constitute  invested  capital, 
includes: 

(1)  Actual  cash  bona  fide  paid  in  for  stock  or  shares; 

(2)  Cash  value  of  tangible  property  paid  in  for  stock  or  shares 
at  the  time  of  such  payment,  but  in  no  case  to  exceed  the  par  value 
of  the  original  stock  or  shares  specifically  issued  therefor,  \mless  it 
is  shown  to  the  satisfaction  of  the  Commissioner  that  the  actual 
cash  value  of  such  property  was  really  and  substantially  in  excess 
of  the  par  value  of  the  stock  or  shares  at  the  time  paid  in; 

(3)  Paid-in  or  earned  surplus  or  profits  earned  prior  to  the 
taxable  year; 

(4)  Intangible  property  bona  fide  paid  in  for  stock  or  shares  prior 
to  March  3,  1917,  in  an  amount  not  exceeding  either  the  actual 
cash  value  of  such  property  at  the  time  paid  in  on  the  par  value  of 
the  stock  or  shares  issued  therefor  or  in  the  aggregate  not  exceeding 
25  per  cent  of  the  par  value  of  the  total  stock  or  shares  of .  the 
corporation  outstanding  on  March  3,  1917,  whichever  is  lowest. 

(5)  Intangible  property  bona  lid e  paid  in  for  stock  or  shares  on 
or  after  March  3,  1917,  in  an  amount  not  exceeding  either  the  actual 
cash  value  of  the  property  at  the  time  paid  in  or  the  par  value  of 
the  stock  or  shares  issued  therefor  or  in  the  aggregate  not  exceeding 
25  per  cent  of  the  par  value  of  the  total  stock  or  shares  of  the 
corporation  outstanding  at  the  beginning  of  the  taxable  year,  which- 
ever is  lowest. 

In  no  case  shall  the  value  of  intnngible  property  paid  in  for  stock 
or  shares,  whether  paid  in  prior  to  or  subsequent  to  March  1,  1913 

40 


(the  date  of  inception  of  the  lirst  income  tax  Act),  exceed  25  per 
cent  of  the  par  value  of  the  total  stock  or  shares  of  the  corporation 
outstanding  at  the  beginning  of  the  taxable  year. 


When  Inadmissible  Assets  May  Be  Included. 

If  a  corporation  owns  inadmissible  assets,  such  as  stocks,  munici- 
pal bonds,  etc.,  the  dividends  or  interest  upon  which  are  not  subject 
to  the  tax  and  the  income  derived  from  these  assets  consists  partly 
of  profits  realized  from  their  sale  or  other  disposition,  which  have 
been  included  in  net  income,  then  a  corresponding  amount  of  the 
capital  invested  in  such  assets  shall  be  included  as  invested  capital. 

If  money  is  borrowed  to  purchase  inadmissible  assets.  Section  234, 
Subdivision  "A,"  Paragraph  2,  provides  that  the  interest  on  this 
indebtedness  is  not  allowable  as  a  deduction  from  net  income.  As 
the  interest  on  this  borrowed  capital  is  an  actual  expense  to  the 
corporation,  and  the  interest  is  not  allowable  as  a  deduction  from 
net  income,  it  naturally  follows  that  the  corporation  is  paying  a 
tax  upon  so  much  dividends  or  interest  received  from  the  stocks, 
municipal  bonds  or  other  inadmissible  assets  which  were  purchased 
with  the  borrowed  money,  as  equals  the  amount  of  interest  paid 
upon  the  capital  borrowed  to  purchase  them.  In  this  case,  if  the 
corporation  is  actually  paying  a  tax  upon  the  income  received  from 
inadmissible  assets  because  of  the  deduction  of  interest  being  lim- 
ited by  Section  234,  a  corresponding  part  of  the  capital  invested 
in  such  inadmissible  assets  shall  be  included  in  invested  capital. 


Excess   of  Inadmissible  Assets  Over  Indebtedness. 

The  excess  of  the  average  amount  of  inadmissible  assets  for  the 
year  over  the  average  indebtedness  for  the  year  shall  be  deducted 
from  invested  capital. 

The  probable  theory  of  this  deduction  is  to  prevent  a  corporation 
from  borrowing  capital  to  invest  in  tax-free  securities;  the  income 
from  the  tax-free  securities  being  exempt  from  tax,  and  the  interest 
on  the  indebtedness  being  deductible  as  an  expense. 


When  Invested   Capital  Cannot  be  Satisfactorily  Determined. 

In  cases  where  the  invested  capital  cannot  satisfactorily  be  de- 
termined due  to  any  of  the  following  reasons  enumerated  below 
as  items  (1)  to  (5),  the  tax  shall  be  the  amount  which  bears  the 
same  ratio  to  the  net  income  (in  excess  of  the  specific  exemption 
of  $3,000)  as  the  average  tax  of  representative  corporations  en- 
gaged in  a  like  or  similar  trade  or  business  bears  to  the  average 
net  income  if  representative  corporations  Avhose  invested  capital  has 
been  satisfactorily  determined  by  the  Commissioner  and  which  are, 
as  nearly  as  may  be,  similarly  circumstanced  with  respect  to  gross 
income,  net  income,  profits  per  unit  of  business  transacted  and 
capital  employed,  the  amount  and  rate  of  war-profits  or  excess- 
profits,  and  all  other  relevant  facts  and  circumstances. 

(1)  Where  the  Commissioner  is  unable  to  determine  the  invested 
capital  as  provided  in  Section  326; 

41 


(2)  In  the  case  of  a  foreign  corporation; 

(3)  Where  a  mixed  aggregate  of  tangible  property  and  intangible 
property  has  been  paid  in  for  stock  or  for  stock  and  bonds  and  the 
Commissioner  is  unable  satisfactorily  to  determine  the  respective 
values  of  the  several  classes  of  property  at  the  time  of  payment, 
or  to  distinguish  the  classes  of  property  paid  in  for  stock  and  for 
bonds,  respectively; 

(4)  Where  upon  application  by  the  corporation  the  Commissioner 
fineds  and  so  declares  of  record  that  the  tax  if  determined  without 
benefit  of  this  section  would,  owing  to  abnormal  conditions  affecting 
the  capital  or  income  of  the  corporation,  work  upon  the  corpora- 
tion an  exceptional  hardship  evidenced  by  gross  disproportion 
between  the  tax  computed  without  benefit  of  this  section  and  the 
tax  computed  by  reference  to  the  representative  corporations  speci- 
fied in  section  328.  This  subdivision  shall  not  apply  to  any  case  (1) 
in  which  the  tax  (computed  without  benefit  of  this  section)  is  high 
merely  because  the  corporation  earned  within  the  taxable  year  a 
high  rate  of  profits  upon  a  normal  invested  capital,  nor  (2)  in  which 
50  per  centum  or  more  of  the  gross  income  of  the  corporation  for 
the  taxable  year  (computed  under  section  233  of  Title  II)  consists 
of  gains,  profits,  commissions,  or  other  income,  derived  on  a  cost- 
plus  basis  from  a  Government  contract  or  contracts  made  between 
April  6,  1917,  and  November  11,  1918,  both  dates  inclusive. 


CONSOLIDATED   RETURNS  BY  AFFILIATED   CORPORATIONS. 

Corporations  shall  be  deemed  to  be  affiliated  and  required  to  make 
consolidated  returns  both  for  the  purpose  of  the  war  excess-profits 
and  corporation  income  taxes  if  one  corporation  owns  directly  or 
controls  through  closely  affiliated  interests  or  by  a  nominee  or 
nominees  substantially  all  the  stock  of  the  other  or  others;  or  if 
substantially  all  the  stock  of  two  or  more  corporations  is  owned  or 
controlled  by  the  same  interests. 

That  there  shall  be  taken  out  of  such  consolidated  net  income  and 
invested  capital,  the  net  income  and  invested  capital  of  any  such 
affiliated  corporation  organized  after  August  1,  1914,  and  not  succes- 
sor to  a  then  existing  business,  50  per  centum  or  more  of  whose 
gross  income  consists  of  gains,  profits,  commissions,  or  other  income, 
derived  from  a  Government  contract  or  contracts  made  between 
April  6,  1917,  and  November  11,  1918,  both  dates  inclusive.  In  such 
case  the  corporation  so  taken  out  shall  be  separately  assessed  on 
the  basis  of  its  own  invested  capital  and  net  income  and  the  re- 
mainder of  such  affiliated  group  shall  be  assessed  on  the  basis  of 
the  remaining  consolidated  invested  capital  and  net  income. 

Wlien  the  tax  is  assessed  upon  the  basis  of  a  consolidated  return, 
the  tax  shall  be  computed  in  the  first  instance  as  a  unit  and  shall 
then  be  assessed  upon  the  respective  affiliated  corporations  in  such 
proportion  as  may  be  agreed  upon  among  them;  or  in  the  absence 
of  any  such  agreement,  then  on  the  basis  of  the  net  income  assign- 
able to  each. 

In  computing  the  tax,  there  shall  only  be  allowed  one  ipeciflc 
credit  of  $3,000  for  the  purpose  of  computing  the  excess -profits  credit 
and  one  specific  credit  of  $3,000  for  the  purpose  of  the  war-profits 
credit  and  one  specific  credit  of  $2,000  for  the  purpose  of  the  cor- 
poration income  tax. 

42 


THE  CORPORATION  INCOME  TAX. 

In  addition  to  the  war-excess  profits  tax,  Section  230  of  the  Act, 
levies  a  corporation  income  tax  of  12%  on  the  net  income  of 
corporations. 

Returns  are  to  be  filed  at  the  same  time  as  for  the  war  excess- 
profits  tax  and  payment  is  to  be  made 'in  the  same  manner. 

Every  corporation  "subject  to  taxation  under  this  Title"  is  re- 
quired to  make  a  return.  As  the  Corporation  Income  Tax  under 
Section  230  allows  domestic  corporations  a  specific  exemption  of 
$2,000,  it  is  assumed  in  the  absence  of  a  ruling,  that  corporations 
whose  net  income  is  less  than  $2,000  are  not  required  to  file  a  return. 


Credits  Allowed. 

In  arriving  at  the  amount  of  net  income  that  is  subject  to  this 
tax,  there  must  first  be  deducted  as  credits  the  amount  of  the 
excess-profits  tax  paid  or  payable  for  the  same  taxable  year,  the 
interest  received  upon  obligations  of  the  United  States  and  bonds 
of  the  War  Finance  Corporation  which  has  been  included  in  gross 
income  and  the  specific  exemption  of  $2,000  allowed  to  all  domestic 
corporations. 

FOREIGN  CORPORATIONS. 

Foreign  corporations  are  taxable  only  upon  income  derived  from 
sources  within  the  United  States,  including  the  interest  on  bonds, 
notes  or  other  interest-bearing  obligations  of  residents,  corporate  or 
otherwise,  dividends  from  resident  corporations  and  including  all 
amounts  received  (although  paid  under  a  contract  for  the  sale  of 
goods  or  otherwise)  representing  profits  on  the  manufacture  and 
disposition  of  goods  within  the  United  States. 

Foreign  corporation  are  not  allowed  the  specific  exemption  of 
$2,000. 

WHAT   CONSTITUTES   GROSS   INCOME. 

The  gross  income  of  a  corporation  has  the  same  meaning  as  defined 
in  the  case  of  an  individual;  namely,  all  gains,  profits  and  income 
derived  from  salaries,  wages  or  compensation  for  personal  service 
of  whatever  kind  and  in  whatever  form  paid;  or  from  professions, 
vocations,  trades,  businesses,  commerce  or  sales,  or  dealings  in  prop- 
erty, whether  real  or  personal,  growing  out  of  the  ownership  or  use 
of  or  interest  in  such  property;  also,  from  interest,  rent,  dividends, 
securities  or  the  transaction  of  any  business  carried  on  for  gain 
or  profit  or  gains  or  profits  and  income  derived  from  any  source 
whatever. 

INSURANCE  ON  LIVES  OF  OFFICERS  OR  EMPLOYEES. 

Amounts  received  as  insurance  upon  the  lives  of  officers  or  em- 
ployees, by  a  corporation,  upon  the  death  of  the  insured  constitutes 
taxable  income  to  the  corporation. 

The  amount  of  premiums  paid  may  be  deducted  from  the  total 
received  and  the  tax  paid  on  the  net  amount. 

43 


DEDUCTIONS  ALLOWABLE  FROM  GROSS  INCOME. 

AH  the  ordinary  and  necessary  expenses  paid  or  accrued  during 
tlie  taxable  year  in  carrying  on  any  trade  or  business,  including  a 
reasonable  allowance  for  salaries  or  other  compensation  for  personal 
services  actually  rendered  and  including  rentals  or  other  payments 
required  to  be  made  as  a  condition  to  the  continued  use  or  possession 
of  property. 

Payments  of  Interest  by  Domestic  or  Foreign  Corporations. 

All  interest  paid  or  accrued  within  the  taxable  year  on  indebted- 
ness. In  the  case  of  a  foreign  corporation  only  the  proportion  of 
such  interest  which  the  amount  of  its  gross  income  from  sources 
within  the  United  States  bears  to  the  amount  of  its  gross  income 
from  all  sources  within  and  without  the  United  States. 

All  taxes  paid  or  accrued  within  the  taxable  year,  except  Income, 
War-Profits  and  Excess -Profits  taxes  and  those  assessed  against  local 
benefits  of  a  kind  tending  to  increase  the  value  of  the  property 
assessed. 

Foreign  Corporation  Taxes. 

In  the  case  of  a  foreign  corporation,  all  taxes  imposed  by  the 
authority  of  any  foreign  country  (except  Income,  War-Profits  and 
Excess-Profits  taxes  and  taxes  assessed  against  local  benefits  of  t, 
kind  tending  to  increase  the  value  of  the  property  assessed)  upon 
the  property  or  business. 


LOSSES  AND  DIVIDENDS  DEDUCTIBLE. 

All  losses  sustained  during  the  taxable  year  and  not  compensated 
for  by  insurance  or  otherwise;  all  debts  ascertained  to  be  worth- 
less and  charged  off  within  the  taxable  year  and  all  dividends  re- 
ceived from  corporations  which  are  taxable  upon  their  net  incomes. 


Obsolescence,  and  Amortization  of  War  Material. 

A  reasonable  allowance  for  the  exhaustion,  wear  and  tear  of  prop- 
erty used  in  trade  or  business,  including  a  reasonable  allowance  for 
obsolescence.  In  the  case  of  buildings,  machinery,  equipment  ac- 
quired or  vessels  constructed  or  acquired  on  or  after  April  6th,  1917, 
contributing  to  the  prosecution  of  the  present  war,  there  shall  be 
allowed  a  reasonable  deduction  for  the  amortization  of  such  part  of 
the  cost  of  such  facilities  or  vessels  as  has  been  borne  by  the  tax- 
payer. 

Re-examination  Within  Three  Years. 

At  any  time  within  three  years  after  the  termination  of  the  pres- 
ent war,  the  Commissioner  of  Internal  Revenue  may,  at  the  request 
of  the  taxpayer,  make  a  re-examination  of  the  returns  in  order  to 
determine  if  proper  allowance  has  been  made  for  this  item  of  amor- 

44 


tization,  and  if  upon  re- examination  it  is  found  that  the  original 
deduction  allowed  was  incorrect,  the  amount  of  taxes  for  the  years 
affected  will  be  redetermined  and  any  tax  which  may  be  found  to 
have  been  overpaid,  will  be  refunded  or  credited  to  the  taxpayer. 


Depletion  of  Oil  and-Gas  Wells. 

In  the  case  of  mines,  oil  and  gas  wells,  other  natural  deposits  or 
timber,  the  reasonable  allowance  for  depletion  and  depreciation  of 
improvements  will  be  allowed  according  to  the  peculiar  conditions 
in  each  case,  based  upon  cost,  including  cost  of  development  not 
otherwise  'deducted. 


Market  Value  of  Mines,  Oil  and  Gas  Wells. 

In  tlie  case  of  the  above  properties  discovered  by  the  taxpayer 
on  or  after  March  1st,  1913,  where  the  fair  market  value  of  the 
property  is  materially  disproportionate  to  the  cost  of  depletion, 
allowance  shall  be  based  upon  the  fair  market  value  of  the  property 
at  the  time  of  discovery  or  within  30  days  thereafter. 

These  allowances  are  to  be  made  in  accordance  with  rules  and 
regulations  to  be  prescribed  by  the  Commissioner  with  the  approval 
of  the  Secretary. 


Lessor  and  Lessee  Apportionment. 

In  the  case  of  leases,  the  deductions  allowed  by  this  Section  shall 
be  equitably  apportioned  by  the  lessor  and  lessee. 


Net  Losses  Applicable  to  Other  Years. 

In  the  case  of  net  losses  discovered  for  the  first  time  during  the 
period  between  November  1st,  1918,  and  January  1st,  1930,  if  the  facts 
are  sustained  by  evidence  which  is  satisfactory  to  the  Commissioner, 
such  losses  may  be  credited  against  the  net  income  of  the  preceding 
year  and  the  taxes  redetermined  accordingly,  as  outlined  in  a  fore- 
going paragraph  entitled  "War  Losses  Deductible  Against  Prior 
Year's  Income." 


Indebtedness  Incurred  to  Purchase  Liberty  Bonds. 

Interest  paid  or  accrued  on  indebtedness  incurred  or  continued  to 
purchase  or  carry  obligations  of  the  United  States  issued  after  Sep- 
tember 24th,  1917,  is  an  allowable  deduction. 


DEDUCTIONS  NOT  ALLOWABLE, 

Premiums  paid  on  any  life  insurance  policy  covering  the  life  of 
any  official  or  employe  of  or  any  person  financially  interested  in 
any  trade  or  business  carried  on  by  the  taxpayer,  when  the  tax- 

45 


payer  is  directly  or  indirectly  a  beneficiary  under  such  policy.  Any 
amount  expended  in  restoring  property  or  in  making  good  the  ex- 
istence thereof,  for  which  an  allowance  is  or  has  been  made. 


Improvements  and  Betterments. 

Any  amount  paid  out  for  new  buildings  or  for  permanent  improve- 
ments where  betterments  are  made  to  increase  the  value  of  any 
property  or  estate. 


Taxes  Paid  on  Bond  Interest  Not  Deductible. 

In  the  case  of  corporations  issuing  bonds  or  other  obligations  which 
contain  a  tax-free  covenant,  that  is,  a  contract  or  provision  by 
which  the  corporation  agrees  to  pay  any  portion  of  the  tax  imposed 
upon  the  bondholder  or  to  reimburse  the  bondholder  for  any  tax 
which  he  may  be  required  to  pay,  the  amount  of  tax  withheld  and 
paid  pursuant  to  this  contract  or  provision  shall  not  be  allowed  as 
a  deduction  from  net  income  by  the  corporation. 


Interest  on  Indebtedness  Incurred  to  Purchase  Tax  Exempt  Securities 

Any  amount  of  interest  paid  or  accrued  within  the  taxable  year 
to  purchase  or  carry  obligations  or  securities,  the  income  from  which 
is  wholly  exempt  from  taxation,  shall  not  be  allowed  as  a  de- 
duction. 

Interest  paid  or  accrued  on  indebtedness  incurred  or  continued  to 
purchase  or  carry  obligations  of  the  United  States  issued  prior  to 
September  24th,  1917,  shall  not  be  an  allowable  deduction. 


WITHHOLDING  TAX  ON  BOND  INTEREST  AT  THE  SOURCE 
WHERE  BONDS  CONTAIN  A  TAX-FREE  CLAUSE. 

In  any  case  where  bonds,  mortgages,  or  deeds  of  trust,  or  other 
similar  obligations  of  a  corporation,  contain  a  contract  or  provision 
by  which  the  obligor  agrees  to  pay  any  portion  of  the  tax  imposed 
by  this  title  upon  the  obligee,  or  to  reimburse  the  obligee  for  any 
portion  of  the  tax,  or  to  pay  the  interest  without  deduction  for  any 
tax  which  the  obligor  may  be  required  or  permitted  to  pay  thereon, 
or  to  retain  therefrom  under  any  law  of  the  United  States,  the 
obligor  shall  deduct  and  withhold  a  tax  equal  to  2  per  cent  of  the 
interest  upon  such  bonds,  mortgages,  deeds  of  trust  or  other  obliga- 
tions, whether  such  interest  is  payable  annually  or  at  short  or 
longer  periods,  and  whether  payable  to  a  non-resident  alien  individual 
or  to  an  individual  citizen  or  resident  of  the  United  States,  or  to  a 
partnership:  Provided,  That  the  Commissioner  may  authorize  such 
tax  to  be  deducted  and  withheld  in  the  case  of  interest  upon  any 
such  bonds,  mortgages,  deeds  of  trust  or  other  obligations,  the 
owners  of  which  are  not  known  to  the  withholding  agent.  In  the 
case  of  a  citizen  or  resident  entitled  to  receive  such  interest,  the 
withholding  shall  not  be  required  if  he  files  with  the  withholding 

46 


agent  on  or  before  February  1st  a  signed  notice  in  writing  claiming 
the  benefits  of  the  exemption  of  either  $1,000  or  $2,000,  according 
to  his  marital  status. 

Filing  of  Withholding  Returns. 

The  returns  by  corporations  of  any- -tax  so  withheld  upon  bonds 
containing  a  tax-free  clause,  shall  be  made  with  the  Collector  of  In- 
ternal Revenue  on  or  before  March  1st  of  each  year  and  payment 
must  be  made  on  or  before  June  15th. 

Owing  to  the  fact  that  the  present  Act  was  not  passed  until  the 
latter  part  of  February  the  filing  date  of  the  withholding  returns 
above  mentioned  will  probably  be  extended. 

Contract  Between  Issuing  Corporation  and  Bondholder. 

The  Government  has  consistently  held  that  the  so-called  tax-free 
covenant  in  bonds  is  a  contract  between  the  issuing  corporation  and 
its  bondholders  with  which  the  Government  has  no  concern.  Inas- 
much, however,  as  the  great  majority  of  the  tax-free  covenants  in 
bonds  are  to  the  effect  that  the  issuing  corporation  "will  pay  coupons, 
etc.,  without  deduction  for  any  Federal  income  taxes  which  the  cor- 
poration is  obliged  by  law  to  retain  and  pay"  the  provision  limiting 
the  amount  to  be  retained  and  paid  at  the  source  to  2%  was  prob- 
ably designed  as  a  measure  of  relief  to  minimize  the  obligation  of 
the  issuing  corporation  to  its  bondholders. 

The  2%  tax  on  bond  interest  to  be  withheld  and  paid  at  the  source 
in  the  case  of  bonds  containing  a  tax-free  covenant  is  only  a  part 
of  the  tax  assessed  on  interest  from  bonds,  the  bondholder  being 
liable  for  tax  on  such  interest  at  the  full  normal  and  super- tax 
rates  prescribed  by  law. 

PAYMENTS  TO  NON-RESIDENT  ALIEN  INDIVIDUALS. 

All  individuals,  corporations  and  partnerships  making  payments  of 
interest,  rent,  salaries,  wages,  premiums,  annuities,  compensations, 
remunerations,  emoluments  or  other  fixed  or  determinable  annual  or 
periodical  gains,  profits,  or  income  to  any  non-resident  alien  individ- 
ual, shall  deduct  and  withhold  from  such  payments  a  tax  equal  to 
8%  thereof. 

Withholding  of  8  Per  Cent  Tax  on  Payments  to  Non-Resident  Aliens. 

The  foregoing  docs  not  apply  to  payments  of  dividends  by  cor- 
porations taxable  upon  their  net  income,  or  payments  of  interest 
upon  bonds  or  other  corporate  obligations  containing  a  tax-free 
clause. 

BONDS  NOT  CONTAINING  A  TAX-FREE  CLAUSE. 

If  the  bonds  do  not  contain  a  tax-free  clause,  the  Government 
imposes  no  obligation  upon  the  corporation  for  payment  of  the  tax 
at  the  source,  when  paid  to  citizens  or  residents,  the  tax  in  this 
case  being  paid  by  the  bondholder. 

47 


BOND   INTEREST  PAID   TO   NON-RESIDENT   ALIENS. 

In  the  case  of  bond  interest  paid  to  non -resident  alien  individuals 
or  non-resident  alien  corporations,  the  tax  is  to  be  withheld  by  the 
issuing  corporation  in  every  case  whether  or  not  the  bonds  contain 
a  tax-free  clause. 

When  the  bonds  contain  a  tax-free  clause  the  amount  to  be  with-, 
held  from  non-resident  aliens  is  2  per  cent.  When  the  bonds  do 
not  contain  the  tax-free  clause  the  amount  to  be  withheld  is  8  per 
cent. 

BOND  INTEREST  PAID  TO  NON-RESIDENT  ALIEN 
CORPORATIONS. 

When  the  bonds  do  not  contain  a  tax-free  clause  the  amount 
to  be  withheld  from  non-resident  alien  corporations  is  10%. 


License  For  Collection  of  Foreign  Items. 

That  all  individuals,  corporations,  or  partnerships  undertaking 
as  a  matter  of  business  or  for  profit  the  collection  of  foreign  pay- 
ments of  interest  or  dividends  by  means  of  coupons,  checks,  or 
bills  of  exchange  shall  obtain  a  license  from  the  Commissioner  and 
shall  be  subject  to  such  regulations  enabling  the  Government  to 
obtain  the  information  required  under  this  title  as  the  Commissioner, 
with  the  approval  of  the  Secretary,  shall  prescribe;  and  who- 
ever knowingly  undertakes  to  collect  such  payments  without  having 
obtained  a  license  therefor,  or  without  complying  with  such  reg- 
ulations, shall  be  guilty  of  a  misdemeanor  and  shall  be  fined  not 
more  than  $5,000,  or  imprisoned  for  not  more  than  one  year,  or 
both. 

Licenses  Under  Previous  Acts. 

Any  person,  corporation,  individual,  or  partnership  holding  a 
license  secured  under  previous  Acts  will  not  be  required  to  take 
out  a  license  under  the  present  Act. 


Licenses  For  Branch  Offices. 

If  licenses  are  required  for  branch  offices  the  collector  for  the 
district  in  which  the  home  office  is  located,  if  so  notified,  will 
issue  the  necessary  authority  to  the  collectors  of  the  districts  in 
which  are  located  any  branch  offices  for  which  any  additional 
licenses  are  required. 


The  Special  Excise  Tax  On  Corporations. 

Every  corporation  shall  pay  annually  a  special  excise  tax  with 
respect  to  carrying  on  or  doing  business  equivalent  to  $1.00  for 
each  $1,000  of  so  much  of  the  fair  average  value  of  its  capital  stock 
for  the  preceding  year  ending  June  30th  as  is  in  excess  of  $5,000. 

48 


In  estimating  the  value  of  capital  stock  the  surplus  and  undi- 
vided profits  shall  be  included.  This  tax  shall  not  apply  to  any 
corporation  which  was  not  engaged  in  business  during  the  pre- 
ceding year  ending  June  30th  nor  to  any  corporation  which  is 
exempt  from  the  corporation  income  tax  or  the  war  excess -profits 
tax,  nor  to  any  foreign  corporation  not  engaged  in  business  in 
the  United  States  during  the  preceding  year  ending  June  30th. 


Special  Excise  Tax  On  Foreign  Corporation. 

Every  foreign  corporation  shall  pay  annually  a  special  excise  tax 
with  respect  to  carrying  on  or  doing  business  in  the  United  States 
equivalent  to  $1.00  for  each  $1,000  of  the  average  amount  of  capital 
employed  in  the  transaction  of  its  business  in  the  United  States 
during  the  preceding  year  ending  June  30th  (without  the  specific 
exemption  of  $5,000  accorded  to  domestic  corporations). 


ADDENDA 

Bonds  That  Do  Not  Contain  a  Tax-Free  Covenant. 

The  Commissioner  has  ruled  that  under  the  law,  a  corporation 
issuing  bonds  without  a  tax-free  covenant  is  not  permitted  to  de- 
duct or  pay  tax  at  the  source  with  respect  to  the  interest  thereon; 
except  in  cases  where  bonds  are  owned  by  a  non-resident  individual 
or  corporation  not  having  an  office  or  place  of  business  in  the 
United  States. 

The  withholding  provisions  of  the  law  apply  to  the  normal  income 
tax  derived  from  interest  payments  upon  bonds  which  do  not  con- 
tain a  tax-fi'ee  covenant  clause  only  in  cases  where  the  bondholders 
are  non-resident  alien  corporations  or  individuals. 

If  interest  payments  are  made  to  citizens  or  residents  of  the 
United  States  from  bonds  which  are  not  tax-free,  such  income  must 
be  reported  on  Form  1001,*  Revised,  as  there  is  no  provision  for 
reporting  this  income  as  subject  to  withholding. 

Should  a  corporation  desire  to  reimburse  its  bondholders  in  such 
cases,  it  may  do  so,  as  this  is  a  matter  wholly  between  the  parties 
concerned  and  one  in  which  the  Government  is  not  interested.  How- 
ever, such  income  should  not  be  reported  as  subject  to  withholding 
and  this  office  will  not  accept  tax  deducted  in  such  cases  by  the 
withholding  agent. 

*0r  its  equivalent  under  any  new  regulations. 


49 


The  Revenue  Act  of  1918 


AN  ACT 

To  provide  revenue,  and  for  other  purposes.  1 

Be  It  enacted  by  the  Senate  and  House  of  Representa-    2 

tlves    of   the    United    States    of    America    in    Congress    3 

assembled,  4 

'^  B 

6 

TITLE  I.— GENERAL  DEFINITIONS.  7 

8 

SECTION  1.     That  when  used  in  this  Act —  9 

The    term    "person"    Includes    partnerships    and    cor-  lo  "Person" 
porations  as  well  as  Individuals;  11 

The  term  "corporation",  includes  associations,  joint- 12  "Corporation" 
stock  companies,  and  Insurance  companies;  13 

The  term  "domestic"  when  applied  to  a  corporation  or  14  "Domestic" 
partnership  means  created  or  organized  in  the  United  15 
States;  16 

The   term    "foreign"   when    applied    to   a   corporation  17  "Foreign" 
or  partnership  means  created  or  organized  outside  the  18 
United   States;  19 

The  term  "United  States"  when  used  in  a  geographl-  20  "United  States" 
cal  sense  includes  only  the   States,   the  Territories  of  21 
Alaska  and  Hawaii,  and  the  District  of  Columbia;  22 

The    term    "Secretary"    means    the    Secretary    of   the  23  "Secretary" 
Treasury;  24 

The  term   "Commissioner"   means  the  Commissioner  25  "Commissioner' 
of  Internal  Revenue;  26 

The    term    "collector"    means    collector    of    Internal  27  "Collector" 
revenue;  28 

The  term  "Revenue  Act  of  1916"  means  the  Act  en-  29  "Revenue  Act 
titled  "An  Act  to  increase  the  revenue,  and  for  other  30       of  1916" 
purposes,"  approved  September  8,  1916;  3a 

The  term  "Revenue  Act  of  1917"  means  the  Act  en-  32  "Revenue  Act 
titled   "An   Act   to   provide   revenue   to   defray   war   ex-  33       of  1917" 
penses,   and   for  other  purposes,"   approved  October   3,34 
1917;  35 

The   term   "taxpayer"   Includes  any   person,   trust   or  36  "Taxpayer" 
estate  subject  to  a  tax  imposed  by  this  Act;  37 

The  term  "Government  contract"  means  (a)  a  con-  38  "Government 
tract  made  with  the  United  States,  or  with  any  depart-  39  Contract" 
ment,  bureau,  officer,  commission,  board,  or  agency,  un-  40 
der  the  United  States  and  acting  in  its  behalf,  or  with  41 
any  agency  controlled  by  any  of  the  above  If  the  con-  42 
tract  is  for  the  benefit  of  the  United  States,  or  (b)  a  sub-  43 
contract  made  with  a  contractor  performing  such  a  con-  44 
tract  if  the  products  or  services  to  be  furnished  under  45 
the  subcontract  are  for  the  benefit  of  the  United  States.  46 

The   term   "Government  contract   or  contracts  made  47 

51 


'Military   or 
Naval  Forces 


1  between   April    6,    1917,   and    November   11,    1918,   both 

2  dates    inclusive"    when    applied    to    a    contract    of    the 

3  kind  referred  to   in   clause    (a)   of  this  paragraph,   in- 

4  eludes  all  such  contracts  which,  although  entered  into 
6  during    such    period,    were    originally    not    enforceable, 

6  but   which   have   been   or   may   become   enforceable   by 

7  reason  of  subsequent  validation  in  pursuance  of  law; 

8  The    term    "taxable    year"    mens    the    calendar    year, 

9  States"    includes   the    Marine   Corps,    the   Coast   Guard, 


of  the  United  10  the  Army  Nurse  Corps,   Female,  and  the  Navy  Nurse 
States"  11  Corps,  Female,  but  this  shall  not  be  deemed  to  exclude 

12  other  units  otherwise  included  within  such  term; 
'Present  War"    13      The  term  "present  war"  means  the  war  in  which  the 

14  United  States  is  now  engaged  against  the  German  Gov- 

15  ernment. 

16  P'or  the  purposes  of  this  Act  the  date  of  the  termina- 

17  tion   of   the   present   war   shall   be  fixed  by   proclama- 

18  tion   of   the   President. 
19 


21 
22 


TITLE  II.— INCOME  TAX. 
PART  Z.-~ GENEBAI^  PROVISIONS. 


'Taxable  Year' 


Federal  Year' 


Fiduciary" 


'Withholding 
Agent" 

'Personal 
Service 
Corporation' 


26  Definitions. 
26 

27  SECTION  200.     That  when  used  in  this  title— 

28  The   term   "taxable   year"   means   the   calendar  year, 

29  or   the   fiscal  year   ending  during   such   calendar  year, 

30  upon    the  basis   of  which   the  net   income   is  computed 

31  under  section  212  or  section  232. 

32  The   term   "fiscal  year"   means  an   accounting   period 

33  of  twelve  months  ending  on  the  last  day  of  any  month 

34  other   than    December.      The    first    taxable   year,    to   be 

35  called  the  taxable  year  1918,  shall  be  the  calendar  year 

36  1918  or  any  fiscal  year  ending  during  the  calendar  year 
871918; 

38  The  term  "fiduciary"  means  a  guardian,   trustee,  ex- 

39  ecutor,    administrator,    receiver,    conservator,    or    any 

40  person   acting   in   any   fiduciary   capacity   for  any   per- 

41  son,  trust  or  estate; 

42  The  term  "withholding  agent"  means  any  person  re- 

43  quired  to  deduct  and  withhold  any  tax  under  the  pro- 

44  visions  of  section   221  or  section   237; 

46      The    term    "personal    service    corporation"'    means    a 

46  corporation   whose   Income  is  to  be  ascribed   primarily 

47  to  the  activities  of  the  principal  owners  or  stockhold- 

48  ers  who  are  themselves  regularly  engaged  in  the  active 

49  conduct  of  the  affairs  of  the  corporation  and  in  which 

60  capital    (whether  invested  or  borrowed)   is  not  a  mate- 

61  rial  income-producing  factor;  but  does  not  include  any 

62  foreign  corporation,  nor  any  corporation  50  per  centum 

63  or  more  of  whose  gross  income  consists  either    (1)   of 

64  gains,    profits,    or    income    derived    from    trading    as    a 

65  principal,    or    (2)    of    gains,    profits,    commissions,    or 

66  other  income,  derived  from  a  Government  contract  or 
57  contracts  made  between  April  6,  1917,  and  November  11, 
68  1918,  both  dates  inclusive; 


52. 


The  term  "paid,"  for  the  purposes  of  the  deductions    1  "Paid," 
and  credits  under  this  title,   means   "paid  or  accrued"    2       "Paid  or 
or  "paid  or  incurred,"  and  the  terms  "paid  or  incurred"    3       Accrued," 
and  "paid  or  accrued"  shall  be  construed  according  to    4       "Paid  or 
the  method  of  accounting  upon  the  basis  of  which  the    S      Incurred" 
net  Income  is  computed  under  Section  212.  6 

7 

8 

Dividends.  9 

10 

SECTION  201.  (a)  Tliat  the  term  "dividend"  when  11  Dividends 
used  In  this  title  (except  in  paragraph  (10)  of  subdivl-  12  Definition 
sion  (a)  of  Section  234)  means  (1)  any  distribution  13 
made  by  a  corporation,  other  than  a  personal  serv-  14 
Ice  corporation,  to  Its  shareholders  or  members,  15 
whether  In  cash  or  In  other  property  or  In  stock  16 
of  the  corporation,  out  of  Its  earning  or  profits  17 
accumulated  since  February  28,  1913,  or  (2)  any  such  IB 
distribution  made  by  a  personal  service  corporation  19 
out  of  Its  earnings  or  profits  accumulated  since  Feb-  20 
ruary  28,  1913,  and  prior  to  January  1,  1918.  21 

(b)  Any  distribution  shall  be  deemed  to  have  been  22 
made  from  earnings  or  profits  unless  all  earnings  and  23 

profits   have   first   been   distributed.      Any    distribution  24  Dividends  Paid 

made  In  the  year  1918  or  any  year  thereafter  shall  be  25       in  Year  1918 

deemed    to    have   been    made   from    earnings    or    profits  26 

accumulated  since  February  28,  1913,  or,  in  the , case  of  27 

a  personal  service  corporation,  from  the  most  recently  28 

accumulated   earnings   or   profits;    but   any   earnings   or  29 

profits  accumulated  prior  to  March  1,  1913,  may  be  dis-  30 

tributed  in  stock  dividends  or  otherwise,  exempt  from  31 

the    tax,    after    the    earnings    and    profits    accumulated  32 

since  February  28,  1913,  have  been  distributed.  33 

(c)  A  dividend  paid  in  stock  of  the  corporation  shall  34  Stock 

be   considered   income   to   the   amount   of   the   earnings  35       Dividends 

or  profits  distributed.     Amounts  distributed  in  the  llq-  36 

uidatlon  of  a  corporation  shall  be  treated  as  payments  37 

in  exchange  for  stock  or  shares,  and  any  gain  or  profit  38 

realized   thereby   shall   be   taxed   to   the   distributee   as  39 

other  gains  or  profits.  40 

(d)  If  any  stock  dividend  (1)  Is  received  by  a  tax- 41 
payer  between  January  1  and  November  1,  1918,  both  48 
dates  inclusive,  or  (2)  Is  during  such  period  bona  fide  43 
authorized  or  declared,  and  entered  on  the  books  of  the  44 
corporation,  and  is  received  by  a  taxpayer  after  No-  45 
vember  1,  1918,  and  before  the  expiration  of  thirty  46 
days  after  the  passage  of  this  Act,  then  such  dividend  47 
shall,  in  the  manner  provided  in  Section  206,  be  taxed  to  48 
the  recipient  at  the  rates  prescribed  by  law  for  the  years  49 
in  which  the  corporation  accumulated  the  earnings  or  50 
profits  from  which  such  dividend  was  paid,  but  the  51 
dividend  shall  be  deemed  to  have  been  paid  from  the  52 
most   recently   accumulated   earnings   or   profits.  53 

(e)  Any  distribution  made  during  the  first  sixty  days  54  Dividends  Paid 
of  any  taxable  year  shall  be  deemed  to  have  been  made  55       in  First  60 
from  earnings  or  profits  accumulated  during  preceding  56      Days  of 
taxable   years;    but  any  distribution   made   during  the  57      Taxable  Tear 
remainder  of  the  taxable  year  shall  be  deemed  to  have  58 

53 


1  been    made    from   earnings   or   profits   accumulated    be- 

2  tween  the  close  of  the  preceding  taxable  year  and  the 
8  date  of  distribution,  to  the  extent  of  such  earnings  or 
4  profits,  and  if  the  books  of  the  corporation  do  not  show 

6  the  amount  of  such  earnings  or  profits,  the  earnings  or 
•  profits  for  the  accounting  period  within  which  the  dls- 

7  tributlon  was  made  shall  be  deemed  to  have  been  ac- 

8  cumulated  ratably  during  such  period. 


Gain  or  Loss 


Property  Ac- 
quired Before 
Mar.  1,  1913 

Property  Ac- 
quired Since 
Mar.  1,  1913 

Exchange  of 
Property 


Reorganization, 
Consolidation 


Inventories 


37 


40 
41 

4M 
43 
44 
45 
46 
47 
48 
49 
60 
51 
52 
53 
54 
65 
56 
67 


Basis  for  Determining'  Gain  or  Iioss. 

SECTION  202.  (a)  That  for  the  purpose  of  ascer- 
taining: the  gain  derived  or  loss  sustained  from  the 
sale  or  other  disposition  of  property,  real,  personal,  or 
mixed,  the  basis  shall  be — 

(1)  In  the  case  of  property  acquired  before  March 
1,  1913,  the  fair  market  price  or  value  of  such  property 
as  of  that  date;  and 

(2)  In  the  case  of  property  acquired  on  or  after  that 
date,  (a)  the  cost  thereof;  or  (b)  the  Inventory  value,  if 
the  inventory  is  made  in  accordance  with  section  203. 

(b)  When  property  is  exchanged  for  other  property, 
the  property  received  in  exchange  shall  for  the  pur- 
pose of  determining  gain  or  loss  be  treated  as  the 
equivalent  of  cash  to  the  amount  of  its  fair  market 
value,  if  any;  but  when  in  connection  with  the  reor- 
ganization, merger,  or  consolidation  of  a  corporation  a 
person  receives  in  place  of  stock  or  securities  owned 
by  him  new  stock  or  securities  of  no  greater  aggre- 
gate par  or  face  value,  no  gain  or  loss  shall  be  deemed 
to  occur  from  the  exchange,  and  the  new  stock  or  se- 
curities received  shall  be  treated  as  taking  the  place 
of  the  stock,  securities,  or  property  exchanged. 

When  in  the  case  of  any  such  reorganization,  merger 
or  consolidation  the  aggregate  par  or  face  value  of  the 
new  stock  or  securities  received  is  in  excess  of  the  ag- 
gregate par  or  face  value  of  the  stock  or  securities 
exchanged,  a  like  amount  in  par  or  face  value  of  the 
new  stock  or  securities  received  shall  be  treated  as  tak- 
ing the  place  of  the  stock  or  securities  exchanged,  and 
the  amount  of  the  excess  In  par  or  face  value  shall  be 
treated  as  a  gain  to  the  extent  that  the  fair  market 
value  of  the  new  stock  or  securities  Is  greater  than  the 
cost  (or  If  acquired  prior  to  March  1,  1913,  the  fair 
market  value  as  of  that  date)  of  the  stock  or  securities 
exchanged. 

Inventories. 

SECTION  203.  That  whenever  in  the  opinion  of  the 
Commissioner  the  use  of  inventories  is  necessary  in 
order  clearly  to  determine  the  Income  of  any  taxpayer. 
Inventories  shall  be  taken  by  such  taxpayer  upon  such 
basis  as  the  Commissioner,  with  the  approval  of  the 
Secretary,  may  prescribe  as  conforming  as  nearly  as 
may  be  to  the  best  accounting  practice  In  the  trade  or 
business  and  as  most  clearly  reflecting  the  Income. 


54 


Net  ZiOBsei.  1 

2 

SECTION  204.  (a)  That  as  used  in  this  section  the  3  "Net  Losses" 
term  "net  loss"  refers  only  to  net  losses  resulting  from  4  Definition 
either  (1)  the  operation  of  any  business  regularly  car-  5 
rled  on  by  the  taxpayer,  or  (2)  the  bona  fide  sale  by  6 
the  taxpayer  of  plant,  buildings,  machinery,  equipment  7 
or  other  facilities,  constructed,  installed  or  acquired  by  8 
the  taxpayer  on  or  after  April  6,  1917,  for  the  produc-  9 
tion  of  articles  contributing  to  the  prosecution  of  the  10 
present  war;  and  when  so  resulting  means  the  excess  11 
of  the  deductions  allowed  by  law  (excluding  in  the  12 
case  of  corporations  amounts  allowed  as  a  deduction  13 
under  paragraph  (6)  of  subdivision  (a)  of  section  234)  14 
over  the  sum  of  the  gross  income  plus,  any  interest  15 
received  free  from  taxation  both  under  this  title  and  16 
under  Title  III.  17 

(b)  If  for  any  taxable  year  beginning  after  October  18  Readjustment 
31,  1918,  and  ending  prior  to  January  1,  1920,  it  appears  19       of  Losses 
upon    the    production    of    evidence    satisfactory    to    the  20 
Commissioner   that  any   taxpayer   has   sustained   a  net  21 

loss,  the  amount  of  such  net  loss  shall  under  regula-  22 
tions  prescribed  by  the  Commissioner  with  the  approval  23 
of  the  Secretary  be  deducted  from  the  net  income  of  24 
the  taxpayer  for  the  preceding  taxable  year;  and  the  25 
taxes  imposed  by  this  title  and  by  Title  III  for  such  26 
preceding  taxable  year  shall  be  redetermined  accord-  27 
ingly.  Any  amount  found  to  be  due  to  the  taxpayer  28 
upon  the  basis  of  such  redetermination  shall  be  credited  29 
or  refunded  to  the  taxpayer  in  accordance  with  the  30 
provisions  of  section  252.  If  such  net  loss  is  in  excess  31 
of  the  net  income  for  such  preceding  taxable  year,  the  32 
amount  of  such  excess  shall  under  regulations  pre-  33 
scribed  by  the  Commissioner  with  the  approval  of  the  34 
Secretary  be  allowed  as  a  deduction  in  computing  the  35 
net  income  for  the  succeeding  taxable  year.  36 

(c)  The  benefit  of  this  section  shall  be  allowed  to  the  37  Benefits 
members  of  a   partnership  and   the  beneficiaries  of  an  38       Allowed 
estate    or    trust    under    regulations    prescribed    by    the  39       Parnerships 
Commissioner  with  the  approval  of  the  Secretary.  40       and  Estates 

41 
Fiscal  Year  With  Different  Rates.  42 

43 
SECTION  205.    (a)   That  if  a  taxpayer  makes  return  44  Fiscal  Year 
for  a  fiscal  year  beginning  in  1917  and  ending  in  1918,  45       Other  Than 
his  tax  under  this  title  for  the  first  taxable  year  shall  46       Calendar 
be  the  sum  of:      (1)   The  same  proportion  of  a  tax  for  47       Year  for 
the  entire  period  computed  under  Title  I  of  the  Revenue  48       1917-18 
Act  of  1916  as  amended  by  the  Revenue  Act  of  1917  and  49 
under  Title   I   of   the   Revenue  Act  of   1917,   which   the  60 
portion  of  such  period  falling  within  the  calendar  year  51 

1917  is  of  the  entire  period,  and  (2)  the  same  propor-  52 
tion  of  a  tax  for  the  entire  period  computed  under  thiE  63 
title  at  the  rates  for  the  calendar  year  1918  which  the  64 
portion  of  such  period  falling  within  the  calendar  year  55 

1918  is  of  the  entire  period:  Provided,  That  in  the  case  56 
of  a  personal  service  corporation  the  amount  to  be  paid  57 
shall  be  only  that  specified  in  clause   (1).  68 


How   Tax  1      Any  amount  heretofore  or  hereafter  paid  on  account 

Rate  Is  2  of  the  tax  imposed  for  such  fiscal  year  by  Title  I  of  the 

Apportioned       3  Revenue  Act  of  1916  as  amended  by  the  Revenue  Act 

4  of   1917,   and   by   Title   I   of   the   Revenue   Act   of   1917, 

6  shall  be  credited  towards  the  payment  of  the  tax  im- 

6  posed  for  such  fiscal  year  by  this  Act,  and  if  the  amount 

7  so  paid  exceeds  the  amount  of  such  tax  imposed  by  this 

8  Act,  or,  in  the  case  of  a  personal  service  corporation, 

9  the  amount  specified  in  clause   (1),  the  excess  shall  be 

10  credited    or    refunded    in    accordance    with    the    provl- 

11  sions  of  section  252. 

Fiscal  Year  12       (b)    If  a  taxpayer   makes  a  return   for   a  fiscal  year 

1918-19  13  beginning   in    1918   and   ending   In   1919,    the    tax   under 

14  this  title  for  such  fiscal  year  shall  be  the  sum  of:   (1) 

15  the  same  proportion  of  a  tax  for  the  entire  period  com- 

16  puted   under   this   title   at   the   rates   specified   for   the 

17  calendar   year   1918    which   the   portion   of   such   period 

18  falling  within  the  calendar  year  1918  is  of  the  entire 

19  period,   and    (2)    the  same  proportion   of  a  tax  for   the 

20  entire   period    computed    under    this    title    at    the    ratea 

21  specified  for  the  calendar  year  1919  which  the  portion 

22  of  such  period  falling  within  the  calendar  year  1919  is 

23  of  the  entire  period. 

Partnerships  24  (c)  If  a  fiscal  year  of  a  partnership  begins  in  1917 
Fiscal  Year  25  and  ends  in  1918  or  begins  in  1918  and  ends  in  1919, 
Other  Than  26  then  notwithstanding  the  provisions  of  subdivision  (b) 
Calendar  27  of  section  218,   (1)  the  rates  for  the  calendar  year  dur- 

Year  28  ing   which   such   fiscal  year   begins   shall   apply    to   an 

29  amount    of    each    partner's    share    of    such    partnership 

30  net    income    (determined    under    the    law    applicable    to 

31  such  year)    equal  to  the  proportion  which  the  part  of 

35  such    fiscal    year    falling    within    such    calendar    year 

33  bears  to  the  full  fiscal  year,  and   (2)  the  rates  for  the 

34  calendar  year  during  which  such  fiscal  year  ends  shall 
30  apply   to   an   amount  of  each   partner's   share  of   such 

36  partnership  net  income   (determined  under  the  law  ap- 

37  plicable   to   such   calendar   year)    equal   to   the   propor- 

38  tion  which  the  part  of  such  fiscal  year  falling  within 

39  such  calendar  year  bears  to  the  full  fiscal  year:     Pro- 

40  vided.  That  in  the  case  of  a  personal  service  corporation 

41  with  respect  to  a  fiscal  year  beginning  in  1917  and  end- 

48  ing  in  1918,  the  amount  specified  in  clause  (1)  shall 
43  not  be  subject   to  normal   tax. 

44 
Income  Subject   45  Parts  of  Income  Subject  to  Bates  for  Different  Years, 
to  Rates  for      46 

Different  47      SECTION  206.     That  whenever  parts  of  a  taxpayer's 

Years  48  income  are  subject  to  rates  for  different  calendar  years, 

49  the  part  subject  to  the  rates  for  the  most  recent  cal- 

50  endar  year  shall  be  placed  in  the  lower  brackets  of 
81  the  rate  schedule  provided  in  this  title,  the  part  sub- 
53  ject  to  the  rates  for  the  next  preceding  calendar  year 

53  shall  be  placed  in  the  next  higher  brackets  of  the  rate 

54  schedule   applicable   to   that  year,   and   so  on   until   the 

55  entire  net  income  has  been  accounted  for.  In  determin- 
58  ing  the  Income,  any  deductions,  exemptions  or  credits 

57  of  a  kind  not  plainly  and  properly  chargeable  against 

58  the  income  taxable  at  rates  for  a  preceding  year  shall 


56 


first  be  applied  against  the  income  subject  to  rates  for  1 
the  most  recent  calendar  year;  but  any  balance  thereof  2 
shall  be  applied  against  the  income  subject  to  the  rates  3 
of  the  next  preceding  year  or  years  until  fully  allowed.    4 

5 

6 

PART   XZ.— ZNDIVIDVAl^S.  7 

8 
Normal  Tax.  9 

10 
SECTION  210.     That,  in  lieu  of  the  taxes  Imposed  by  11  Individuals 
subdivision  (a)  of  section  1  of  the  Revenue  Act  of  1916  12       Normal  Tax 
and  by  section  1  of  the  Revenue  Act  of  1917,  there  shall  13       Year  1918 
be  levied,  collected,  and  paid  for  each  taxable  year  upon  14 
the  net  income  of  every  individual  a  normal  tax,  at  the  15 
following  rates:  ^  IS 

(a)  For  the  calendar  year  1918,  12  per  centum  of  the  IV 
amount  of  the  net  Income  in  excess  of  the  credits  pro-  13 
vided  in  section  216:  Provided,  That  in  the  case  of  a  19 
citizen  or  resident  of  the  United  States  the  rate  upon  23 
the  first  $4,000  of  such  excess  amount  shall  be  6  per  21 
centum;  22 

(b)  For  each  calendar  year  thereafter,  8  per  centum  23  Year  1919  an  I 
of  the  amount  of  the  net  income  in  excess  of  the  credits  24       Thereafter 
provided  in  section  216:  Provided,  That  in  the  case  of  25 

a  citizen  or  resident  of  the  United  States  the  rate  upon  26 
the  fix'st  $4,000  of  such  excess  amount  shall  be  4  per  27 
centum.  28 

29 
Surtax.  30 

31 
SECTION   211.      (a)    That,    in    lieu   of   the    taxes    Im-  32  Surtax 
posed   by   subdivison    (b)    of  section   1   of   the   Revenue  33       Schedules 
Act   of   1916   and   by   section   2   of   the   Revenue  Act  of  34       of  Rates 
1917,  but  in  addition  to  the  normal  tax  imposed  by  sec   35 
tion  210  of  this  Act,  there  shall  be  levied,  collected,  and  36 
paid  for  each  taxable  year  upon  the  net  income  of  every  37 
individual,  a  surtax  equal  to  the  sum  of  the  followlng-j  38 

1  per  centum  of  the  amount  by  which  the  net  in-  39 
come  exceeds  $5,000  and  does  not  exceed  $6,000;  40 

2  per  centum  of  the  amount  by  which  the  net  Incomtj  41 
exceeds  $6,000  and  does  not  exceed  $8,000;  42 

3  per  centum  of  the  amount  by  which  the  net  income  43 
exceeds  $8,000  and  does  not  exceed  $10,000;  44 

4  per  centum  of  the  amount  by  which  the  net  Income  45 
exceeds  $10,000  and  does  not  exceed  $12,000;  46 

5  per  centum  of  the  amount  by  which  the  net  income  47 
exceeds  $12,000  and  does  not  exceed  $14,000;  43 

6  per  centum  of  the  amount  by  which  the  net  Income  49 
exceeds  $14,000  and  does  not  exceed  $16,000;  50 

7  per  centum  of  the  amount  by  which  the  net  income  51 
exceeds  $16,000  and  does  not  exceed  $18,000;  52 

8  per  centum  of  the  amount  by  which  the  net  Income  53 
exceeds  $18,000  and  does  not  exceed  $20,000;  54 

9  per  centum  of  the  amount  by  which  the  net  Income  55 
exceeds  $20,000  and  does  not  exceed  $22,000;  56 

10  per  centum  of  the  amount  by  which  the  net  Income  57 
exceeds  $22,000  and  does  not  exceed   $24,000;  58 

57 


1  11  per  centum  of  the  amount  by  wliich  the  net  income 

2  exceeds  $24,000  and  does  not  exceed  $26,000; 

3  12  per  centum  of  the  amount  by  which  the  net  income 

4  exceeds  $26,000  and  does  not  exceed  $28,000; 

5  13  per  centum  of  the  amount  by  which  the  net  Income 

6  exceeds  $28,000  and  does  not  exceed  $30,000; 

7  14  per  centum  of  the  amount  by  which  the  net  income 

8  exceeds  $30,000  and  does  not  exceed  $32,000; 

9  15  per  centum  of  the  amount  by  whicli  the  net  income 

10  exceeds  $32,000  and  does  not  exceed  $34,000; 

11  16  per  centum  of  the  amount  by  which  the  net  income 

12  exceeds  $34,000  and  does  not  exceed  $36,000; 

13  17  per  centum  of  the  amount  by  whicli  the  net  income 

14  exceeds  $36,000  and  does  not  exceed  $38,000; 

15  18  per  centum  of  the  amount  by  which  the  net  income 

16  exceeds  $38,000  and  does  not  exceed  $40,000; 

17  19  per  centum  of  the  amount  by  which  the  net  income 

18  exceeds  $40,000  and  does  not  exceed  $42,000; 

19  20  per  centum  of  the  amount  by  whicli  the  net  income 

20  exceeds  $42,000  and  does  not  exceed  $44,000; 

21  21  per  centum  of  the  amount  by  which  the  net  income 

22  exceeds  $44,000  and  does  not  exceed  $46,000; 

23  22  per  centum  of  the  amount  by  which  the  net  income 

24  exceeds  $46,000  and  does  not  exceed  $48,000; 

25  23  per  centum  of  the  amount  by  which  the  net  income 

26  exceeds  $48,000  and  does  not  exceed  $50,000; 

27  24  per  centum  of  the  amount  by  which  the  net  income 

28  exceeds  $50,000  and  does  not  exceed  $52,000; 

29  25  per  centum  of  the  amount  by  which  the  net  income 

30  exceeds  $52,000  and  does  not  exceed  $54,000; 

31  26  per  centum  of  the  amount  by  which  the  net  income 

32  exceeds  $54,000  and  does  not  exceed  $56,000; 

33  27  per  centum  of  tlie  amount  by  which  the  net  income 

34  exceeds  $56,000  and  does  not  exceed  $58,000; 

35  28  per  centum  of  the  amount  by  which  the  net  income 

36  exceeds  $58,000  and  does  not  exceed  $60,000; 

37  29  per  centum  of  the  amount  by  which  the  net  Income 

38  exceeds   $60,000  and  does  not  exceed  $62,000; 

39  30  per  centum  of  the  amount  by  which  the  net  Income 

40  exceeds  $62,000  and  does  not  exceed  $64,000; 

41  31  per  centum  of  the  amount  by  which  the  net  income 

42  exceeds  $64,000  and  does  not  exceed  $66,000; 

'^      32  per  centum  of  the  amount  by  w^hich  the  net  income 

44  exceeds  $66,000  and  does  not  exceed  $68,000; 

45  33  per  centum  of  the  amount  by  which  the  net  income 

46  exceeds  $68,000  and  does  not  exceed  $70,000; 

47  34  per  centum  of  the  amount  by  which  the  net  income 

48  exceeds  $70,000  and  does  not  exceed  $72,000; 

49  35  per  centum  of  the  amount  by  wliicli  the  net  income 

50  "xceeds  $72,000  and  does  not  exceed  $74,000; 

51  36  per  centum  of  the  amount  by  which  the  net  income 

52  exceeds  $74,000  and  does  not  exceed  $76,000; 

53  37  per  centum  of  the  amount  by  which  the  net  income 

54  exceeds  $76,000  and  does  not  exceed  $78,000; 

55  38  per  centum  of  the  amount  by  which  the  net  income 

56  exceeds  $78,000  and  does  not  exceed   $80,000; 

B7      39  per  centum  of  the  amount  by  which  the  net  income 
5S  exceeds  $80,000  and  does  not  exceed  $82,000; 

58 


40  per  centum  of  the  amount  by  which  the  net  Income  "* 
exceeds  $82,000  and  does  not  exceed  $84,000;  2 

41  per  centum  of  the  amount  by  which  the  net  income  3 
exceeds  84,000  and  does  not  exceed  $86,000;  4 

42  per  centum  of  the  amount  by  which  the  net  Income  6 
exceeds  $86,000  and  does  not  exceed  $88,000;  6 

43  per  centum  of  the  amount  by  whioh  the  net  income  7 
exceeds  $88,000  and  does  not  exceed  $90,000;  8 

44  per  centum  of  the  amount  by  which  the  net  Income  9 
exceeds  $90,000  and  does  not  exceed  $92,000;  10 

45  per  centum  of  the  amount  by  which  the  net  Income  11 
exceeds  $92,000  and  does  not  exceed  $94,000;  12 

46  per  centum  of  the  amount  by  which  the  net  Income  13 
exceeds  $94,000  and  does  not  exceed  $96,000;  14 

47  per  centum  of  the  amount  by  wliich  the  net  income  15 
exceeds  $96,000  and  does  not  exceed  $98,000;  16 

48  per  centum  of  the  amount  by  which  the  net  Income  17 
exceeds  $98,000  and  does  not  exceed  $100,000;  18 

52  per  centum  of  the  amount  by  which  the  net  income  19 
exceeds  $100,000  and  does  not  exceed  $150,000;  20 

56  per  centum  of  the  amount  by  which  the  net  Income  21 
exceeds  $150,000  and  does  not  exceed  $200,000;  22 

60  per  centum  of  the  amount  by  which  the  net  income  23 
exceeds  $200,000  and  does  not  exceed  $300,000;  24 

63  per  centum  of  the  amount  by  which  the  net  income  25 
exceeds  $300,000  and  does  not  exceed  $500,000;  26 

64  vev  centum  of  the  amount  by  which  the  net  income  27 
exceeds  $500,000  and  does  not  exceed  $1,000,000;  28 

65  per  centum  of  the  amount  by  which  the  net  income  29 
exceeds  $1,000,000.  30 

(b)   In  the  case  of  a  bona  fide  sale  of  mines,  oil  or  31  Limitation  of 
gas  wells,  or  any  interest  therein,  where  the  principal  32       Surtax 
value  of  the  property  has  been  demonstrated  by  pros-  33      on  Income 
pecting  or  exploration  and  discovery  work  done  by  the  34       from  Mines, 
taxpayer,  the  portion  of  the  tax  imposed  by  this  section  35       Oil  and  Gas 
attributable  to  such  sale  shall  not  exceed  20  per  centum  36 
of  the  selling  price  of  such  property  or  interest.  37 

38 
Net  Income  Defined.  39 

40 

SECTION  212.     (a)  That  in  the  case  of  an  individual  41  Net  Income 
the  term  "net  income"  means  the  gross  income  as  de-  42       Definition 
fined  in  section  213,  less  the  deductions  allowed  by  sec-  43       How 
tion  214.  44      Computed 

(b)  The  net  income  shall  be  computed  upon  the  basis  45 
of  the  taxpayer's  annual  accounting  period  (fiscal  year  46 
or  calendar  year,  as  the  case  may  be)  in  accordance  47 
with  the  method  of  accounting  regularly  employed  in  48 
keeping  the  books  of  such  taxpayer;  but  if  no  such  49 
method  of  accounting  has  been  so  employed,  or  if  the  50 
method  employed  does  not  clearly  reflect  the  income,  the  51 
computation  shall  be  made  upon  such  basis  and  in  such  52 
manner  as  In  the  opinion  of  the  Commissioner  does  53 
clearly  reflect  the  income.  If  the  taxpayer's  annual  54 
accounting  period  is  other  than  a  fiscal  year  as  defined  55 
in  section  200  or  if  the  taxpayer  has  no  annual  ac-  56 
counting  period  or  does  not  keep  books,  the  net  Income  57 
shall  be  computed  on  the  basis  of  the  calendar  year.  B8 

59 


Change  of 
Accounting 
Period 


G-roMS  Xnoome 
Definition 


EKempt  Income 

Life  Insurance 
Policies 

Return  of 
Premium 


Gifts  and 
Bequests 

Interest  from 
Obligations 
of  State  and 
Political 
Subdivisions 

Federal 

Farm  Loans 
Obligation 
of  United 
States 


1  If   a   taxpayer   changes   his   accounting   period   from 

2  fiscal  year  to  calendar  year,  from  calendar  year  to  fiscal 

3  year,  or  from  one  fiscal  year  to  another,  the  net  Income 

4  shall,  with  the  approval  of  the  Commissioner,  be  com- 
6  puted  on  the  basis  of  such  new  accounting  period,  sub- 
6  ject  to  the  provisions  of  section  226. 

7 

8  G-ros«  Xncoxue  Defined. 

9 

10  SECTION   213.     That   for  the   purposes   of   this   title 

11  (except  as  otherwise  provided  In  section  233)  the  term 

12  "gross   income" — 

13  (a)  Includes  gains,  profits,  and  income  derived  from 

14  salaries?,  wag'es,  or  compensation  for  personal  service 
16  (including  in  the  case  of  the  President  of  the  United 
16  States,  the  judges  of  the  Supreme  and  Inferior  courts  of 
IT  the  United  States,  and  all  other  ofl^icers  and  employees, 

18  Avhether    elected    or    appointed,    of    the    United    States, 

19  Alaska,  Hawaii,  or  any  political  subdivision  thereof,  or 

20  the  District  of  Columbia,  the  compensation  received  as 

21  such)  of  whatever  kind  and  In  whatever  form  paid,  or 

22  from    professions,    vocations,    trades,    businesses,    com- 

23  merce,  or  sales,  or  dealings  In  property,  whether  real  or 
tf«  personal,  growing  out  of  the  ownership  or  use  of  or  In- 

25  terest  in  such  property;  also  from  interest,  rent,  divi- 

26  dends,    securities,   or   the    transaction   of   any   business 

27  carried  on  for  gain  or  profit,  or  gains  or  profits  and  In- 

28  come     derived     from     any     source     whatever.       The 

29  amount  of  all  such  items  shall  be  Included  in  the  gross 

30  income  for  the  taxable  year  In  which  received  by  the 

31  taxpayer,    unless,    under    methods    of    accounting    per- 

32  mitted  under  subdivision   (b)   of  section  212,  any  such 

33  amounts  are  to  be  properly  accounted  for  as  of  a  dlf- 

34  ferent  period;  but 

35  (b)  Does  not  Include  the  following  Items,  which  shall 

36  be  exempt  from  taxation  under  this  title: 

37  <  I)   The  proceeds  of  life  insurance  v'olicies  paid  upon 

38  the  death  of  the  insured  to  individual  beneficiaries  or 

39  to  the  estate  of  the  insured; 

40  (2)  The  amount  received  by  the  insured  as  a  return 

41  of  premium  or  premiums  paid  by  him  under  life  insur- 

42  ance,   endowment,   or  annuity   contracts,   either   during 

43  the  term  or  at  the  maturity  of  the  term  mentioned  In 

44  the  contract  or  upon  surrender  of  the  contract; 

45  (3)  The  value  of  property  acquired  by  gift,  bequest, 

46  devise,  or  descent  (but  the  Income  from  such  property 

47  shall  be  included  In  gross  Income) ; 

48  (4)   Interest    upon    (a)    the    obligations    of    a    State, 

49  Territory,  or  any  political  subdivision  thereof,  or  the 
60  District  of  Columbia;  or  (b)  securities  issued  under  the 

51  provisions  of  the  Federal  Farm  Loan  Act  of  July   17, 

52  1916;  or  (c)  the  obligations  of  the  United  States  or  Its 

63  possessions;   or   (d)   bonds  Issued  by  the  War  Finance 

64  Corporation:  Provided,  That  every  person  owninq-  any  of 
55  the  obligations,  securities  or  bonds  enumerated  In 
66  clauses  (a),  (b),  (o),  and  (d)  shall,  In  the  return  re- 
57  quii-ed  by  this  title,  submit  a  statement  showing  the 
68  number  and  amount  of  such  obligations,  securities  and 


GO 


bonds  owned  by  him  and  the  Income  received  there-  1 
from,  In  such  form  and  with  such  Information  as  the  2 
Commissioner  may  require.  In  the  case  of  obligations  3 
of  the  United  States  issued  after  September  1,  1917,  and  4 
in  the  case  of  bonds  issued  by  the  War  Finance  Cor-  5 
poratlon,  the  interest  shall  be  exempt  only  If  and  to  the  6 
extent  provided  in  the  respective  Acts  authorizing  the  7 
issue  thereof  as  amended  and  supplemented,  and  shall  8 
be  excluded  from  gross  income  only  if  and  to  the  extent  9 
it  is  wholly  exempt  from  taxation  to  the  taxpayer  both  10 
under  this  title  and   under  Title  III;  11 

(5)  The    income    of    foreign    governments    received  12  Income  of 
from  investments  in  the  United  States  in  stocks,  bonds,  13       Foreign 

or   other   domestic   securities,    owned   by    such   foreign  14       Governments 
governments,  or  from  interest  on  deposits  in  banks  in  15 
the  United  States  of  moneys  belonging  to  such  foreign  16 
governments,    or    from    any    other    source    within    the  17 
United  States;  18 

(6)  Amounts  received,  through  accident  or  health  in-  19  Accident, 
surance    or    under    workmen's    compensation    acts,    as  20       Health  and 
compensation  for  personal  injuries  or  sickness,  plus  the  21       Compensation 
amount  of  any  damages   received  whether  by  suit  or  22       Insurance 
agreement  on  account  of  such  injuries  or  sickness;  23 

(7)  Income   derived   from   any    public   utility   or   the  24  Income 
exercise   of   any    essential    governmental    function    and  25       Accruing 
accruing   to   any    State,    Territory,    or    the   District   of  26       to  State 
Columbia,    or   any   political   subdivision   of   a   State   or  27 
Territory,    or   income   accruing   to    the    government    of  28 

any  possession  of  the  United  States,  or  any  political  29 
subdivision  thereof.  30 

Whenever  any  State,  Territory,  or  the  District  of  31 
Columbia,  or  any  political  subdivision  of  a  State  or  32 
Territory,  prior  to  September  8,  1916,  entered  in  good  33 
faith  into  a  contract  with  any  person,  the  object  and  34 
purpose  of  which  is  to  acquire,  construct,  operate,  or  35 
maintain  a  public  utility,  no  tax  shall  be  levied  under  36 
the  provisions  of  this  title  upon  the  income  derived  37 
from  the  operation  of  such  public  utility,  so  far  as  38 
the  payment  thereof  will  impose  a  loss  or  burden  upon  39 
suoh  State,  Territory,  District  of  Columbia,  or  political  40 
subdivision;  but  this  provision  is  not  intended  to  confer  41 
upon  such  person  any  financial  gain  or  exemption  or  to  42 
relieve  such  person  from  the  payment  of  a  tax  as  pro-  43 
vided  for  in  this  title  upon  the  part  or  portion  of  such  44 
income  to  which  such  person  is  entitled  under  such  con-  45 
tract;  46 

(8)  So  much  of  the  amount  received  during  the  pres-  47  Income  of 

ent  war  by  a  person  in  the  military  or  naval  forces  of  48      Military  and 
the  United   States   as   salary   or  compensation  io   any  49      Naval  Forces 
form  from  the  United  States  for  active  services  In  such  50 
forces  as  does  not  exceed  $3,500.  51 

(c)   In    the    case    of    non-resident    alien    individuals,  52  Non-fes^L^eut 
gross    income    includes    only    the    gross    income    from  53       Alien — Gro^s 
sources  within  the  United  States,  including  interest  on  54       Income 
bonds,   notes,    or   other   interest-bearing   obligations   ojl  65       Defined 
residents,  corporate  or  otherwise,  dividends  from  resi-  56 
dent  corporations,  and  including  all  amounts  received  57 
(although  paid  under  a  contract  for  the  sale  of  goods  58 

61 


1  or  otherwise)   representing  profits  on  the  manufacture 

a  and  disposition  of  goods  within  the  United  States. 

3 

4 

6 

6  Seductions  AUowed. 

7 
Deductions  8      SECTION   214.     (a)  That    In    computing   net    income 

9  there  shall  be  allowed  as  deductions: 
Expenses  10      (1)  All  the  ordinary  and  necessary  expenses  paid  or 

II  incurred  during  the  taxable  year  in  carrying  on  any 
la  trade  or  business,  including  a  reasonable  allowance  for 

13  salaries   or   other   compensation    for   personal    services 

14  actually  rendered,  and  including  rentals  or  other  pay- 

15  ments  required  to  be  made  as  a  condition  to  the  con- 

16  tinued  use  or  possession,  for  purposes  of  the  trade  or 

17  business,  of  property  to  which  the  taxpayer  has  not 

18  taken   or   is   not  taking  title  or   In   which   he   has  no 

19  equity; 

Interest  on  20      (2)  All  interest  paid  or  accrued  within  the  taxable 

Indebtedness    21  year  on  indebtedness,  except  on  indebtedness  incurred 

22  or  continued  to  purchase  or  carry  obligations  or  securi- 

23  ties  (other  than  obligations  of  the  United  States  Issued 

24  after  September  24,  1917),  the  interest  upon  which  Is 

25  wholly   exempt   from   taxation   under   this   title  as   In- 

26  come  to  the  taxpayer,  or,  in  the  case  of  a  non-resident 

27  alien  Individual,  the  proportion  of  such  Interest  which 

28  the  amount  of  his   gross  Income  from  sources  within 

29  the  United  States  bears  to  the  amount  of  his  gross  In- 

30  come  from  all  sources  within  and  without  the  United 

31  States; 

Taxes  32      (3)  Taxes  paid  or  accrued  within  the  taxable  year 

33  imposed  (a)  by  the  authority  of  the  United  States,  ex- 

34  cept   income,    war   profits  and   excess-profits   taxes;   or 

35  (b)   by  the  authority  of  any  of  its  possessions,  except 

36  the  amount  of  Income,  war  profits  and  excess-profits 

37  taxes  allowed  as  a  credit  under  section  222;  or  (c)  by 

38  the  authority  of  any  State  or  Territory,  or  any  county, 
89  school  district,   municipality,   or  other  taxing  subdlvl- 

40  sion    of   any    State    or   Territory,   not   Including   those 

41  assessed  against  local  benefits  of  a  kind  tending  to  in- 

42  crease  the  value  of  the  property  assessed  r  or  (d)  In  the 

43  case  of  a  citizen  or  resident  of  the  United  States,  by  the 

44  authority  of  any  foreign   country,   except  the  amount 

45  of  income,  war-profits  and  excess-profits  taxes  allowed 

46  as  a  credit  under  section  222;  or  (e)  In  the  case  of  a 

47  non-resident  alien  Individual,  by  the  authority  of  any 

48  foreign  country  (except  income,  war-profits  and  excess< 

49  profits  taxes,  and  taxes  assesed  against  local  benefits  of 
60  K.  kind  tending  to  increase  the  value  of  the  property 
51  assessed),  upon  property  or  business; 

Cosset  62      (4)  Losses  sustained  during  the  taxable  year  and  not 

XsOsses  In  63  compensated  for  by  Insurance  or  otherwise.  If  Incurred 

Trade  64  In  trade  or  business; 

Losses  Not  65      (5)  Losses   sustained   during    the    taxable   year   and 

Connected  56  not  compensated  for  by  insurance  or  otherwise.  If  In- 
With  57  curred  In  any  transaction  entered  into  for  profit,  though 

Business  68  not  connected  with  the  trade  or  business;  but  In  the 


case  of  a  nonresident  alien   individual  only  as  to  such 
transactions  within   the  United   States; 

(6)  Losses  sustained  during-  the  taxable  year  of  prop- 
erty not  connected  with  the  trade  or  business  (but  in 
the  case  of  a  non-resident  alien  individual  only  prop- 
erty within  the  United  States)  if  arising  from  fires, 
storms,  shipwreck,  or  other  casualty,- ^r  from  theft, 
and  if  not  compensated  for  by  insurance  or  otherwise; 

(7)  Debts  ascertained  to  be  worthless  and  charged 
off  within   the   taxable  year; 

(8)  A  reasonable  allowance  for  the  exhaustion,  wear 
and  tear  of  property  used  in  the  trade  or  business,  in- 
cluding a  reasonable  allowance  for  obsolescence; 

(9)  In  the  case  of  buildings,  machinexT.  equipment, 
or  other  facilities,  constructed,  erected,  installed,  or 
acquired,  on  or  after  April  6,  1917,  for  the  production 
of  articles  contributing  to  the  prosecution  of  the  pres- 
ent war,  and  in  the  case  of  vessels  constructed  or  ac- 
quired on  or  after  such  date  for  the  transportation  of 
articles  or  men  contributing  to  the  pi'osecution  of  the 
present  war,  there  shall  be  allowed  a  reasonable  deduc- 
tion for  amortization  of  such  part  of  the  cost  of  such 
facilities  or  vessels  as  has  been  borne  by  the  tax- 
payer, but  not  again  including  any  amount  otherwise 
allowed  under  this  title  or  previous  Acts  of  Congi-est. 
as  a  deduction  in  computing  net  income.  At  any  time 
within  three  years  after  the  termination  of  the  pres- 
ent war,  the  Commissioner  may,  and  at  the  request  ot 
the  taxpayer  shall,  re-examine  the  return,  and  if  he 
then  finds  as  a  result  of  an  appi'aisal  or  from  other  evi- 
dence that  the  deduction  originally  allowed  was  incoi- 
rect,  the  taxes  imposed  by  this  title  and  by  Title  111 
for  the  year  or  years  affected  shall  be  redetermined; 
and  the  amount  of  tax  due  upon  such  redetermination, 
if  any,  shall  be  paid  upon  notice  and  demand  by  tlie 
collector,  or  the  amount  of  tax  overpaid,  if  any,  shall 
be  credited  or  refunded  to  the  taxpayer  in  accordance 
with  the  provisions  of  section  252;. 

(10)  In  the  case  of  mines,  oil  and  gas  wells,  other 
natural  deposits,  and  timber,  a  reasonable  allowance 
for  depletion  and  for  depreciation  of  improvements,  ac- 
cording to  the  peculiar  conditions  in  each  case,  based 
upon  cost  including  cost  of  development  not  otherwise 
deducted:  Provided,  That  in  the  case  of  such  properties 
acquired  prior  to  March  1,  1913,  the  fair  market  value 
of  the  property  (or  the  taxpayer's  interest  therein)  on 
that  date  shall  be  taken  in  lieu  of  cost  up  to  that  date: 
Provided  further,  That  in  the  case  of  mines,  oil  and  gas 
wells,  discovered  by  the  taxpayer,  on  or  after  March 
1,  1913,  and  not  acquired  as  the  result  of  purchase  of 
a  proven  tract  or  lease,  where  the  fair  market  vahu 
of  the  property  is  materially  disproportionate  to  the 
cost,  the  depletion  allowance  .shall  be  based  upon  thf 
fair  market  value  of  the  property  at  the  date  of  the 
discovery,  or  within  thirty  days  thereafter;  such  rea- 
sonable allowance  in  all  the  above  cases  to  be  made 
under  rules  and  regulations  to  be  prescribed  by  the 
Commissioner  with  the  approval  of  the  Secretary.      In 


Losses  from 
Fires,    Storm, 
Shipwrecks 


Bad  Debts 
Depreciation 


Depreciation  of 
Property,  etc. 
Constructed 
or  Acquired 
in  Connection 
With   War 


Mines,  Oil  and 
Gas  Wells- 
Depletion, 
Depreciation 


63 


1  the  case  of  leases  the  deductions  allowed  by  this  para- 

2  graph  shall  be  equitably  apportioned  between  the  lessor 
8  and  lessee; 

Gifts  to  4      (11)  Contributions  or  gifts  made  within  the  taxable 

Religious,  6  year  to  corporations  organized  and  operated  exclusively 

Charitable,  6  for  religious,  charitable,  scientific,  or  educational  pur- 

Scientific  and  7  poses,  or  for  the  prevention  of  cruelty  to  children  or 
Educational  8  animals,  no  part  of  the  net  earnings  of  which  inures  to 
Corporations      9  the  benefit  of  any  private  stockholder  or  individual,  or 

10  to    the   special   fund   for   vocational   rehabilitation    au- 

11  thorized  by  section  7  of  the  Vocational  Rehabilitation 
la  Act,  to  an  amount  not  in  excess  of  15  per  centum  of 

13  the    taxpayer's    net    income    as    computed    without    the 

14  benefit  of  this  paragraph.     Such  contributions  or  gifts 

15  shall  be  allowable  as  deductions  only  if  verified  under 

16  rules  and  regulations  prescribed  by  the  Commissioner, 

17  with  the  approval  of  the  Secretary.     In  the  case  of  a 

18  nonresident    alien    individual    this    deduction    shall    be 

19  allowed    only    as    to    contributions    or    gifts    made    to 

20  domestic   corporations,   or  to   such   vocational   rehablli- 

21  tation   fund; 

Losses  from         22      (12)   (a)  At  the  time  of  filing  return  for  the  taxable 
Decreased  23  year   1918   a   taxpayer   may   file   a  claim   in  abatement 

Value  of  24  based  on  the  fact  that  he  has  sustained  a  substantial 

Inventory,  25  loss  (whether  or  not  actually  realized  by  sale  or  other 
Rebates,  etc.     26  disposition)  resulting  from  any  material  reduction  (not 

27  due  to  temporary  fluctuation)  of  the  value  of  the  In- 

28  ventory  for  such  taxable  year,  or  from  the  actual  pay- 

29  ment  after  the  close  of  such  taxable  year  of  rebates 

30  In  pursuance  of  contracts  entered  into  during  such  year 

31  upon  sales  made  during  such  year.     In  such  case  pay- 

32  ment  of  the  amount  of  the  tax  covered  by  such  claim 

33  shall  not  be  required  until  the  claim  is  decided,  but  the 

34  taxpayer   shall   accompany   his    claim   with   a   bond    In 

35  double  the  amount  of  the  tax  covered  by  the  claim,  with 

36  sureties   satisfactory   to   the   Commissioner,   conditioned 

37  for  the  payment  of  any  part  of  such  tax  found  to  be 

38  due,  with  Interest.  If  any  part  of  such  claim  Is  dis- 
89  allovved    then    the    remainder   of    the    tax    due    shall    on 

40  notice  and  demand  by  the  collector  be  paid  by  the  tax- 

41  payer   with   Interest,   at   the   rate   of   1    per   centum   per 

42  month  from  the  time  the  tax  would  have  been  due  had 
48  no  such  claim  been  filed.  If  it  Is  shown  to  the  satls- 
44  faction  of  the  Commissioner  that  such  substantial  less 
46  has  been  sustained,  then  in  computing  the  tax  imposed 

46  by  this  title  the  amount  of  such  loss  shall  be  deducted 

47  from  the  net  income,     (b)  If  no  such  claim  Is  filed,  but 

48  it  is  shown  to  the  satisfaction  of  the  Commissioner  that 
40  during  the  taxable  year  1919  the  taxpayer  has  sus- 
50  tained    a    substantial    loss    of   the    character   above   de- 

61  scribed  then  the  amount  of  such  loss  shall  be  deducted 

62  from  the  net  income  for  the  taxable  year  1918  and  the 

63  tax    imposed   by   this   title   for   such  year   shall    be   re- 
Non-resident        54  determined  accordingly.     Any  amount  found  to  be  due 

Alien  55  to  the  taxpayer  upon  the  basis  of  such  redetermination 

Individuals —  66  shall   be  credited   or   refunded   to   the   taxpayer   In   ac- 
Deductions        57  cordance  with  the  provisions  of  Section  252. 
Allowed  68      (b)   In  the  case  of  a  nonresident  alien  individual  the 


64 


deductions  allowed  in  paragraphs  (1),  (4),  (7),  (8),  (9),  1 
(10),  (12)  and  clause  (e)  of  paragraph  (3),  of  subdivi-  2 
sion  (a)  shall  be  allowed  only  if  and  to  the  extent  that  G 
they  are  connected  with  income  arising  from  a  source  4 
within  the  United  States;  and  the  proper  apportionment  5 
and  allocation  of  the  deductions  with  respect  to  sources  6 
of  income  within  and  without  the  United  States  shall  be  7 
determined  under  rules  and  regulations'  prescribed  by  8 
the  Commissioner  with  the  approval  of  the  Secretary.  9 

10 
Ztems  Not  Deductible.  11 

12 
SECTION    215.     That    in    computing    net    income    no  13  Items  Not 
deduction  shall  in  any  case  be  allowed  in  respect  of —      14       Deductible 

(a)  Personal,   livingr,   or  family  expenses;  15 

(b)  Any  amount  paid  out  for  new  buildings  or  for  16 
permanent  improvements  or  betterments  made  to  in-  17 
crease  the  value  of  any  property  or  estate;  18 

(c)  Any  amount  expended  in  restoring  property  or  in  19 
making  good  the  exhaustion  thereof  for  which  an  al-  20 
lowance  is  or  has  been  made;  or  21 

(d)  Premiums  paid  on  any  life  insurance  policy  cov-  22 
ering  the  life  of  any  officer  or  employee,  or  of  any  per-  23 
son  financially  interested  in  any  trade  or  business  car-  24 
Tied  on  by  the  taxpayer,  when  the  taxpayer  is  directly  25 
or  indirectly  a  beneficiary  under  such  policy,  26 

27 
Ci'edits   Allowed.  28 

29 
SECTION  216.     That  for   the  purpose  of  the  normal  30  Credits 
tax  only  there  shall  be  allowed  the  following  credits:      31       Allowed — 

(a)  The  amount  received  as   dividends  from  a   cor-  32       Dividends 
poration    which    is    taxable    under    this    title    upon    its  33 

net  income,  and  amounts  received  as  dividends  from  a  34 
personal  service  corporation  out  of  earnings  or  profits  35 
upon  which  income  tax  has  been  imposed  by  Act  of  36 
Congress;  37 

(b)  The  amount  received  as  interest  upon  obligations  38  Obligations  of 
of  the  United  States  and  bonds  issued  by  the  War  39  U.  S. — ^When 
Finance  Corporation,  which  is  Included  in  gross  income  40 

under  section  213;  41 

(c)  In   the  case  of   a  single   person,  a  personal   ex-  42  Personal 
emptlon   of    $1,000,    or   in    the   case   of   the   head   of   a  43       Exemption 
family  or  a  married  person  living  with  husband  or  wife,  44 

a  personal  exemption  of  $2,000.  A  husband  and  wife  46 
living  together  shall  receive  but  one  personal  exemption  46 
of  $2,000  against  their  aggregate  net  income;  and  In  47 
case  they  make  separate  returns,  the  personal  ex-  48 
emption  of  $2,000  may  be  taken  by  either  or  divided  49 
between  them;  60 

(d)  $200  for  each  person  (other  than  husband  or  61 
wife)  dependent  upon  and  receiving  his  chief  support  62 
from  the  taxpayer,  if  such  dependent  person  Is  under  53 
eighteen  years  of  age  or  is  incapable  of  self-support  54 
because  mentally  or  physically   defective.  55 

(e)  In  the  case  of  a  nonresident  alien  individual  who  56  Non-resident 
Is  a  citizen  or  subject  of  a  country  which  Imposes  an  57      Aliens 
Income  tax,  the  credits  allowed  In  subdivisions  (c)  and  68 

65 


1  (d)  shall  be  allowed  only  If  such  country  allows  a 
a  similar  credit  to  citizens  of  the  United  States  not  reald- 
3  Ing  in  such  country. 


Non-resident 
Aliens — 
Deductions 
and  Credits 
Allowed 


Partnerships 
and  Personal 
Service 
Corporations 


Fiscal  Year 
Other  Than 
Calendar 
Year 


6  Nonresident     Aliens — Allowance     of     Dednctlons     and 

6  Credits. 

7 

8  SECTION  217.     That  a   nonresident  alien   individual 

9  shall  receive  the  benefit  of  the  deductions  and  credits 

10  allowed   in   this   title  only   by   filing   or  causing   to   be 

11  filed  with  the  collector  a  true  and  accurate  return  of 

12  his  total  income  received  from  all  sources  corporate  or 

13  otherwise    in    the    United    States,    in    the    manner    pre- 

14  scribed  by  this  title,  including  therein  all  the  informa- 
16  tion  which  the  Commissioner  may  deem  necessary  for 

16  the   calculation    of   such   deductions   and   credits:    Pro- 

17  vided,  That  the  benefit  of  the  credits  allowed  in  sub- 

18  divisions   (c)   and    (d)   of  section   216  may,  in  the  dis- 

19  cretion  of  the  Commissioner,  and  except  as  otherwise 

20  provided  in  subdivision  (e)  of  that  section,  be  received 
ai  by  filing  a  claim  therefor  with  the  withholding  agent. 

22  In  case  of  failure  to  file  a  return,  the  collector  shall 

23  collect  the  tax  on   such   income,   and   all   property   be- 

24  longing   to    such   nonresident  alien    individual   shall   be 

25  liable  to  distraint  for  the  tax. 
26 

27       Partnerships  and  Personal  Service  Corporations. 
28 

29  SECTION     218.      (a)  That     individuals     carrying    on 

30  business  in  partnership  shall  be  liable  for  Income  tax 

31  only   in   their  individual  capacity.     There  shall   be  In- 

32  eluded   in   computing   the   net   income   of   each   partner 
38  his   distributive   share,    whether  distributed   or  not,   of 

34  the  net  income  of  the  partnership  for  the  taxable  year, 

35  or,  if  his  net  income  for  such  taxable  year  is  computed 

36  upon  the  basis  of  a  period  different  from  that  upon  the 

37  basis  of   which   the   net  income  of   the   partnership   is 

38  computed,  then  his  distributive  share  of  the  net  income 
89  of   the   partnership   for   any   accounting  period   of   the 

40  partnership  ending  within   the  fiscal  or  calendar  year 

41  upon   the  basis   of  which   the   partner's  net  income   is 

42  computed. 

43  The    partner   shall,    for    the    purpose   of    the    normal 

44  tax,   be  allow^ed   as  credits,   in   addition   to   the  credits 

45  allowed    to    him    under    section    216,    his    proportionate 

46  share  of  such  amounts  specified  in  subdivisions  (a)  and 

47  (b)  of  section  216  as  are  received  by  the  partnership. 

48  (b)  If  a  fiscal  year  of  a  partnership  ends  during  a 

49  calendar  year  for  which  the  rates  of  tax  differ  from 

50  those   for   the   preceding   calendar   year,    then    (1)    the 

51  rates  for  such  preceding  calendar  year  shall  apply  to 

52  an  amount  of  each  partner's  share  of  such  partnership 

53  net  Income  equal   to  the   proportion   which  the  part  of 

54  such  fiscal  year  falling  within  such  calendar  year  bears 

55  to  the  full  fiscal  year,  and    (2)    the  rates  for  the  cal- 

56  endar  year   during   which    such   fiscal  year   ends   shall 

57  apply  to  the  remainder. 

58  (c)  In  the  case  of  an  individual  member  of  a  part- 


66 


nership  which  makes  return  for  a  fiscal  year  beginning  1 
in  1917  and  ending  in  1918,  his  proportionate  share  of  2 
any  excess  profits  tax  imposed  upon  the  partnership  3 
under  the  Revenue  Act  of  1917  with  respect  to  that  4 
part  of  such  fiscal  year  falling  in  1917,  shall,  for  the  a 
the  purpose  of  determining  the  tax  imposed  by  this  C 
title,  be  credited  against  that  portion  of  the  net  income  7 
embi-aced  in  his  personal  return  for  the  taxable  year  8 
1918  to  which  the  rates  for  1917  apply.  9 

(d)  The  net  income  of  the  partnership  shall  be  com-  10  Partnership 
puted  in   the  same  manner  and  on   the  same  basis  as  11       Income — 
provided    in    section    212,    except    that    the    deduction  12       How 
provided  in  paragraph  (11)   of  subdivision   (a)  of  sec-  13       Computed 
tion  214  shall  not  be  allowed.  14 

(e)  Personal  service   corporations   shall  not  be  sub-  15  Personal 
ject    to    taxation    under    this    title,   but    the    individual  16       Service 
stockholders  thereof  shall  be  taxed  in  the  same  manner  17      Corporation — 
as   the   members   of   partnerships.     All   the   provisions  13       Individual 

of  this  title  relating  to  partnerships  and  the  members  19       Stockholders 
thereof  shall  so  far  as   practicable  apply   to   personal  20       Taxed  the 
service     corporations    and     the     stockholders     thereof:  21       Same  as 
Provided,    That    for    the    purpose    of    this    subdivision  22       Partnerships 
amounts  distributed  by  a  personal  service  corporation  23 
during  Its  taxable  year  shall  be  accounted  for  by  the  24 
distributees;  and  any  portion  of  the  net  Income  remain-  25 
ing  undistributed  at  the  close  of  its  taxable  year  shall  £6 
be  accounted  for  by  the  stockholders  of  such  corpora-  27 
tion  at  the  close  of  its  taxable  year  in  proportion  to  £3 
their  respective  shares.  £9 

Estates  and  Trusts.  31 

S2 
SECTION  219.     (a)  That  the  tax  Imposed  by  sections  33  Estates  and 
210  and  211  shall  apply  to  the  Income  of  estates  or  of  34      Trusts — 
any  kind  of  property  held  In  trust,  inoluding —  35       Taxable 

(1)  Income  received  by  estates  of  deceased  persons  36  Income 
during  the  period  of  administration  or  settlement  of  37  Defined 
the  estate;  33 

(2)  Income  accumulated  in  trust  for  the  benefit  of  39 
unborn  or  unascertained  persons  or  persons  with  con-  40 
tlngent  Interests;  41 

(3)  Income  held  for  future  distribution  under  the  43 
terms  of  the  will  or  trust;  and  43 

(4)  Income  which  is  to  be  distributed  to  the  bene-  44 
flciaries  periodically,  whether  or  not  at  regular  Inter-  15 
vals,  and  the  Income  collected  by  a  guardian  of  an  -13 
infant  to  be  held  or  distributed  as  the  court  may  ^I7 
direct.  43 

(b)  The   fiduciary    shall   be    responsible    for   making  49  Returns — 
the  return  of  Income  for  the  estate  or  trust  for  which  50       Computation 
he  acts.     The  net  Income  of  the  estate  or  trust  shall  51       of  locome 
be  computed  In  the  same  manner  and  on  the  same  basis  52 
as  provided  In  section  212,  except  that  there  shall  also  bS 
be  allowed  as  a  deduction  (in  lieu  of  the  deduction  au-  £4 
thorlzed  by  paragraph   (11)   of  subdivision   (a)   of  sec-  £;;3 
tion  214)  any  part  of  the  gross  income  which,  pursuant  £G 
to  the  terms  of  the  will  or  deed  creating  the  trust,  is  57 
during   the   taxable   year   paid   to   or   permanently   set  53 


67 


1  aside  for  the  United  States,  any  State,  Territory,  or  any 

2  political    subdivision    thereof,    or    the    District    of    Co- 

3  lumbia,  or  any  corporation  organized  and  operated  ex- 

4  clusively  for  religious,  charitable,   scientific,  or  educa- 

5  tional   purposes,   or   for   the    prevention    of    cruelty   to 

6  children   or   animals,   no    part   of   the   net   earnings   of 

7  which  inures  to  the  benefit  of  any  private  stockholder 

8  or  Individual;  and  in  cases  under  paragraph  (4)  of  sub- 

9  division   (a)   of  this  section  the  fiduciary  shall  include 

10  in    the    return    a    statement    of    each    beneficiary's    dls- 

11  tributive  share  of  such  net  income,  whether  or  not  dis- 

12  tributed  before  the  close  of  the  taxable  year  for  which 

13  the  return  is  made. 

Tax  to  Be  Paid      14       (c)   In    cases    under    paragraph    (1),    (2),    or    (3)    of 
by  Fiduciary     15  subdivision    (a)    the    tax    shall    be    imposed    upon    the 

16  net    Income   of    the   estate   or   trust   and    shall   be   paid 

17  by    the   fiduciary,    except    that    in    determining    the    net 

18  Income   of   the    estate    of   any    deceased    person    during 

19  the  period  of  administration  or  settlement  there  may  be 

20  deducted   the  amount  of  any   income   properly   paid   or 
ai  credited  to  any  legatee,  heir  or  other  beneficiary.     In 

22  such  cases  the  estate  or  trust  shall,  for  the  purpose  of 

23  the   normal   tax,   be   allowed   the   same   credits   as   are 
2^  allowed  to  single  persons  under  section  216. 

Income  of  25      (d)   In    cases    under    paragraph     (4)     of    subdivision 

Estate  26  (a),  and  in  the  case  of  any  income  of  an  estate  during 

During  27  the   period   of   administration   or    settlement   permitted 

Period  of  Ad-  28  by  subdivision  (c)  to  be  deducted  from  the  net  income 
ministration     29  upon  which  tax  is  to  be  paid  by  the  fiduciary,  the  tax 

30  shall  not  be  paid  by  the  fiduciary,  but  there  shall  be 

31  Included   in   computing   the   net   income   of   each  bene- 
38  ficiary    his   distributive    share,    whether   distributed    or 

33  not,  of  the  net  income  of  the  estate  or  trust  for  the 

34  taxable   year,    or,    if   his   net   Income   for   such   taxable 

35  year  Is  computed  upon  the  basis  of  a  period  different 
38  from  that  upon  the  basis  of  which  the  net  income  of 

37  the  estate  or  trust  is  computed,  then  his  distributive 

38  share  of  the  net  income  of  the  estate  or  trust  for  any 
89  accounting  period  of  such  estate  or  trust  ending  within 

40  the   fiscal   or  calendar  year   upon    the   basis   of  which 

41  such   beneficiary's   net    income    is   computed.      In    such 

42  cases    the    beneficiary    shall,    for    the    purpose    of    the 

43  normal   tax,   be   allowed   as   credits   In   addition    to   the 

44  credits  allowed  to  him  under  section  216,   his   propor- 
46  tlonate  share  of  such  amounts  specified  In  subdivisions 

46  (a)    and    (b)    of    section    216    as   are    received    by    the 

47  estate   or   trust. 
48 

49        Profits  of  CorporationB  Taza1)l«  to  Stockholders. 
60 
Accumulated        51      SECTION    220.     That    if    any    corporation,    however 
Profits  of  52  created  or  organized.   Is  formed  or  availed  of  for  the 

Corporation  53  purpose  of  preventing  the  Imposition  of  the  surtax 
Taxable  to  54  upon  its  stockholders  or  members  through  the  medium 
Stockholders    53  of    permitting    its    gains    and    profits    to    accumulate 

56  instead  of  being  divided   or  distributed,   such  corpora- 

57  tion  shall  not  be  subject  to  the  tax  Imposed  by  section 
68  230,  but  the  stockholders  or  jnembers  thereof  shall  be 


68 


subject  to  taxation  under  this  title  in  the  same  manner  1 
as  provided  in  subdivision  (e)  of  section  218  in  the  case  2 
of  stoclcholders  of  a  personal  service  corporation,  except  3 
that  the  tax  imposed  by  Title  III  shall  be  deducted  4 
from  the  net  income  of  the  corporation  before  the  com-  5 
putation  of  the  pz'oportionate  share  of  each  stockholder  6 
or  member.  The  fact  that  any  corporation  is  a  mere  7 
holding  company,  or  that  the  gains  and  profits  8 
are  permitted  to  accumulate  beyond  the  reasonable  9 
needs  of  the  business,  shall  be  prima  facie  evidence  of  10 
a  purpose  to  escape  the  surtax;  but  the  fact  that  the  11 
gains  and  profits  are  in  any  case  permitted  to  accumu-  13 
late  and  become  surplus  shall  not  be  construed  as  13 
evidence  of  a  purpose  to  escape  the  tax  in  such  case  14 
unless  the  Commissioner  certifies  that  In  his  opinion  15 
such  accumulation  Is  unreasonable  for  the  purposes  16 
of  the  business.  When  requested  by  the  Commissioner.  17 
or  any  collector,  every  corporation  shall  forward  to  18 
him  a  correct  statement  of  such  gains  and  profits  and  19 
the  names  and  addresses  of  the  individuals  or  share-  20 
holders  who  would  be  entitled  to  the  same  if  divided  21 
or  distributed,  and  of  the  amounts  that  would  be  22 
payable    to    each.  23 

24 
Payment  of  Tax  at  Source.  25 

26 

SECTION    221.     (a)  That    all    Individuals,    corpora- 27  PaymentB  of 
tions    and    partnerships,    in    whatever   capacity    acting.  28       Tax  at 
including    lessees    or   mortgagors    of    real    or    personal  29       Source — Tax 
property,    fiduciaries,    employers,    and    all    ofEicers    and  30       on  Income  of 
employees    of    the   United    States,    having    the    control,  31       Non-resident 
receipt,  custody,  disposal,  or  payment,  of  Interest,  rent,  32       Alien 
salaries,    wages,    premiums,    annuities,    compensations,  33       Individual 
remunerations,  emoluments,  or  other  fixed  or  determin-  34       to  Be 
able    annual    or    periodical    gains,    profits,    and    Income,  35       Withheld 
of  any  nonresident  alien  individual  (other  than  Income  36 
received    as    dividends    from    a    corporation    which    If  37 
taxable  under  this  title  upon  Its  net  Income,  shall  (ex-  38 
cept  in  the  cases  provided  for  in  subdivision    (b)   and  39 
except  as  otherwise  provided  In  regulations  prescribed  40 
by   the   Commissioner    under    section    217)    deduct   and  41 
withhold  from  such  annual  or  periodical  gains,  profits^  42 
and  income  a  tax  equal  to  8  per  centum  thereof:     Pro-  43 
vided.  That  the  Commissioner  may  authorize  such  tax  44 
to   be   deducted   and   withheld    from    the    interest    upon  45 
any  securities  the  owners  of  which  are  not  known   tc  46 
the  withholding  agent.  47 

(b)   In  any  case  where  bonds,  mortgages,  or  deeds  of  48  Bonds 
trust,    or    other    similar    obligations    of    a    corporation  49       Oontaiaxingr 
contain   a   contract  or   provision   by   which   the   obligor  50       Tax-free 
agrees  to  pay  any  portion  of  the  tax  Imposed  by  this  51       Covenant- 
title  upon  the  obligee,  or  to  reimburse  the  obligee  for  52       Tax  on 
any  portion  of  the  tax,  or  to  pay  the  interest  without  53       Interest  at 
deduction    for  any   tax   which   the   obligor   may   be   re- 54       Rate  of  2% 
quired  or  permitted  to  pay  thereon  or  to  retain  there-  55       to  Be 
from  under  any  law  of  the  United  States,  the  obligor  56      Withheld  and 
shall  deduct  and  withhold  a  tax  equal  to  2  per  centum  67      Paid  for 
of  the   Interest  upon   such  bonds,   mortgages,  deeds  of  58      Citizens  and 


69 


Residents, 

1 

Partnerships, 

2 

Nonresident 

3 

and  Allen 

4 

inaividuals 

6 

6 

7 

i> 

9 

10 

11 

12 

13 

1-5 

15 

16 

17 

Returns  of 

18 

Taxes 

19 

Withheld 

20 

21 

22 

23 

24 

25 

20 

27 

28 

Credit  for  Tax 

29 

Withheld 

30 

31 

32 

33 

34 

35 

36 

37 

38 

39 

40 

41 

42 

43 

44 

45 

48 

Credit  for 

47 

Taxes — 

48 

Citizen 

49 

ro 

PI 

na 

C3 

Resident 

64 

55 

F  .' 

Allen 

B7 

Resident 

58 

trust,  or  other  obligations,  whether  such  interest  is 
payable  annually  or  at  shorter  or  longer  periods  and 
whether  payable  to  a  nonresident  alien  individual  or 
to  an  individual  citizen  or  resident  of  the  United  States 
or  to  a  partnership:  Provided,  That  the  Commissioner 
may  authorize  such  tax  to  be  deducted  and  withheld 
in  the  case  of  Interest  upon  any  such  bonds,  mort- 
gages, deeds  of  trust  or  other  obligations,  the  owners 
of  which  are  not  known  to  the  withholding  agent.  Such 
deduction  and  withholding  shall  not  be  required  in  the 
case  of  a  citizen  or  resident  entitled  to  receive  such 
interest,  if  he  files  v/ith  the  withholding  agent  on  or 
before  February  1,  a  signed  notice  in  writing  claiming 
the  benefit  of  the  credits  provided  in  subdivisions  (c) 
and  (d)  of  section  216;  nor  in  the  case  of  a  nonresident 
alien  Individual  if  so  provided  for  In  regulations  pre- 
scribed by  the  Commissioner  under  section  217. 

(c)  Every  individual,  corporation,  or  partnership  re- 
quired to  deduct  and  withhold  any  tax  under  this  sec- 
tion shall  make  return  thereof  on  or  before  March  first 
of  each  year  and  shall  on  or  before  June  15th  pay 
the  tax  to  the  oflicial  of  the  United  States  Govern- 
ment authorized  to  receive  it.  Every  such  individual, 
corporation,  or  partnership  is  hereby  made  liable  for 
such  tax  and  is  hereby  indemnified  against  the  claims 
and  demands  of  any  individual,  corporation,  or  part- 
nership for  the  amount  of  any  payments  made  In  ac- 
cordance with   the   provisions  of  this  section. 

(d)  Income  upon  which  any  tax  is  required  to  be 
withheld  at  the  source  under  this  section  shall  be  In- 
cluded In  the  return  of  the  recipient  of  such  income, 
but  any  amount  of  tax  so  withheld  shall  be  credited 
against  the  amount  of  income  tax  as  computed  In  such 
return. 

(e)  If  any  tax  required  under  this  section  to  be  de- 
ducted and  withheld  is  paid  by  the  recipient  of  the 
income,  it  shall  not  be  re-collected  from  the  withhold- 
ing agent;  nor  in  cases  in  which  the  tax  is  so  paid 
shall  any  penalty  be  imposed  upon  or  collected  from 
the  recipient  of  the  income  or  the  withholding  agent 
for  failure  to  return  or  pay  the  same,  unless  such 
failure  was  fraudulent  and  for  the  purpose  of  evading 
payment. 

Credit  for  Taxes. 

SECTION  222.  (a)  That  the  tax  computed  under 
Part  II  of  this  title  shall  be  credited  with: 

(1)  In  the  case  of  a  citizen  of  the  United  States,  the 
amount  of  any  Income,  war-profits  and  excess-profits 
taxes  paid  during  the  taxable  year  to  any  foreign 
country,  upon  income  derived  from  sources  therein,  or 
to  any  possession  of  the  United  States;  and 

(2)  In  the  case  of  a  resident  of  the  United  States, 
the  amount  of  any  such  taxes  paid  during  the  taxable 
year  to  any  possession  of  the  United  States;  and 

(3)  In  the  case  of  an  alien  resident  of  the  United 
States  who  Is  a  citizen  or  subject  of  a  foreign  country. 


70 


the  amount  of  any  such  taxes  paid  or  accrued  during 
tlie  taxable  year  to  such  country,  upon  income  derived 
from  sources  therein,  if  such  country,  in  imposing  such 
taxes,  allows  a  similar  credit  to  citizens  of  the  United 
States  residing  in  such  country;  and 

(4)  In  the  case  of  any  such  individual  who  is  a  mem- 
ber of  a  partnership  or  a  beneficiary  of  an  estate  or 
trust,  his  proportionate  share  of  such"  taxes  of  the  8 
partnership  or  the  estate  or  trust  paid  during  the  tax-  9 
able  year  to  a  foreign  country  or  to  any  possession  of  10 
the  United  States,  as  the  case  n»ay  be.  H 

(b)  If  accrued  taxes  when  paid  differ  from  the  12 
amounts  claimed  as  credits  by  the  taxpayer,  or  if  any  13 
tax  paid  is  refunded  in  whole  or  in  part,  the  taxpayer  14 
shall  notify  the  Commissioner  who  shall  redetermine  15 
the  amount  of  the  tax  due  under  Part  II  of  this  title  16 
for  the  year  or  years  affected,  and  the  amount  of  17 
tax  due  upon  such  redetermination,  if  any,  shall  be  18 
paid  by  the  taxpayer  upon  notice  and  demand  by  the  19 
collector,  or  the  amount  of  tax  overpaid,  if  any,  shall  20 
be  credited  or  refunded  to  the  taxpayer  in  accordance  21 
with  the  provisions  of  Section  252.  In-  the  case  of  22 
such  a  tax  accrued  but  not  paid,  the  Commis«5ioner  as  23 
a  condition  precedent  to  the  allowance  of  this  credit  24 
may  require  the  taxpayer  to  give  a  bond  with  sureties  25 
satisfactory  to  and  to  be  approved  by  the  Commissioner  26 
in  such  penal  sum  as  the  Commissioner  may  require,  27 
conditioned  for  the  payment  by  the  taxpayer  of  any  28 
amount  of  tax  found  due  upon  any  such  redetermine  •  29 
tion;  and  the  bond  herein  prescribed  shall  contain  30 
such  further  conditions  as  the  commissioner  may  re-  31 
quire.  32 

(c)  These  credits  shall  be  allowed  only  If  the  tax-  33 
payer  furnishes  evidence  satisfactory  to  the  Commls-  34 
sioner  showing  the  amount  of  Income  derived  from  35 
sources  within  such  foreign  country  or  such  possession  36 
of  the  United  States,  and  all  other  information  nece»-  37 
sary  for  the  computation   of  such  credits.  38 

39 

40 

41 

Individual  Retnrns.  42 

43 
SECTION  223.  That  every  individual  having  a  net  44 
Income  for  the  taxable  year  of  $1,000  or  over  If  single  '^5 
or  if  married  and  not  living  with  husband  or  wife,  46 
or  of  ?2,000  or  over  If  married  and  living  with  hus-  47 
band  or  wife,  shall  make  under  oath  a  return  stating  48 
specifically  the  items  of  his  gross  income  and  the  49 
deductions  and  credits  allowed  by  this  title.  If  a  hus-  BO 
band  and  wife  living  together  have  an  aggregate  net  61 
income  of  $2,000  or  over,  each  shall  make  such  a  return  52 
unless  the  income  of  each  Is  included  In  a  single  joint  53 
return.  54 

If  the  taxpayer  Is  unable  to  make  his  own  return,  55 
the  return  shall  be  made  by  a  duly  authorized  agent  56 
or  by  the  guardian  or  other  person  charged  with  the  57 
care  of  the  person   or  property  of  such  taxpayer.  58 


Individual 
Partner, 
Beneficiary 


When 

Amount  of 
Tax  Differs 
From 
Amount 
Claimed  as 
Credit 


Satisfactory 
Evidence 
Required 


Retnms — 
Individual 


Return  by 
Agent 


fc^  ca 

i 


71 


Partnership   Returns. 


1 
2 
Partnership  3      SECTION   224.     That   every   partnership   shall   make 

Returns  4  a  return  for  each  taxable  year,  stating  specifically  the 

6  Items  of  its  gross  Income  and  the  deductions  allowed 

6  by  this  title,  and  shall  include  in  the  return  the  names 

7  and  addresses  of  the  Individuals  who  would  be  entitled 

8  to    share    in    the    net    income    if    distributed    and    the 

9  amount   of   the   distributive   share   of   each   individual. 

10  The    return    shall    be    sworn    to    by    any    one    of    the 

11  partners. 

12  Fiduciary  Returns. 
13 

Fiduciary  14      SECTION     225.     That     every     fiduciary     (except     re- 

Returns  15  ceivers  appointed  by  authority  of  law  in  possession  of 

16  part  only  of  the  property  of  an  individual)   shall  make 

17  under  oath  a  return  for  the  individual,  estate  or  trust 

18  for    which    he    acts    (1)    if    the    net    income    of    such 

19  individual  is  $1,000  or  over  if  single  or  if  married  and 

20  not  living  with  husband   or  wife,   or   $2,000  or  over   if 

21  married  and  living  with  husband  or  wife,  or  (2)   if  tlie 

22  net  Income  of   such  estate   or   trust  is   $1,000  or  over 

23  or  if  any  beneficiary  of  such  estate  or  trust  is  a  non- 
24  resident    alien,    stating    specifically    the    items    of    the 

26  gross  income  and   the   deductions  and   credits   allowed 
28  by    this    title.      Under    such    regulations    as    the    Com- 

27  missioner    with    the    approval    of    the    Secretary    may 

28  prescribe,  a  return  made  by  one  of  two  or  more  joint 

29  ^duciaries  and  filed  in  the  office  of  the  collector  of  the 

30  Ustrict  where   such  fiduciary  resides   shall   be  a   suffi- 

31  cient    compliance    with    the    above    requirement.      The 

32  fiduciary  shall  make  oath  that  he  has  sufficient  knowl- 

33  edge  of  the  affairs  of  such  individual,   estate  or  trust 

34  to  enable  him  to  make  the  return,   and   that  the  same 

35  is,   to  the  best  of  his  knowledge  and  belief,   true  and 

36  correct. 

37  Fiduciaries  required  to  make  returns  under  this  Act 

38  shall    be    subject    to    all    the    provisions    of    this    Act 

39  which  apply  to  individuals. 


41  Returns  When  Accounting'  Period  Changed. 

42 

Return  When  43  SECTION  226.  Tliat  if  a  taxpayer,  with  the  ap- 
Accounting  44  proval  of  the  Commissioner,  changes  the  basis  of  corn- 
Period  45  puting  net  income  from  fiscal  year  to  calendar  year 
Changed  '^"  a    separate    return    shall    be    made    for    the    period    be- 

47  Lween  the  close  of  the  last  fiscal  year  for  which  return 

48  was    made    and    the    following    December    31.      If    the 

49  change  is  from  calendar  year  to  fiscal  year,  a  separate 

50  return  shall  be  made  for  the  period  between  the  close 

51  of  the   last  calendar  year  for  which  return   was  made 

52  and  the  date  designated  as  the  close  of  the  fiscal  year. 

53  If  the  change  is  from  one  fiscal  year  to  another  fiscal 

54  year  a   separate   return    shall   be   made   for   the   period 

55  between   the   close   of   the   former   fiscal   year  and   the 

56  date  designated  as  the  close  of  the  new  fiscal  year.     If 

57  V  taxpayer  making  his  first  rettirn  for  income  tax  keeps 

58  his  accounts  on  the  basis  of  a -fiscal  year  he  shall  make 


72 


a  separate  return  for  the  period  between  the  beginning  1 
of  the  calendar  year  in  whicli  such  fiscal  year  ends  2 
and  the  end  of  such  fiscal  year.  3 

In  all  of  the  above  cases  the  net  Income  shall  be  4 
computed  on  the  basis  of  such  period  for  which  sep-  5 
arate  return  Is  made,,  and  the  tax  shall  be  paid  thereon  6 
at  the  rate  for  the  calendar  year  in  which  such  period  7 
is  included;  and  the  credits  provided  in  subdivisions  8 
(c)  and  (d)  of  section  216  shall  be  reduced  respec-  9 
tively  to  amounts  which  bear  the  same  ratio  to  the  10 
full  credits  provided  in  such  subdivisions  as  the  num-  11 
ber  of  months  in  such  period  bears  to  twelve  months.        12 

18 
Time  and  Place  for  Filing'  Returns.  14 

16 
SECTION    227.      (a)   That   returns   shall   be   made   on  16  Time  nad 
or  before  the  fifteenth  day  of  the  third  month  follow-  17       Place   for 
ing   the   close    of   the   fiscal   year,    or,    if    the   return    is  13       Filing 
made  on  the  basis  of  the  calendar  year,  then  the  return  19       Returns 
shall  be  made  on  or  before  the  fifteenth  day  of  March.  20 
The   Commissioner    may    grant   a    reasonable   extension  21 
of   time   for   filing   returns    whenever    in    his   judgment  22 
good    cause    exists    and    shall    keep    a    record    of    every  23 
such  extension  and  the  reason  therefor.     Except  in  the  24 
case   of  taxpayers  who   are  abroad,   no   such   extension  25 
shall  be  for  more  than  six  months.  26 

(b)  Returns  shall  be  made  to  the  collector  for  the  27 
district  in  which  is  located  the  legal  residence  or  28 
principal  place  of  business  of  the  person  making  the_29 
return,  or,  if  he  has  no  legal  residence  or  principal  30 
place  of  business  in  the  United  States,  then  to  the  31 
collector  at   Baltimore,   Maryland.  32 

33 
Vnaerstatement   in   Returns.  34 

35 
SECTION  228.     That  if   the  collector   or  deputy  col-  SS  Under- 
lector   has   reason    to   believe   that  the  amount   of  any  37       statement   in 
income    returned    is    understated,    he    shall    give    due  38       Return 
notice    to    the    taxpayer    making    the    return    to    show  39 
cause    why    the   amount    of    the    return    should    not    De  40 
increased,  and  upon   proof  of  the  amount   understated,  43 
may    Increase    the    same    accordingly.      Such    taxpayer  42 
may    furnish    sworn    testimony    to    prove    any    relevant  43 
facts  and   if  dissatisfied  with  the  decision   of   the   col^44 
lector    may    appeal    to    the    Commissioner    for    his    de-45 
clsion,   under   such   rules   of   pi'ocedure   a.s   may   be  pre- 46 
scribed    by    the    Commissioner    with    the    approval    of  47 
the   Secretary.  48 

49 
PART    ZIZ.— CORPORATIONS.  50 

61 
Tax  on  Corporations.  52  Corporations — 

53  Taxes  on 
SECTION  230.  (a)  That,  In  lieu  of  the  taxes  im- 54 
posed  by  section  10  of  the  Revenue  Act  of  1916,  as  55 
amended  by  the  Revenue  Act  of  1917,  and  by  section  56 
i  of  the  Revenue  Act  of  1917,  there  shall  be  levied,  57 
collected,  and  paid  for  each  taxable  year  upon  the  net  58 

~        73  ,      .. 


Year  1918 


Year  1919  and 
Thereafter 

Systems  Under 
Federal 
Control 


Exempt 
Corporations 

Labor, 

Agricultural 
Mutual  Savings 

Banks 
Fraternal 

Organizations 


Building  and 
Loan 

Cemetery 

Religious, 
Charitable 
Educational, 
etc. 

Chambers  of 
Commerce, 
etc. 

Civic  Leagues 


Clubs 

Insurance 
Telephone 


1  income    of   every    corporation    a    tax   at    the    following 

2  rates:   .  ■"*.  ^iSPt 

3  (1)  For    the   calendar   year    1918,    12    per   centum   of 

4  the  amount  of  the  net  Income  in  excess  of  the  credits 

5  provided   In    section    236;    and 

6  (2)  For  each  calendar  year  thereafter,  10  per  centum 

7  of  such  excess  amount. 

8  (b)  For  the  purposes  of  the  Act  approved  March  21, 

9  1918,  entitled  "An  Act  to  provide  for  the  operation  of 

10  transportation  systems  while  under  Federal  control,  for 

11  the  Just  compensation   of   their  owners  and  for  other 

12  purposes,"  flve-slxths  of  the  tax  Imposed  by  paragrapn 

13  (1)    of    subdivision     (a)    and    four-fifths    of    the    tax 

14  imposed  by  paragraph   (2)  of  subdivision   (a)   shall  be 

15  treated  as   levied  by  an  Act   In   amendment  of  Title  I 

16  of   the   Revenue  Act  of   1917. 
17 

18  Conditional  and  Other  Exemptions. 

19 

20  SECTION     231.     That     the     following     organizations 

21  shall  be  exempt  from  taxation  under  this  title — 

22  (1)  Labor,    agricultural,    or    horticultural    organlza- 

23  tions; 

24  (2)   Mutual  savings  banks  not  having  a  capital  stock 

25  represented  by  shares; 

26  (3)  Fraternal    beneficiary    societies,    orders,    or   asso- 

27  ciatlons,    (a)   operating  under  the  lodge  system  or  for 

28  the   exclusive  benefit  of   the  members   of  a  fraternity 

29  Itself  operating  under  the  lodge  system,  and   (b)   pro- 

30  viding  for  the  payment  of  life,  sick,  accident,  or  other 

31  benefits  to  the  members  of  such  society,  order,  or  asso- 

32  elation  or  their  dependents; 

33  (4)   Domestic  building  and  loan  associations  and  co- 

34  operative    banks   without   capital    stock   organized    and 

35  operated  for  mutual  purposes  and  without  profit; 

36  (5)  Cemetery   companies  owned  and  operated   exclu- 

37  sively  for  the  benefit  of  their  members; 

38  (6)  Corporations  organized  and  operated  exclusively 

39  for  religious,  charitable,   scientific,  or  educational  pur- 

40  poses,  or  for  the  prevention  of  cruelty   to  children  or 

41  animals,  no  part  of  the  net  earnings  of  which  Inures  to 

42  the  benefit  of  any  private  stockholder  or  individual; 

43  (7)  Business    leagues,     chambers    of    commerce,    or 

44  boards   of  trade,   not  organized   for   profit  and  no   part 

45  of  the  net   earnings  of  which   inures  to   the  benefit  of 
4&any   private   stockholder   or   individual; 

47  (8)  Civic  leagues  or  organizations  not  organized  for 

48  profit   but   operated    exclusively   for    the    promotion    of 

49  social    welfare; 

50  (9)  Clubs    organized    and    operated    exclusively    for 

51  pleasure,   recreation,  and  other  nonprofitable  purposes, 

52  no   part   of   the   net   earnings   of   which   Inures   to   the 

53  benefit  of  any  private  stockholder  or  member; 

54  (10)  Farmers'  or  other  mutual  hall,  cyclone,  or  fire 

55  Insurance  companies,   mutual  ditch  or  irrigation   com- 

56  panics,  mutual  or  cooperative  telephone  companies,  or 

57  like  organizations  of  a  purely  local  character,  the  In- 
68  come   of   which    consists   solely    of   assessments,    dues. 


74 


and  fees  collected  from  members  for  the  sole  purpose  % 
of   meeting   expenses;  8 

(11)  Farmers',    fruit   growers',    or    like    associations,    3  Fruit  Growers 
organized  and  operated  as  sales  agents  for  the  purpose    4 

of  marketing  the  products  of  members  and  turning  5 
back  to  them  the  proceeds  of  sales,  less  the  necessary  6 
selling  expenses,  on  the  basis  of  the  quantity  of  produce  7 
furnished  by  them;  8 

(12)  Corporations    organized    for   the    exclusive    pur-    9  Special 
pose    of    holding    title    to    property,    collecting    income  10 
therefrom,  and  turning  over  the  entire  amount  thereof,  11 

less  expenses,  to  an  organization  which  itself  is  ex-  12 
empt  from  the  tax  imposed  by  this  title;  13 

(13)  Federal  land  banks  and  national  farm-loan  as-  14  Federal  Land 
sociations   as   provided   in    section    26    of   the    Act   ap- 15       Banks — 
proved  July  17,  1916,  entitled  "An  Act  to  provide  cap- 16       Farm  Loan 
ital   for   agricultural   development,   to   create    standard  17       Associations 
forms    of   investment    based    upon    farm    mortgage,    to  18 

equalize  rates  of  interest  upon  farm  loans,  to  furnish  19 
a  market  for  United  States  bonds,  to  create  Govern-  20 
ment  depositaries  and  financial  agents  for  the  United  21 
States,  and  for  other  purposes";  22 

(14)  Personal  service  corporations.  28 

24 
Net  Income  Defined.  25 

26 
SECTION  232.  That  in  the  case  of  a  corporation  27  Net  Income 
subject  to  the  tax  imposed  by  section  230  the  term  28  Defined 
"net  income"  means  the  gross  income  as  defined  in  29 
section  233  less  the  deductions  allowed  by  section  234,  30 
and  the  net  income  shall  be  computed  on  the  same  31 
basis  as  is  provided  in  subdivision  (b)  of  section  212  32 
or  in   section  226.  33 

34 
Gross   Income  Defined.  35 

36 

SECTION  233.     (a)  That  in  the  case  of  a  corporation  37  Gross  Income 

subject   to    the    tax    imposed   by    section    230    the    term  38 

"gross    income"    means    the    gross    Income    as    defined  39 

in  section  213,  except  that:  40 

(1)  In   the   case   of   life   Insurance   companies   there  41  Life  Ins.  Go's 
shall    not    be    included    in    gross    income    such    portion  42 

of  any  actual  premium  received  from  any  individual  43 
policyholder  as  is  paid  back  or  credited  to  or  treated  as  44 
an  abatement  of  premium  of  such  policyholder  within  45 
the  taxable  year.  46 

(2)  Mutual  marine  Insurance  companies  shall  Include  47  Mutual  Marine 
in  gross  Income  the  gross  premiums  collected  and  re-  48       Ins.  Go's 
ceived  by  them  less  amounts  paid  for  reinsurance.        49 

(b)  In  the  case  of  a  foreign  corporation  gross  Income  50  Foreign  Corp. 
includes  only  the  gross  income  from  sources  within  51 
the  United  States,  including  the  Interest  on  bonds,  52 
notes,  or  other  Interest-bearing  obligations  of  resi-  53 
dents,  corporate  or  otherwise,  dividends  from  resident  54 
corporations,  and  including  all  amounts  received  (al  55 
though  paid  under  a  contract  for  the  sale  of  goods  56 
or  otherwise)  representing  profits  on  the  manufacture  57 
and  disposition  of  goods  within  the  United  States.  68 

75 


Ddduotlons 


Expenses 


Dednotiong    Allowed. 


Interest 


Taxes 


Losses 
Bad  Debts 
Dividends 


3  SECTION    234.     (a)  That   in    computing   the  net   in- 

4  come  of  a  corporation  subject  to  the  tax  imposed  by 
6  section  230  there  shall  be  allowed  as  deductions: 

6  (1)  All    the    ordinary    and    necessary    expenses    paid 

7  or  Incurred  during  the  taxable  year  in  carrying  on  any 

8  trade  or  business,  including  a  reasonable  allowance  for 
8  salaries    or    other    compensation    for   personal    services 

10  actually  rendered,  and  including  rentals  or  other  pay- 

11  ments  required  to  be  made  as  a  condition  to  the  con- 
IS  tinned  use  or  possession  of  property  to  which  the  cor- 

13  poration  has  not  taken  or  is  not  taking  title,  or  In  which 

14  it  has  no  equity; 

15  (2)  All  interest  paid  or  accrued  within   the  taxable 

16  year   on   its   indebtedness,    except   on    indebtedness   In- 

17  curred   or   continued   to   purchase   or   carry   obligations 

18  or    securities    (other    than    obligations    of    the    United 

19  States  Issued  after  September  24,  1917)  the  interest 
80  upon  which  is  wholly  exempt  from  taxation  under  this 
ai  title  as  Income  to  the  taxpayer,  or,  in  the  case  of  a 
22  foreign  corporation,  the  proportion  of  sUch  interest 
83  which  the  amount  of  its  gross  income  from  sources* 
24  within  the  United  States  bears  to  the  amount  of  Its 
26  gross  income  from  all  sources  within  and  without  the 

26  United    States; 

27  (3)  Taxes  paid  or  accrued  within   the   taxable  year 

28  imposed    (a)    by    the   authority    of   the    United    States, 

29  except  income,  war  profits  and  excess-profits  taxes;  or 

30  (b)  by  the  authority  of  any  -of  its  possessions,  except 

31  the  amount  of  income,   war   profits  and   excess-profits 

32  taxes  allowed  as  a  credit  under  section  238;  or  (c)  by 

33  the  authority  of  any  State  or  Territory,  or  any  county, 

34  school    district,    municipality,    or    other    taxing    subdi- 

35  vision  of  any   State  or  Territory,   not   Including  those 

36  assessed   against   local   benefits   of   a   kind    tending    to 

37  increase  the  value  of  the  property  assessed;  or  (d)  in 

38  the  case  of  a  domestic  corporation,  by  the  authority 
89  of  any  foreign  country,  except  the  amount  of  Income, 

40  war-profits  and  excess-profits  taxes  allowed  as  a  credit 

41  under  section  238;  or  (e)  in  the  case  of  a  foreign  cor- 

42  poration,    by    the    authority    of    any    foreign    country 

43  (except    income,    war-profits    and    excess-profits    taxes, 

44  and    taxes   assessed    against    local   benefits   of    a    kind 

45  tending  to  increase  the  value  of  the  property  assessed), 

46  upon  the  property  or  business:     Provided,  That  In  the 

47  case  of  obligors  specified  In  subdivision   (b)  of  section 

48  221  no  deduction  for  the  payment  of  the  tax  imposed  by 

49  this  title  or  any  other  tax  paid  pursuant  to  the  con- 
60  tract  or  provision  referred  to  In  that  subdivision,  shall 

51  be   allowed; 

52  (4)  Losses    sustained    during    the    taxable   year   and 

53  not  compensated   for  by   Insurance  or  otherwise; 

54  (5)  Debts   ascertained   to   be   worthless  and   charged 

55  off  within  the  taxable  year; 

56  (6)  Amounts    deceived  as  dividends  from  a  corpora- 

57  tion    which    Is    taxable    under    this    title    upon    Its    net 

58  Income,  and  amounts  received  as  dividends  from  a  per- 


76 


sonal  service  corporation  out  of  earnings  or  profits  upon 
which  income  tax  has  been  imp'osed  by  Act  of  Congress; 

(7)  A  reasonable  allowance  for  the  exhaustion,  wear 
and  tear  of  property  used  in  the  trade  or  business,  in- 
cluding a  reasonable  allowance  for  obsolescence; 

(8)  In  the  case  of  buildings,  machinery,  equip- 
ment, or  other  facilities,  constructed,  erected,  installed, 
or  acquired,  on  or  after  April  6,  1917,  for  the  produc- 
tion of  articles  contributing  to  the  prosecution  of  the 
present  war,  and  in  the  case  of  vessels  constructed  or 
acquired  on  or  after  such  date  for  the  transportation 
of  articles  or  men  contributing  to  the  prosecution  of 
the  present  war,  there  shall  be  allowed  a  reasonable 
deduction  for  the  amortization  of  such  part  of  the 
cost  of  such  facilities  or  vessels  as  has  been  borne 
by  the  taxpayer,  but  not  again  including  any  amount 
otherwise  allowed  under  this  title  or  previous  acts  of 
Congress  as  a  deduction  in  computing  net  Income.  At 
any  time  within  three  years  after  the  termination  of 
the  present  war  the  Commissioner  may,  and  at  the 
request  of  the  taxpayer  shall,  re-examine  the  return, 
and  if  he  then  finds  as  a  result  of  an  appraisal  or 
from  other  evidence  that  the  deduction  originally  al- 
lowed was  Incorrect,  the  taxes  imposed  by  this  title 
and  by  Title  III  for  the  year  or  years  affected  shall 
be  redetermined;  and  the  amount  of  tax  due  upon  such 
redetermination,  If  any,  shall  be  paid  upon  notice  and 
demand  by  the  collector,  or  the  amount  of  tax  over- 
paid, if  any,  shall  be  credited  or  refunded  to  the  tax- 
payer in  accordance  with  the  provisions  of  section  252; 

(9)  In  the  case  of  mines,  oil  and  gas  wells,  other 
natural  deposits,  and  timber,  a  reasonable  allowance 
for  depletion  and  for  depreciation  of  improvements, 
according  to  the  peculiar  conditions  in  each  case,  based 
upon  cost  including  cost  of  development  not  otherwise 
deducted:  Provided,  That  In  the  case  of  such  prop- 
erties acquired  prior  to  March  1,  1913,  the  fair  market 
value  of  the  property  (or  the  taxpayer's  interest  there- 
in) on  that  date  shall  be  taken  in  lieu  of  cost  up  to 
that  date:  Provided  further,  That  in  the  case  of 
mines,  oil  and  gas  wells,  discovered  by  the  taxpayer, 
on  or  after  March  1,  1913,  and  not  acquired  as  the  re- 
sult of  purchase  of  a  proven  tract  or  lease,  where  the 
fair  market  value  of  the  property  Is  materially  dis- 
proportionate to  the  cost,  the  depletion  allowance  shall 
be  based  upon  the  fair  market  value  of  the  property 
at  the  date  of  the  discovery,  or  within  30  days  there- 
after; such  reasonable  allowance  In  all  the  above  cases 
to  be  m.ade  under  rules  and  regulations  to  be  pre- 
scribed by  the  Commissioner  with  the  approval  of  the 
Secretary.  In  the  case  of  leases  the  deductions  allowed 
by  this  paragraph  shall  be  equitably  apportioned  be- 
tween the  lessor  and  lessee; 

(10)  In  the  case  of  insurance  companies,  in  addi- 
tion to  the  above:  (a)  The  net  addition  required  by 
law  to  be  made  within  the  taxable  year  to  reserve 
funds  (including  in  the  case  of  assessment  Insurance 
companies   the   actual   deposit   of   sums   with    State   or 


1 

2 

3  Depreciation 

4 

5 

6  Special  War 

7  Loss  and 

8  Depreciation 
9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

1.9 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 

35 

36 

37 

38 

39 

40 

41 

42 

43 

44 

45 

46 

47 

43 

49 

50 

51 

52 

53 

54  Insurance  Co's 

55 

56 

57 

58 


77 


Life,  Health, 
Accident 


Mutual  Marine 
Ins.  Co. 


Mutual  Ins. 
Other  Than 
Life  or 
Mutual 
Marine 


Deductions 
for  Special 
Losses 


1  Territorial    officers    pursuant    to    law    as    additions    to 

2  guarantee  or  reserve  funds) ;  and   (b)   the  sums  other 

3  than  dividends  paid  within  the  taxable  year  on  policy 

4  and  annuity  contracts; 

B      (11)  In  the  case  of  corporations  Issuing  policies  cov- 

6  ering  life,  health  and  accident   insurance  combined  in 

7  one  policy  issued  on  the  weekly  premium  payment  plan 

8  continuing  for  life  and  not  subject  to  cancellation,  in 

9  addition  to  the  above,  such  portion  of  the  net  addition 

10  (not  required  by  law)  made  within  the  taxable  year  to 

11  reserve  funds  as  the  Commissioner  finds  to  be  required 
19  for  the  protection  of  the  holders  of  such  policies  only; 

13  (12)    In  the  case  of  mutual   marine   insurance  com- 

14  panics,  there  shall  be  allowed,  in  addition  to  the  deduc- 

15  tlons    allowed    In    paragraphs    (1)    to    (10),    Inclusive, 

16  amounts  repaid  to  policyholders  on  account  of  premiums 

17  previously  paid  by  them,  and  interest  paid  upon  such 

18  amounts  between   the   ascertainment  and   the   payment 

19  thereof; 

20  (13)   In    the    case    of    mutual    insurance    companies 

21  (other   than   mutual   life   or   mutual   marine   Insurance 

22  companies)  requiring  their  members  to  make  premium 

23  deposits  to  provide  for  losses  and  expenses,  there  shall 

24  be    allowed,    in    addition    to    the    deductions   allowed    In 

25  paragraphs  (1)  to  (10),  inclusive  (unless  otherwise  al- 
86  lowed  under  such  paragraphs),  the  amount  of  premium 
27  deposits  returned  to  their  policyholders  and  the  amount 
98  of  premium  deposits  retained  for  the  payment  of  losses, 

29  expenses,   and   reinsurance   reserves; 

30  (14)   (a)  At  the  time  of  filing  return  for  the  taxable 

31  year   1918   a   taxpayer   may   file   a   claim   in   abatement 

32  based  on  the  fact  that  he  has  sustained  a  substantial 

33  loss  (whether  or  not  actually  realized  by  sale  or  other 

34  disposition)  resulting  from  any  material  reduction  (not 

35  due  to  temporary  fluctuation)   of  the  value  of  the  in- 

36  ventory  for  such  taxable  year,  or  from  the  actual  pay- 

37  ment  after  the  close  of  such  taxable  year  of  rebates 

38  in  pursuance  of  contracts  entered  Into  during  such 
89  year  upon  sales  made  during  such  year.  In  such  case 
^  payment   of   the   amount   of   the   tax    covered   by   such 

41  claim  shall  not  be  required  until  the  claim  Is  decided, 

42  but  the  taxpayer  shall  accompany  his  claim  with  a  bond 

43  in  double  the  amount  of  the  tax  covered  by  the  claim, 

44  with    sureties   satisfactory    to   the   Commissioner,    con- 

45  ditloned  for  the  payment  of  any  part  of  such  tax  found 

46  to  be  due,  with  Interest.     If  any  part  of  such  claim  is 

47  disallowed  then  the  remainder  of  the  tax  due  shall  on 

48  notice  and  demand  by  the  Collector  be  paid  by  the  tax- 

49  payer  with   interest  at  the  rate  of   1    per  centum  per 

50  month  from  the  time  the  tax  would  have  been  due  had 
81  no  such  claim  been  filed.  If  it  is  shown  to  the  satls- 
88  faction  of  the  Commissioner  that  such  substantial  loss 
83  has  been  sustained,  then  in  computing  the  taxes  Im- 
64  posed  by  this  title  and  by  Title  III  the  amount  of  such 

55  loss  shall  be  deducted  from  thtf  net  Income,     (b)  If  no 

56  such  claim  is  filed,  but  it  Is  shown  to  the  satisfaction 

57  of  the  Commissioner  that  during  the  taxable  year  1919 

58  the   taxpayer  has   sustained   a  substantial   loss  of   the 

78 


character  above  described  then  the  amount  of  such  1 
loss  shall  be  deducted  from  the  net  income  for  the  tax-  2 
.Die  year  1918  and  the  taxes  imposed  by  this  title  and  3 
by  Title  III  for  such  year  shall  be  redet-ermined  accord-  4 
Ingly.  Any  amount  found  to  be  due  to  the  taxpayer  6 
upon  the  basis  of  such  redetermination  shall  be  cred-  6 
Ited  or  refunded  to  the  taxpayer  in  accordance  with  the  7 
provisions  of  section  252.  8 

(b)  In  the  case  of  a  foreign  corporation  the  deduc-    9  Foreign 
tion   allowed   in   subdivision    (a),   except  those  allowed  10       Corporation 
in   paragraph    (2)   and  in  clauses    (a),    (b),   and    (c)   of  H       Deductions 
paragraph   (3),  shall  be  allowed  only  if  and  to  the  ex-  12 
tent  that  they  are  connected  with  income  arising  from  13 
a  source  within  the  United  States;  and  the  proper  ap-  14 
portionment  and  allocation  of  the  deductions  with  re-  15 
spect    to    sources   of   income    within    and    without   the  16 
United  States  shall  be  determined  under  rules  and  regu-  1^ 
latlons  prescribed  by  the  Commissioner  with   the   ap-  1« 
proval  of  the  Secretary.  19 

20 
Items   Hot  Deductible  21  Items  Not 

22      Deductible 
SECTION    235.     That    in    computing    net    income    no  23 
deduction   shall  in   any  case  be  allowed  In   respect  of  24 
any  of  the  Items  specified  in   section   215.  25 

26 
Credits  Allowed.  27  Credits 

28       Allowed 
SECTION    236.     That    for    the    purpose    only    of    the  29 
tax  Imposed  by  section  230  there  shall  be  allowed  the  30 
following   credits:  31 

(a)  The  amount  received  as  Interest  upon  obligations  32  Interest 
of   the   United    States    and    bonds    Issued   by    the   War  33 
Finance  Corporation,  which  Is  included  In  gross  Income  34 

under  section  233;  35 

(b)  The  amount  of  any  taxes  imposed  by  Title  III  36  Taxes 
for  the  same  taxable  year:     Provided,  That  In  the  case  37 

of  a  corporation  which  makes  return  for  a  fiscal  year  38 
beginning  in  1917  and  ending  in  1918,  in  computing  the  39 
tax  as  provided  In  subdivision  (a)  of  section  205,  the  40 
tax  computed  for  the  entire  period  under  Title  II  of  41 
the  Revenue  Act  of  1917  shall  be  credited  against  the  42 
net  Income  computed  for  the  entire  period  under  Title  I  43 
of  the  Revenue  Act  of  1916  as  amended  by  the  Revenue  44 
Act  of  1917  and  under  Title  I  of  the  Revenue  Act  of  45 
1917,  and  the  tax  computed  for  the  entire  period  under  46 
Title  III  of  this  Act  at  the  rates  prescribed  for  the  47 
calendar  year  1918  shall  be  credited  against  the  net  43 
Income  computed  for  the  entire  period  under  this  title;  ^^ 
and  FO 

(c)  In  the  case  of  a  domestic  corporation,   $2,000.      51  Exemption 

Payment  of  Tax  At  Source.  53 

54 
SECTION  237.     That   In   the   case   of  foreign   corpo-  55  Foreigfn   Corp. 
rations    subject   to    taxation    under    this    title    not    en-  56       Tax  on 
gaered   In   trade   or  business  within   the   United   States  57       Income  to  Be 
pnd  not  having  any  office  or  place  of  business  therein,  58      Withheld 

79 


and  Paid 
at  Source 


Credit  for 
Income, 
War-Proflts 
and  Excess- 
Profits  Taxes 


Satisfactory 
Evidence 
Required 


1 

2 

3 

4 

6 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 


34 
38 
36 
37 
38 
39 
40 
41 
42 
43 
44 
48 


3\ln 


VMiere  Fiscal  47 
Year  is  Other  48 
Tlian  49 

Calendar  Year  50 


there  shall  be  deducted  and  withheld  at  the  source 
the  same  manner  and  upon  the  same  items  of  inconwf 
as  is  provided  in  section  221  a  tax  equal  to  10  per 
centum  thereof,  and  such  tax  shall  be  returned  and 
paid  in  the  same  manner  and  subject  to  the  same  con- 
ditions as  provided  in  that  section:  Provided,  That 
in  the  case  of  interest  described  in  subdivision  (b) 
of  that  section  the  deduction  and  withholding  shall 
he  at  the  rate  of  2  per  centum. 

Credit  for  Taxes. 

SECTION  238.  (a)  That  in  the  case  of  a  domestic 
corporation  the  total  taxes  imposed  for  the  taxable 
year  by  this  title  and  by  Title  III  shall  be  credited 
with  the  amount  of  any  income,  war-proflts  and  excess- 
profits  taxes  paid  during  the  taxable  year  to  any  for- 
eign country,  upon  income  derived  from  sources  there- 
in, or  to  any  possession  of  the  United  States. 

If  accrued  taxes  when  paid  differ  from  the  amounts 
claimed  as  credits  by  the  corporation,  or  if  any  tax 
paid  is  refunded  in  whole  or  in  part,  the  corporation 
shall  at  once  notify  the  Commissioner  who  shall  re- 
determine the  amount  of  the  taxes  due  under  this  title 
and  under  Title  III  for  the  year  or  years  affected,  and 
the  amount  of  taxes  due  upon  such  redetermination,  if 
any,  shall  be  paid  by  the  corporation  upon  notice  and 
demand  by  the  Collector,  or  the  amount  of  taxes  over- 
paid, if  any,  shall  be  credited  or  refunded  to  the  cor- 
poration in  accordance  with  the  provisions  of  section 
252.  In  the  case  of  such  a  tax  accrued  but  not  paid, 
the  Commissioner  as  a  condition  precedent  to  the  al- 
lowance of  this  credit  may  require  the  corporation  to 
give  a  bond  with  sureties  satisfactory  to  and  to  be 
approved  by  him  in  such  penal  sum  as  he  may  require, 
conditioned  for  the  payment  by  the  taxpayer  of  any 
amount  of  taxes  found  due  upon  any  such  redetermina- 
tlon:  and  the  bond  herein  prescribed  shall  contain  such 
further  conditions  as  the  Commissioner  may  require. 

(b)  This  credit  shall  be  allowed  only  if  the  taxpayer 
furnishes  evidence  satisfactory  to  the  Commissioner 
showing  the  amount  of  Income  derived  from  sources 
within  such  foreign  country  or  such  possession  of  the 
United  States,  as  the  case  may  be,  and  all  other  in- 
formation necessary  for  the  computation  of  such 
credit. 

(c)  If  a  domestic  corporation  makes  a  return  for  a 
fiscal  year  beginning  In  1917  and  ending  in  1918,  only 
that  proportion  of  this  credit  shall  be  allowed  which 
the  part  of  such  pei'iod  within  the  calendar  year  191S 
bears  to  the  entire  period. 


63  Oorporatlon  Returns. 

54 

Returns  65      SECTION    239.     That    every    corporation    subject    to 

60  taxation    under   this    title   and  *  every    personal    service 

67  corporation    shall    make   a    return,    stating    specifically 

68  the  items  of  its  gross  income  and  the  deductions  and 


credits    allowed    by    this    title.      The    return    shall    be    1  ^ 

sworn    to    by    the    president,    vice-president,    or    other    2  ^ 

principal  officer  and  by  the  treasurer  or  assistant  3 
treasurer.  If  any  foreign  corporation  has  no  office  or  4 
place  of  business  in  the  United  States  but  has  an  5 
agent  in  the  United  States,  the  return  shall  be  made  6 
by  the  agent.  In  cases  where  receivers,  trustees  in  7 
bankruptcy,  or  assignees  are  operating  the  property  or  8 
business  of  corporations,  such  receivers,  trustees,  or  9 
assignees  shall  make  returns  for  such  corporations  10 
in  the  same  manner  and  form  as  corporations  are  re-  11 
quired  to  make  returns.  Any  tax  due  on  the  basis  of  12 
such  returns  made  by  receivers,  trustees,  or  assignees  13 
shall  be  collected  in  the  same  manner  as  if  collected  14 
from  the  corporations  of  whose  business  or  property  15 
they   have  custody   and   control.  16 

Returns  made  under  this  section  shall  be  subject  17 
to  the  provisions  of  sections  226  and  228.  18 

When  return  is  made  under  section  226  the  credit  19 
provided  in  subdivision  (c)  of  section  236  shall  be  20 
reduced  to  an  amount  which  bears  the  same  ratio  to  21 
the  full  credit  therein  provided  as  the  number  of  22 
months  in  the  period  for  which  such  return  is  made  23 
bears  to  twelve  months.  24 

25 
Consolidated  Betnms.  26 

27 

SECTION  240.     (a)  That  corporations  which  are  af-  28  Consolidated 
filiated  within  the  meaning  of  this  section  shall,  under  29       Returns    of 
regulations  to  be  prescribed  by  the  Commissioner  with  30       Income  and 
the  approval  of  the  Secretary,  make  a  consolidated  re-  31       Invested 
turn  of  net   Income  and  Invested   capital  for  the  pur-  32       Capital, 
poses  of  this  title  and  Title  III,  and  the  taxes  there-  33 
under    shall    be    computed    and    determined    upon    the  34 
basis   of   such   return:      Provided,   That   there   shall   be  35 
taken  out  of  such  consolidated  net  Income  and  Invested  36 
capital,    the   net   Income   and    Invested    capital    of   any  37 
such   affiliated    corporation    organized    after   August    1, 38 
1914,  and  not  successor  to  a  then  existing  business,  50  39 
per  centum  or  more  of  whose  gross  Income  consists  of  40 
gains,    profits,    commissions,    or   other    income,    derived  41 
from  a  government  contract  or  contracts  made  between  42 
April  6,  1917,  and  November  11,  1918,  both  dates  inclu- 43 
sive.     In  such  case  the  corporation  so  taken  out  shall  44 
be  separately  assessed  on  the  basis  of  Its  own  invested  45 
capital  and  net  income  and  the  remainder  of  such  af-46 
filiated  group  shall  be  assessed  on  the  basis  of  the  re-  47 
maining  consolidated  invested  capital  and  net  income.      43 

In  any  case  In  which  a  tax  is  assessed  upon  the  49 
basis  of  a  consolidated  return,  the  total  tax  shall  be  SO 
computed  In  the  first  Instance  as  a  unit  and  shall  then  51 
be  assessed  upon  the  respective  affiliated  corporations  52 
in  such  proportions  as  may  be  agreed  upon  among  53 
them,  or,  in  the  absence  of  any  such  agreement,  then  54 
on  the  basis  of  the  net  Income  properly  assignable  to  55 
each.  There  shall  be  allowed  In  computing  the  Income  56 
tax  only  one  specific  credit  of  $2,000  (as  provided  in  57 
section   236);  in  computing  the  war-profits  credit    (as  58 


81 


Affiliated 

Corporations 


Domestic 
Corporation 
Owning 
Majority 
stock   of 
Foreign 
Corporation 


1 

a 

3 

4 

6 

6 

7 

8 

9 

10 

11 

12 

13 

14 

16 

16 

17 

18 

19 

20 

21 


24 


26 

27 

28 

29 

80 

31 

82 

Time  and 

33 

Place    for 

34 

Filing 

35 

Returns 

36 

87 


40 
41 
48 


provided  in  section  311)  only  one  specific  exemption 
$3,000;   and  in   computing  the  excess-profits   credit    (a 
provided  in  section  312)  only  one  specific  exemption  of 
$3,000. 

(b)  For  the  purpose  of  this  section  two  or  more  do- 
mestic corporations  shall  be  deemed  to  be  affiliated  (1) 
if  one  corporation  owns  directly  or  controls  through 
closely  affiliated  interests  or  by  a  nominee  or  nominees 
substantially  all  the  stock  of  the  other  or  others,  or  (2) 
if  substantially  all  the  stock  of  two  or  more  corpora- 
tions is  owned  or  controlled  by  the  same  interests. 

(c)  For  the  purposes  of  section  238  a  domestic  cor- 
poration which  owns  a  majority  of  the  voting  stock  of 
a  foreign  corporation  shall  be  deemed  to  have  paid  the 
same  proportion  of  any  income,  war-profits  and  excess- 
profits  taxes  paid  (but  not  including  taxes  accrued)  by 
such  foreign  corporation  during  the  taxable  year  to  any 
foreign  country  or  to  any  possession  of  the  United 
States  upon  income  derived  from  sources  without  the 
United  States,  which  the  amount  of  any  dividends  (not 
deductible  under  section  234)  received  by  such  domes- 
tic corporation  from  such  foreign  corporation  during 
the  taxable  year  bears  to  the  total  taxable  income  of 
such  foreign  corporation  upon  or  with  respect  to  whicii 
such  taxes  were  paid:  Provided,  That  in  no  such  case 
shall  the  amount  of  the  credit  for  such  taxes  exceed 
the  amount  of  such  dividends  (not  deductible  under  sec- 
tion 234)  received  by  such  domestic  corporation  during 
the  taxable  year. 

Time   and  Place   for  Filing  Retoms. 

SECTION  241.  (a)  That  returns  of  corporations 
;^hall  be  made  at  the  same  time  as  is  provided  in  sun- 
division    (a)   of  section   227. 

(b)  Returns  shall  be  made  to  the  collector  of  the 
listrict  in  which  is  located  the  principal  place  of 
business  or  principal  office  or  agency  of  the  corpora- 
tion, or,  if  it  has  no  principal  place  of  business  or 
itrincipal  office  or  agency  in  the  United  States,  then  to 
the  collector  at  Baltimore,   Maryland. 


Payment  of 
Taxes 

to  be  Paid 
In  Four 
Installments 


Extension  of 
Time  for 
Filinir 
Returns 


44  PAST    ZV — ADMINZSTBATIVi:    PROVISIONS. 

48 

46  Payment   of   Taxes. 

47 

48  SECTION    250.     (a)  That    except    as   otherwise    pro- 

49  vlded  in  this  section  and  sections  221  and  237  the  tax 

50  shall  be  paid  In  four  installments,  each  consisting  of 
61  one-fourth  of  the  total  amount  of  the  tax.  The  first 
68  Installment  shall  be  paid  at  the  time  fixed  by  law  for 

63  filing  the  return,  and   the  second  installment  shall  be 

64  paid  on  the  fifteenth  day  of  the  third  month,  the  third 

65  Installment   on    the  fifteenth   day   of   the   sixth   month, 

66  and  the  fourth  Installment  on  the  fifteenth  day  of  the 

57  ninth    month,    after   the    time   fixed   by   law    for   filing 

58  the  return.     Where  an   extension   of   time   for  filing  a 


return  is  granted  the  time  for  payment  of  the  first  in-  1 
stallment  shall  be  postponed  until  the  date  of  the  ex-  2 
piration  of  the  period  of  the  extension,  but  the  time  3 
for  payment  of  the  other  installments  shall  not  be  post-  4 
poned  unless  the  Commissioner  so  provides  in  granting  5 
the  extension.  In  any  case  in  which  the  time  for  the  6 
payment  of  any  installment  is  at  the  request  of  the  tax-  7 
payer  thus  postponed,  there  shall  be  added  as  part  8 
of  such  installment  interest  thereon  at  the  rate  of  i^  of  9 
1  per  centum  per  month  from  the  time  it  would  have  10 
been  due  if  no  extension  had  been  granted,  until  paid.  11 
If  any  installment  is  not  paid  when  due,  the  whole  12 
amount  of  the  tax  unpaid  shall  become  due  and  pay-  13 
able  upon  notice  and  demand  by  the  collector.  14 

The  tax  may  at  the  option  of  the  taxpayer  be  paid  15 
in  a  single  payment  instead  of  in  installments,  in  16 
which  case  the  total  amount  shall  be  paid  on  or  before  17 
the  time  fixed  by  law  for  filing  the  return,  or,  where  an  18 
extension  of  time  for  filing  the  return  has  been  granted,  19 
on  or  before  the  expiration  of  the  period  of  such  ex-  20 
tension.  21 

(b)  As  soon  as  practicable  after  the  return  is  filed,  22 
the  Commissioner  shall  examine  it.  If  it  then  appears  23 
that  the  correct  amount  of  the  tax  is  greater  or  less  23 
than  that  shown  in  the  return,  the  installments  shall  26 
be  recomputed.  If  the  amount  already  paid  exceedsj26 
that  which  should  have  been  paid  on  the  basis  of  the!  27 


Tax  May  be 
Paid  in 
Single 
Payment 


Excess 

Installment 
Payment 


installments   as   recomputed,    the    excess    so    paid    shall 


When 

Installment 
Payment  is 
Too  Small 


be  credited  against  the  subsequent  installments;  and  29 
If  the  amount  already  paid  exceeds  the  correct  amount  30 
of  the  tax,  the  excess  shall  be  credited  or  refunded  tO|31 
the  taxpayer  in  accordance  with  the  provisions  of[32 
section  252. 

If  the  amount  already  paid  is  less  than  that  which 
should  have  been  paid,  the  difference  shall,  to  the 
extent  rot  covered  by  any  credits  then  due  to  the  36 
taxpayer  under  section  252,  be  paid  upon  notice  and[37 
demand  by  the  collector.  In  such  case  if  the  return 
is  made  in  good  faith  and  the  understatement  of  the 
amount  in  the  return  is  not  due  to  any  fault  of  the 
taxpayer,  there  shall  be  no  penalty  because  of  such 
understatement.  If  the  understatement  is  due  to  negli- 
gence on  the  part  of  the  taxpayer,  but  without  intent  to 
defraud,  there  shall  be  added  as  part  of  the  tax  5  per 
centum  of  the  total  amount  of  the  deficiency,  plusi45 
interest  at  the  rate  of  1  per  centum  per  month  on.  46 
the  amount  of  the  deficiency  of  each  installment  fi'om.47 
the  time   the   Installment  was   due.  {48 

If    the    understatement    is    false    or    fraudulent   with  49  False  or 
intent  to  evade   the  tax,   then,   in   lieu   of   the   penalty  50      Fraudulent 
provided   by   section   3176   of   the   Revised   Statutes,   as  51       Understate- 
Rmended,     for    false    or    fraudulent    returns    willfully  52       ment 
made,   but   in   addition   to   other  penalties   provided   by  53 
law    for    false    or    fraudulent    returns,    there    shall    be  64 
added  as  part  of  the  tax  50  per  centum  of  the  amount  66 
of  the  deficiency.  56  Payment  on 

(c)  If  the  return  is  made  pursuant  to  section   3176  67      Notice  and 
of   the   Kevised    Statutes  as  amended,    the   amount   of  68      Demand 


28 


83 


1  tax  determined  to  be  due  under  such  return   shall  be 

2  paid  upon  notice  and  demand  by  the  collector. 
Assessment  May  3      (d)  Except   In    the    case   of   false   or   fraudulent   re- 
Be   Made             4  turns    with    Intent    to    evade    the    tax,    the    amount    of 
Within  Five       5  tax    due    under    any    return    shall    be    determined    and 
Years                    6  assessed  by   the  Commissioner  within  five  years  after 

7  the  return  was  due  or  was  made,  and  no  suit  or  pro- 

8  ceeding   for   the   collection   of  any   tax   shall   be  begun 

9  after  the  expiration  of  five  years  after  the  date  when 
10  the  return  was  due  or  was  made.  In  the  case  of  such 
H  false    or   fraudulent   returns,    the   amount   of    tax   due 

12  may   be   determined   at   any   time   after   the   return    Is 

13  filed,  and  the  tax  may  be  collected  at  any  time  after 

14  it  becomes  due. 

Unpaid  taxes       15      (e)  If  any  tax  remains  unpaid  after  the  date  when 

16  it   Is   due,   and   for   ten   days  after  notice  and   demand 

17  by   the   collector,   then,   except   In   the   case   of   estates 

18  of   Insane,   deceased,  or   Insolvent  persons,   there   shall 

19  be  added  as  part  of  the  tax  the  sum  of  5  per  centum 

20  on   the   amount   due   but   unpaid,   plus   Interest   at   the 

21  rate  of  1  per  centum  per  month  upon  such  amount  from 

22  the   time   It   became   due:      Provided,    That  as    to   any 

23  such  amount  which  Is  the  subject  of  a  bona  fide  claim 

24  for   abatement   such    sum   of   5    per   centum   shall   not 

25  be  added  and  the  Interest  from  the  time  the  amount 

26  was  due  until  the  claim  Is  decided  shall  be  at  the  rate 

27  of  %   of  1  per  centum  per  month. 

28  In  the  case  of  the  first  Installment  provided  for  In 

29  subdivision   (a)   the  Instructions  printed  on  the  return 

30  shall   be    deemed    sufficient    notice    of    the    date    when 

31  the   tax   Is    due   and    sufficient   demand,    and    the    tax- 

32  payers'    computation    of    the    tax   on    the    return    shall 

33  be  deemed  sufficient  notice  of  the  amount  due. 

34  (f)  In  any  case  In   which  In   order  to   enforce  pay- 

35  ment  of  a  tax  It  is  necessary  for  a  collector  to  cause 

36  a  warrant  of  distraint  to  be  served,  there  shall  also 
87  be  added  as  part  of  the  tax  the  sum  of  $5. 

Evasion  of  tax  38      (g)  If   the   Commissioner  finds   that  a   taxpayer  de- 
89  signs  quickly  to  depart  from  the  United  States  or  to 

40  remove  his  property  therefrom,  or  to  conceal  himself 

41  or  his  property  therein,  or  to  do  any  other  act  tending 

42  to  prejudice  or  to  render  wholly  or  partly  Ineffectual 

43  proceedings    to    collect    the    tax    for    the    taxable    year 

44  then  last  past  or  the  taxable  year  then  current  unless 

45  such  proceedings  be  brought  without  delay,   the  Com- 

46  missioner    shall    declare    the    taxable    period    for    such 

47  taxpayer  terminated  at  the  end  of  the  calendar  month 

48  then  last  past  and  shall  cause  notice  of  such  finding 

49  and  declaration  to  be  given  the  taxpayer,  together 
60  with  a  demand  for  Immediate  payment  of  the  tax  for 
51  the  taxable  period  so  declared  terminated  and  of  the 
68  tax  for  the  preceding  taxable  year  or  so  much  of  said 
53  tax  as  Is  unpaid,  whether  or  not  the  time  otherwise 
64  allowed  by   law   for  filing   return  and   paying  the   tax 

55  has   expired:   and   such   taxes   shall   thereupon   become 

56  immediately   due   and   payable.      Ifi   any   action    or   suit 

57  brought  to  enforce  payment  of  taxes  made  due  and 
68  payable    by    virtue    of    the    provisions    of    this    sub 

84 


division  the  finding  of  the  Commissioner,  made  as  1 
herein  provided,  whether  made  after  notice  to  the  tax-  2 
payer  or  not,  shall  be  for  all  purposes  presumptive  3 
evidence  of  the  taxpayer's  design.  A  taxpayer  who  4 
is  not  in  default  in  making  any  return  or  paying  in-  6 
come,  war  profits,  or  excess-profits  tax  under  any  Act  6 
of  Congress  may  furnish  to  the  United  States,  under  7 
regulations  to  be  prescribed  by  the  Commissioner  with  8 
the  approval  of  the  Secretary,  security  approved  by  9 
the  Commissioner  that  he  will  duly  make  the  return  10 
next  thereafter  required  to  be  filed  and  pay  the  tax  11 
next  thereafter  required  to  be  paid.  The  Commissioner  12 
may  approve  and  accept  in  like  manner  security  for  13 
return  and  payment  of  taxes  made  due  and  payable  14 
by  virtue  of  the  provisions  of  this  subdivision,  pro-  15 
vided  the  taxpayer  has  paid  in  full  all  other  income,  16 
war  profits,  or  excess-profits  taxes  due  from  him  under  17 
any  Act  of  Congress.  If  security  is  approved  and  18 
accepted  pursuant  to  the  provisions  of  this  subdivision  19 
and  such  further  or  other  security  with  respect  to  the  20 
tax  or  taxes  covered  thereby  is  given  as  the  Commis-  21 
sioner  shall  from  time  to  time  find  necessary  and  22 
require,  payment  of  such  taxes  shall  not  be  enforced  23 
by  any  proceedings  under  the  provisions  of  this  sub-  24 
division  prior  to  the  expiration  of  the  time  otherwise  25 
allowed  for  paying  such  respective  taxes.  26 

27 
Receipts  for  Taxes.  28 

29 

SECTION  251.  That  every  collector  to  whom  any  30  Receipts  for 
payment  of  any  tax  is  made  under  the  provisions  of  31  Taxes  Given 
this  title  shall  upon  request  give  to  the  person  mak-  32  Upon 
Ing  such  payment  a  full  written  or  printed  receipt,  33  Request 
stating  the  amount  paid  and  the  particular  account  for  34 
which  such  payment  was  made;  and  whenever  any  35 
debtor  pays  taxes  on  account  of  payments  made  or  to  36 
be  made  by  him  to  separate  creditors  the  collector  shall,  37 
if  requested  by  such  debtor,  give  a  separate  receipt  for  38 
the  tax  paid  on  account  of  each  creditor  in  such  form  39 
that  the  debtor  can  conveniently  produce  such  receipts  40 
separately  to  his  several  creditors  in  satisfaction  of  41 
their  respective  demands  up  to  the  amounts  stated  in  42 
the  receipts;  and  such  receipt  shall  be  sufficient  evi-  43 
dence  in  favor  of  such  debtor  to  justify  him  in  with-  44 
holding  from  his  next  payment  to  his  creditor  the  45 
amount  therein  stated;  but  the  creditor  may,  upon  46 
giving  to  his  debtor  a  full  written  receipt  acknowledg-  47 
Ing  the  payment  to  him  of  any  sum  actually  paid  and  48 
accepting  the  amount  of  tax  paid  as  aforesaid  (specify-  49 
ing  the  same)  as  a  further  satisfaction  of  the  debt  to  50 
that  amount,  require  the  surrender  to  him  of  such  col-  51 
lector's  receipt.  52 

Refunds.  63 

64 

SECTION  252.     That  if,  upon  examination  of  any  re-  55  Refund   of   Tax 
turn  of  Income  made  pursuant  to  this  Act,  the  Act  of  56 
August  5,   1909,  entitled   "An  Act   to   provide   revenue,  57 
equalize   duties,    and   encourage   the   industries   of   the  58 

85 


Penalties 


1 

a 
s 

4 

6 

6 

7 

8 

9 

10 

11 

12 

13 

14 

16 

16 

17 

18 

19 

ao 

21 
22 
23 
24 
26 
26 
27 
28 
29 
30 
31 


37 


United  States,  and  for  other  purposes,"  the  Act  of  Oc- 
tober 3,  1913,  entitled  "An  Act  to  reduce  tariff  duties 
and  to  provide  revenue  for  the  Government,  and  for 
other  purposes,"  the  Revenue  Act  of  1916,  as  amended, 
or  the  Revenue  Act  of  1917,  it  appears  that  an  amount 
of  income,  war  profits  or  excess-profits  tax  has  been 
paid  in  excess  of  that  properly  due,  then,  notwithstand- 
ing the  provisions  of  section  3228  of  the  Revised  Stat- 
utes, the  amount  of  the  excess  shall  be  credited  against 
any  income,  war  profits  or  excess-profits  taxes,  or  in- 
stallment thereof,  then  due  from  the  taxpayer  under 
any  other  return,  and  any  balance  of  such  excess  shall 
be  immediately  refunded  to  the  taxpayer:  Provided, 
That  no  such  credit  or  refund  shall  be  allowed  or  made 
after  five  years  from  the  date  when  the  return  was  due, 
unless  before  the  expiration  of  such  five  years  a  claim 
therefor  is  filed  by  the  taxpayer. 

Penalties. 

SECTION  253.  That  any  Individual,  corporation,  or 
partnership  required  under  this  title  to  pay  or  collect 
any  tax,  to  make  a  return  or  to  supply  information, 
who  fails  to  pay  or  collect  such  tax,  to  make  such  re- 
turn, or  to  supply  such  information  at  the  time  or 
times  required  under  this  title,  shall  be  liable  to  a 
penalty  of  not  more  than  $1,000.  Any  individual,  cor- 
poration, or  partnership,  or  any  officer  or  employee  of 
any  corporation  or  member  or  employee  of  a  partner- 
ship, who  willfully  refuses  to  pay  or  collect  such  tax, 
to  make  such  return,  or  to  supply  such  information  at 
the  time  or  times  required  under  this  title,  or  who  will- 
fully attempts  in  any  manner  to  defeat  or  evade  the 
tax  imposed  by  this  title,  shall  be  guilty  of  a  mis- 
demeanor and  shall  be  fined  not  more  than  $10,000  or 
imprisoned  for  not  more  than  one  year,  or  both,  to- 
gether with  the  costs  of  prosecution. 


39  Returns  of  Payments  of  Dividends. 

40 

Return  of  41      SECTION  254.     That  every  corporation  subject  to  the 

Payments   of  42  tax   imposed   by   this   title   and   every    personal    service 
Dividends  43  corporation  shall,  when  required  by  the  Commissioner, 

44  render  a  correct  return  duly  verified  under  oath,  of  its 

45  payments  of  dividends,   stating  the  name  and  address 

46  of   each   stockholder,   the   number   of   shares   owned   by 

47  him,  and  the  amount  of  dividends  paid  to  him. 
48 

^^  Betnms  of  Broilers. 

50 
Brokern—  bi      SECTION  255.     That  every  individual,  corporation,  or 

Returns  of       52  partnership  doing  business  as  a  broker  shall,  when  re- 

63  quired   by    the   Commissioner,    render   a   correct   return 

64  duly  verified  under  oath,  under  such  rules  and  regula- 

65  tlons   as   the   Commissioner,   with  the   approval   of   the 

66  Secretary,    may   prescribe,    showing  the   names   of   cus- 

67  tomers  for  whom  such  Individual,  corporation,  or  part- 

68  nership  has  transacted  any  business,  with  such  details 


86 


as  to  the  profits,  losses  or  other  information  which  the 
Commissioner  may  require,  as  to  each  of  such  cus- 
tomers, as  will  enable  the  Commissioner  to  determine 
whether  all  income  tax  due  on  profits.  X)r  gains  ot  such 
customers  has  been  paid. 

Information  at  Source. 


1 
2 
3 
4 
6 
6 
7 
8 
SECTION  256,  That  all  individuals,  corporations,  9 
and  partnerships,  in  whatever  capacity  acting,  includ-  10 
ing  lessees  or  mortgagors  of  real  or  personal  property,  11 
fiduciaries,  and  employers,  making  payment  to  another  12 
individual,  corporation,  or  partnership,  of  interest,  rent,  13 
salaries,  wages,  premiums,  annuities,  compensations,  re-  14 
munerations,  emoluments,  or  other  fixed,  or  determin-  15 
able  gains,  profits,  and  income  (other  than  payments  16 
described  in  sections  254  and  255),  of  $1,000  or  more  in  17 
any  taxable  year,  or,  in  the  case  of  such  payments  made  18 
by  the  United  States,  the  officers  or  employees  of  the  19 
United  States  having  information  as  to  such  payments  20 
and  required  to  make  returns  in  regard  thereto  by  the  21 
regulations  hereinafter  provided  for,  shall  render  a  true  22 
and  accurate  return  to  the  Commissioner,  under  such  23 
regulations  and  in  such  form  and  manner  and  to  such  24 
extent  as  may  be  prescribed  by  him  with  the  approval  25 
of  the  Secretary,  setting  forth  the  amount  of  such  26 
gains,  profits,  and  income,  and  the  name  and  address  27 
of  the  recipient  of  such  payment.  23 

Such  returns  may  be  required,  regardless  of  amounts,  29 
(1)  in  the  case  of  payments  of  interest  upon  bonds,  30 
mortgages,  deeds  of  trust,  or  other  similar  obligations  31 
of  corporations,  and  (2)  in  the  case  of  collections  of  32 
items  (not  payable  in  the  United  States)  of  interest  33 
upon  the  bonds  of  foreign  countries  and  interest  upon  34 
the  bonds  of  and  dividends  from  foreign  corporations  35 
by  individuals,  corporations,  or  partnerships,  undertak-  36 
Ing  as  a  matter  of  business  or  for  profit  the  collection  37 
of  foreign  payments  of  such  interest  or  dividends  by  38 
means  of  coupons,  checks,  or  bills  of  exchange.  39 

When  necessary  to  make  effective  the  provisions  of  40 
this  section  the  naine  and  address  of  the  recipient  of  41 
income  shall  be  furnished  upon  demand  of  the  Individ  42 
ual,  corporation,  or  partnership  paying  the  income.  43 

The  provisions  of  this  section  shall  apply  to  the  cal-  44 
endar  year  1918  and  each  calendar  year  thereafter,  but  45 
shall  not  apply  to  the  payment  of  interest  on  obliga-  46 
tions  of  the  United  States.  47 

48 
Returns  to  be  Fulilic  Records.  49 

50 
SECTION  257.  That  returns  upon  which  the  tax  has  51 
been  determined  by  the  Commissioner  shall  constitute  52 
public  records;  but  they  shall  be  open  to  inspection  only  53 
upon  order  of  the  President  and  under  rules  and  regu-  54 
lations  prescribed  by  the  Secretary  and  approved  by  55 
the  President:  Provided,  That  the  proper  officers  of  56 
any  State  Imposing  an  income  tax  may,  upon  the  re-  57 
quest  of  the  governor  thereof,  have  access  to  the  re-  58 


Information 
Source 
Return  of 
Required 


at 


Payments  of 
Interest  on 
Bonds, 
Mortgages 
Etc. 


Returns   to   be 
Public 
Records 


87 


1  turns   of   any   corporation,   or    to   an    abstract   thereof 

2  showing  the  name   and  income  of   the   corporation,   at 

3  such  times  and  in  such  manner  as  the  Secretary  may 
Examination  of    4  prescribe:   Provided  further,  That  all  bona  fide  stock- 
Returns   by        B  holders  of  record  owning  1  per  centum  or  more  of  the 
Stockholders       6  outstanding  stock  of  any  corporation  shall,  upon  mak- 

7  ing  request  of  the  Commissioner,  be  allowed  to  examine 

8  the  annual  income  returns  of  such  corporation  and  of 

9  its  subsidiaries.     Any  stockholder  who  pursuant  to  the 

10  provisions  of  this  section  is  allowed  to  examine  the  re- 

11  turn  of  any  corporation,  and  who  makes  known  in  any 

12  manner  whatever  not  provided  by  law  the  amount  or 

13  source  of  income,  profits,  losses,  expenditures,  or  any 

14  particular   thereof,   set  forth  or  disclosed  in   any   such 

15  return,  shall  be  guilty  of  a  misdemeanor  and  be  pun- 

16  ished  by   a  fine  not  exceeding   $1,000,   or  by   imprison- 

17  ment  not  exceeding  one  year,  or  both. 

List  of  Persons   18      The    Commissioner    shall    as    soon    as    practicable    in 
Making  19  each  year  cause  to  be  prepared  and  made  available  to 

Returns  80  public  inspection  in  such  manner  as  he  may  determine, 

81  in  the  office  of  the  collector  in  each  internal-revenue 
88  district  and  in  such  other  places  as  he  may  determine, 
88  lists  containing  the  names  and  the  post-office  addresses 
84  of  all  individuals  making  income-tax  returns  in  such 
86  district. 

86  Publication  of  Statistics. 

27 
Publication  of     88      SECTION  258.     That  the  Commissioner,  with  the  ap- 
Statistics  89  proval  of  the  Secretary,  shall  prepare  and  publish  an- 

80  nually  statistics  reasonably  available  with  respect  to 
31  the  operation  of  the  income,  war  profits  and  excess- 
88  profits  tax  laws,  including  classifications  of  taxpayers 
83  and  of  income,  the  amounts  allowed  as  deductions,  ex- 
•4  emptions,  and  credits,  and  any  other  facts  deemed  per- 
86  tlnent  and  valuable. 

86 

97  Collection  of  Poreign  Items. 

88 

Collection  of        39      SECTION  259.     That  all  individuals,  corporations,  or 

Foreign  40  partnerships   undertaking   as   a   matter   of   business   or 

Items  41  for  profit  the  collection  of  foreign  payments  of  Interest 

4ii  or  dividends  by   means  of  coupons,   checks  or  bills  of 

48  exchange  shall  obtain  a  license  from  the  Commissioner 

44  and   shall  be  subject  to  such  regulations  enabling  the 

*S  Government  to  obtain  the  information   required  under 

48  this  title  as  the  Commissioner,  with  the  approval  of  the 

47  Secretary,  shall  prescribe;  and  whoever  knowingly  un- 

48  dertakes  to  collect  such  payments  without  having  ob- 
48  tained  a  license  therefor,  or  without  complying  with 
M  such  regulations,  shall  be  guilty  of  a  misdemeanor  and 

81  shall  be  fined  not  more  than  $5,000,  or  imprisoned  for 
88  not  more  than  one  year,  or  both. 

68 

64  Citizens  of  United  States  Possessions. 

60 
Citizens  of  U.  S.   56      SECTION  260.     That  any  individual  who  is  a  citizen 
Possessions      57  of  any  possession  of  the  United  States  (but  not  other- 
58  wise   a  citizen   of   the   United   States)    and   who   Is   not 


88 


a  resident  of  the  United  States,  shall  be  subject  to  1 
taxation  under  this  title  only  as  to  income  derived  from  2 
sources  with  the  United  States,  and,, in  such  case  the  3 
tax  shall  be  computed  and  paid  in  the  same  manner  4 
and  subject  to  the  same  conditions  as  In  the  case  of  5 
other  persons  who  are  taxable  only  as  to  income  derived  6 
from  such  sources.  7 

8 
Porto  Rico  and  Philippine  Islands.  9 

10 
SECTION  261.     That  in   Porto  Rico  and  the  Philip-  11  Porto  Rico, 
pine  Islands  the  income  tax  shall  be  levied,  assessed,  12      Philippine 
collected,  and  paid  in  accordance  with  the  provisions  of  13       Islands 
the  Revenue  Act  of  1916  as  amended.  14 

Returns  shall  be  made  and  taxes  shall  be  paid  under  15  . 
Title  I  of  such  Act  in  Porto  Rico  or  the  Philippine  16 
Islands,  as  the  case  may  be,  by  (1)  every  Individual  17 
who  is  a  citizen  or  resident  of  Porto  Rico  or  the  Philip-  18 
pine  Islands  or  derives  Income  from  sources  therein,  13 
and  ( 2 )  every  corporation  created  or  organized  In  Porto  20 
Rico  or  the  Philippine  Islands  or  deriving  income  from  21 
sources  therein.  An  Individual  who  Is  neither  a  citizen  22 
nor  a  resident  of  Porto  Rico  or  the  Philippine  Islands  23 
but  derives  income  from  sources  therein,  shall  be  taxed  24 
In  Porto  Rico  or  the  Philippine  Islands  as  a  non-resi-  25 
dent  alien  individual,  and  a  corporation  created  or  or-  26 
ganized  outside  Porto  Rico  or  the  Philippine  Islands  27 
and  deriving  income  from  sources  therein  shall  be  taxed  28 
In  Porto  Rico  or  the  Philippine  Islands  as  a  foreign  29 
corporation.  For  the  purposes  of  section  216  and  of  30 
paragraph  (6)  of  subdivision  (a)  of  section  234  a  tax  31 
Imposed  in  Porto  Rico  or  the  Philippine  Islands  upon  32 
the  net  Income  of  a  corporation  shall  not  be  deemed  33 
to  be  a  tax  under  this  title.  34 

The  Porto  Rican  or  Philippine  Legislature  shall  have  85 
power  by  due  enactment  to  amend,  alter,  modify,  or  re-  36 
peal  the  Income  tax  laws  In  force  in  Porto  Rico  or  the  37 
Philippine  Islands,  respectively.  38 

89 

40 
TITLE  III.— WAR-PROFITS  AND  EXCESS-PROFITS  41  War-Profits   & 
TAX.  42      Bxcess- 

43       Profits   Tax 
PART   Z.— aSNERAZ.    DEPINXTZOITS.  44 

45 
SECTION  300.  That  when  used  in  this  title  the  46  Definitions 
terms  "taxable  year,"  "fiscal  year,"  "personal  service  47 
corporation,"  "paid  or  accrued,"  and  "dividends"  shall  48 
have  the  same  meaning  as  provided  for  the  purposes  49 
of  Income  tax  in  sections  200  and  201.  The  first  tax-  50 
able  year  for  the  purposes  of  this  title  shall  be  the  51 
same  as  the  first  taxable  year  for  the  purposes  of  the  52 
income  tax  under  Title  II.  53 

54 
PART  ZZ.— -IMPOSITZOIT  OP  TAX.  55  Imposition  of 

56       Tax 
SECTION  301.      (a)   That  In  lieu  of  the  tax  Imposed  57 
by  Title   II  of  the  Revenue  Act  of  1917,   but   In   addi-  58 


1  tlon  to  the  other  taxes  imposed  by  this  Act,  there  shall 

2  be  levied,  collected,  and  paid  for  the  taxable  year  1918 

3  uDon  the  net  income  of  everv  corooration  a  tax  equal 

4  to  the  sum  of  the  following: 
6 

First   Bracket       6  Pirst  Bracket. 

7 

8  30   per  centum  of  the  amount   of   the  net  income  in 

9  excess   of   the   excess-profits    credit    (determined    under 

10  section  312)  and  not  in  excess  of  20  per  centum  of  the 

11  invested  capital; 

Second  Bracket  12  Second  Bracket. 

13 

14  65   per  centum  of  the  amount   of   the  net  income   in 

15  excess  of  20   per  centum  of  the  invested  capital; 
16 

Third  Bracket     17  Third  Bracket. 

18 

19  The    sum,    if    any,    by    which    80    per    centum   of   the 

20  amount  of  the  net  income  in  excess  of  the  war-profits 

21  credit     (determined    under    section     311)     exceeds    the 

22  amount  of  the  tax  computed  under  the  first  and  second 

23  brackets. 

24  (b)  For  the  taxable  year  1919  and  each  taxable  year 
26  thereafter  there  shall  be  levied,  collected,  and  paid  upon 

26  the   net  income   of   every   corporation    (except   corpora- 

27  tions  taxable  under  subdivision    (c)   of  this  section)   a 

28  tax  equal  to  the  sum  of  the  following: 
29 

First   Bracket     30  Pirst   Bracket. 

31 

32  20   per  centum  of  the  amount  of  the   net   income   in 

33  excess   of   the   excess-profits   credit    (determined   under 

34  r-;ection  312)  and  not  in  excess  of  20  per  centum  of  the 

35  invested  capital'; 

Second  Bracket  36  Second  Bracket. 

37 

38  40  per  centum  of  the  amount  of  the  net  income  in  ex- 

39  crss  of  20  per  centum  of  the  invested  capital. 

Year   1919  40      (c)   For  the  taxable  year  1919  and  each  taxable  year 

41  thereafter  there  shall  be  levied,  collected,  and  paid  upon 

42  the  net   income  of  every   corporation   which   derives   in 

43  such  year  a  net  income  of  more  than  $10,000  from  any 

44  fovernment   contract  or   contracts  made   between  April 

45  6.  3917,  and  November  11,  1918,  both  dates  inclusive,  a 

46  tax  equal  to  the  sum  of  the  following: 

47  (1)    Such  a  portion   of  a  tax  computed   at   the   rates 

48  specified  in  subdivision    (a)   as  the  part  of  the  net  in- 

49  come  attributable  to  such  government  contract  or  con- 

50  tracts  bears  to  the  entire  net  income.  In  computing 
81  such  tax  the  excess-profits  credit  and  the  war-profits 
52  credit  applicable  to  the  taxable  year  shall  be  used; 

88      (2)    Such  a  portion   of  a  tax  computed   at  the   rates 

54  specified  In  subdivision    (b)   as  the  part  of  the  net  In- 

55  come  not  attributable   to  such   government  contract  or 

66  contracts  bears  to  the  entire  net  income. 

67  For  the  purpose  of  determining  the  part  of  the  net 

68  income    attributable    to    such    government    contract    or 

90 


contracts,  the  proper  apportionment  and  allocation  of  1 
the  deductions  with  respect  to  gross  income  derived  2 
from  such  government  contract  or  contracts  and  from  3 
other  sources,  respectively,  shall  be  determined  under  4 
rules  and  regulations  prescribed  by  the  Commissioner  5 
with  the  approval  of  the  Secretary.  6 

(d)  In  any  case  where  the  full  amount  of  the  excess-  7 
profits  credit  is  not  allowed  under  the  first  bracket  of  8 
subdivision  (a)  or  (b),  by  reason  of  the  fact  that  such  9 
credit  is  in  excess  of  20  per  centum  of  the  invested  10 
capital,  the  part  not  so  allowed  shall  be  deducted  from  11 
the  amount  in  the  second  bracket.  12 

(e)  For  the  purposes  of  the  Act  approved  March  21,  13 
1918,  entitled  "An  Act  to  provide  for  the  operation  of  14 
transportation  systems  while  under  Federal  control,  for  15 
the  just  compensation  of  their  owners  and  for  other  16 
purposes,"  the  tax  imposed  by  this  title  shall  be  treated  17 
as  levied  by  an  Act  in  amendment  of  Title  II  of  the  18 
Revenue  Act  of  1917.  19 

SECTION  302.     That  the  tax  imposed  by  subdivision  20  Limitation  of 
(a)  of  section  301  shall  in  no  case  be  more  than  30  per  21       Amount  of 
centum  of  the  amount  of  the  net  income  in  excess  of  22       Tax 
$3,000  and  not  in  excess  of  $20,000,  plus  80  per  centum  23 
of  the  amount  of  the  net  income  in  excess  of  $20,000;  24 
the    tax    imposed    by    subdivision     (b)    of    section    301  25 
shall   in   no   case  be   more   than    20   per   centum  of   the  26 
amount  of  the  net  income  in  excess  of  $3,000  and  not  27 
in  excess  of  $20,000,  plus  40  per  centum  of  the  amount  28 
of  the  net  income  in  excess  of  $20,000;  and  the  above  29 
limitations    shall    apply    to    the    taxes    computed    under  30 
subdivisions    (a)    and    (b)    of   section   301,    respectively,  31 
when  used  in  subdivision   (c)   of  that  section.     Nothing  32 
in  this  section  shall  be  construed  in  such  manner  as  to  33 
increase  the  tax  imposed  by  section  301.  34 

SECTION  303.     That  if  part  of  the  net  income  of  a  35  Separate 
corporation  is  derived   (1)  from  a  trade  or  business   (or  36       Corporation 
a  branch  of  a  trade  or  business)   in  which  the  employ-  37       Where  Part 
ment  of  capital  Is  necessary,  and  (2)  a  part  (constltut- 38       of  Business 
ing  not  less  than  30  per  centum  of  Its  total  net  Income)  39      Requires    No 
is  derived  from  a  separate  trade  or  business  (or  a  dis-  40       Capital 
tinctly  separate  branch  of  the  trade  or  business)  which  41 
if  constituting  the  sole  trade  or  business  would  bring  42 
it  within   the  class  of  "personal   service  corporations,"  43 
then  (under  regulations  prescribed  by  the  Commissioner  44 
with  the  approval  of  the   Secretary)   the  tax  upon  the  45 
first  part  of  such  net  income  shall  be  separately  com-  46 
puted    (allowing    in    such    computation    only    the    same  47 
proportionate    part    of    the    credits    authorized    In    sec-  48 
tions  311   and  312),  and  the  tax  upon  the   second  part  49 
shall  be  the  same  percentage  thereof  as  the  tax  so  com-  50 
puted  upon  the  first  part  is  of  such  first  part:  Provided,  51 
That  the  tax  upon  such  second  part  shall  In  no  case  be  52 
less  than  20  per  centum  thereof,  unless  the  tax  upon  the  53 
entire  net  Income,  if  computed  without  benefit  of  this  54 
section,    would   constitute   less   than   20    per   centum   of  55 
such  entire  net  income,  in  which  event  the  tax  shall  be  56 
determined  upon  the  entire  net   income,   without  refer-  57 
ence    to    this    section,    as    other    taxes    are    determined  58 

91 


Exempt 
Corporations 


Gold  Mining 
Corporations 
Exempt    to 
Certain 
Extent 


New 
Corporations 


Credits 
Allowed 


1  under  this  title.     The  total   tax   computed   under   thla 

2  section  shall  be  subject  to  the  limitations  provided  m 

3  section  302. 

4  SECTION  304.      (a)   That  the  corporations  enumerat- 
6  ed  in  section  231  shall,  to  the  extent  that  they  are  ex- 

6  empt  from  income  tax  under  Title  II,  be  exempt  from 

7  taxation  under  this  title. 

8  (b)  Any  corporation  whose  net  income  for  the  taxable 

9  year  is  less  than  $3,000  shall  be  exempt  from  taxation 

10  under  this  title. 

11  (c)    In   the  case  of  any   corporation   engaged   In   the 

12  mining  of  gold,  the  portion  of  the  net  income  derived 

13  from  the  mining  of  gold  shall  be  exempt  from  the  tax 

14  imposed   by   this   title,   and    the   tax   on    the    remaining 

15  portion  of  the  net  income  shall  be  the  proportion  of  a 

16  tax  computed   without   the   benefit   of  this   subdivision 

17  which  such  remaining  portion  of  the  net  income  bears 

18  to  the  entire  net  income. 

19  SECTION  305.     That  if  a  tax  is  computed  under  this 

20  title    for    a    period    of    less    than    twelve    months,    the 

21  specific   exemption    of    $3,000,    wherever   referred    to    in 

22  this  title,  shall  be  reduced  to  an  amount  which  is  the 

23  same    proportion    of    $3,000    as   the   number   of    months 

24  in  the  period  is  of  twelve  months. 
25 

26 

27  PART  IZZ.— CREDITS. 

28 

29  SECTION   310.     That  as  used  in   this  title  the  term 

30  "prewar   period"   means   the  calendar  years   1911,   1912, 

31  and  1913,  or,  if  a  corporation  was  not  in  existence  dur- 

32  ing  the  whole   of   such   period,    then   as   many   of   such 

33  years  during  the  whole  of  which  the  corporation  was 

34  in   existence. 

35  SECTION  311.      (a)   That  the  war-profits  credit  shall 

36  consist  of  the  sum  of: 

37  (1)  A  specific  exemption  of  $3,000;  and 

38  (2)  An  amount  equal  to  the  average  net  Income  of 
89  the   corporation   for  the  prewar  period,   plus  or   minus, 

40  as  the  case  may  be,  10  per  centum  of  the  difference  be- 

41  tween    the    average    invested    capital    for    the    prewar 

42  period  and  the  Invested  capital  for  the  taxable  year.     If 

43  the  tax  Is  computed  for  a  period  of  less  than   twelve 

44  months    such    amount    shall    be    reduced    to    the    same 

45  proportion    thereof    as    the    number    of    months    In    the 

46  period  is  of  twelve  months. 

47  (b)   If  the  corporation  had  no  net  income  for  the  pre- 

48  war  period,  or  if  the  amount  computed  under  paragraph 

49  (2)  of  subdivision  (a)  is  less  than  10  per  centum  of  Its 

50  Invested   capital   for   the    taxable   year,    then    the    war- 

61  profits  credit  shall  be  the  sum  of: 

62  (1)  A  specific  exemption  of  $3,000;  and 

63  (2)  An   amount   equal    to   10    per   centum    of   the    In- 

64  vested  capital  for  the  taxable  year. 

5S  (c)  If  the  corporation  was  not  In  existence  during 
66  the  whole  of  at  least  one  calendar  year  during  the 
87  prewar  period,  then,  except  as  provided  in  subdivision 
68  (d),  the  war-profits  credit  shall  be  the  sum  of: 


(1)  A  specific  exemption  of  $3,000;  and  1 

(2)  An  amount  equal  to  the  same  percentage  of  the  2 
invested  capital  of  the  taxpayer  for  the  taxable  year  3 
as  the  average  percentage  of  net  Income  to  invested  4 
capital,  for  the  prewar  period,  of  corporations  engaged  6 
in  a  trade  or  business  of  the  same  general  class  aa  6 
that  conducted  by  the  taxpayer;  but  such  amount  shall  7 
in  no  case  be  less  than  10  per  centum  of  the  invested  8 
capital  of  the  taxpayer  for  the  taxable  year.  Such  9 
average  percentage  shall  be  determined  by  the  Com-  LO 
missloner  on  the  basis  of  data  contained  in  return  Ji  11 
made  under  Title  II  of  the  Revenue  Act  of  1917,  anvl  12 
the  average  known  as  the  median  shall  be  used.  If  13 
such  average  percentage  has  not  been  determined  and  14 
published  at  least  30  days  prior  to  the  time  when  tb<e  IE 
return  of  the  taxpayer  is  due,  then  for  purposes  of  16 
such  return  10  per  centum  shall  be  used  in  lieu  there- 17 
of;  but  such  average  percentage  when  determined  shall  18 
be  used  for  the  purposes  of  section  250  in  determining  19 
the  correct  amount  of  the  tax.  20 

(d)  The  war-profits  credit  shall  be  determined  in  the  21 
manner  provided  in  subdivision  (b)  instead  of  in  the  22 
manner  provided  in  subdivision  (c),  in  the  case  of  any  23 
corporation  which  was  not  in  existence  during  the  24 
whole  of  at  least  one  calendar  year  during  the  prewar  25 
period,  if  (1)  a  majority  of  its  stock  at  any  time  during  26 
the  taxable  year  is  owned  or  controlled,  directly  or  in- 27 
directly,  by  a  corporation  which  was  in  existence  dur-28 
ing  the  whole  of  at  least  one  calendar  year  during  the  29 
prewar  period,  or  if  (2)  50  per  centum  or  more  of  its  30 
gross  income  (as  computed  under  section  233  for  in- 31 
come  tax  purposes)  consists  of  gains,  profits,  commis-32 
sions,  or  other  income,  derived  from  a  government  con-  33 
tract  or  contracts  made  between  April  6,  1917,  and  No- 34 
vember  11,  1918,  both  dates  inclusive.  35 

(e)  A  foreign  corporation  shall  not  be  entitled  to  a  36 
specific  exemption  of  $3,000.  37 

38 
SECTION   312.     That   the    excess-profits   credit   shall  39  Foreign 
consist  of  a  specific  exemption  of  $3;000  plus  an  amount 40       Corporation 
equal  to  8  per  centum  of  the  invested  capital  for  the  41 
taxable  year.  42 

A  foreign  corporation  shall  not  be  entitled  to  the  43 
specific   exemption   of   $3,000.  44 

45 
46 
47 
PART   TV.— NUT   INCOME.  48  Net  Income 

49       How 
SECTION    320.      (a)   That    for    the    purpose    of    this  50       Computed 
title  the  net  income  of  a   corporation   shall  be  ascer-51 
tained   and   returned —  52 

(1)  For  the  calendar  years  1911  and  1912  upon  the  53 
same  basis  and  in  the  same  manner  as  provided  in  54 
section  38  of  the  Act  entitled  "An  Act  to  provide  55 
revenue,  equalize  duties,  and  encourage  the  Industries  56 
of  the  United  States,  and  for  other  purposes,"  ap-57 
proved  August   5,   1909,  except  that  taxes  imposed  by  58 

93 


1  such   section   and   paid   by   the   corporation   within   tne 

2  year  shall  be  included; 

3  (2)  For  the  calendar  year  1913  upon  the  same  basis 

4  and  in  the  same  manner  as  provided  in  Section  II  of 
6  the  Act  entitled   "An  Act  to   reduce   tariff   duties  and 

6  to  provide  revenue  for  the  Government,  and  for  other 

7  purposes,"  approved  October  3,  1913,  except  that  taxes 

8  imposed  by  section   38   of  such  Act  of  August  5,   1909, 
8  and    paid    by    the    corporation    within    the    year    shall 

10  be    included,    and    except    that    the    amounts    received 

11  by    it   as    dividends    upon    the    stock    or    from    the    net 
18  earnings  of   other  corporations   subject  to  the  tax  im- 

13  posed   by   Section    II   of   such   Act   of   October   3,    1913, 

14  shall  be  deducted;   and 

15  (3)  For   the   taxable   year   upon    the   same   basis   and 

16  in   the   same   manner  as  provided   for  income  tax  pur- 

17  poses  in  Title  II  of  this  Act. 

18  (b)   The   average   net   income   for   the   prewar   period 

19  shall   be   determined  by   dividing  the  number  of  years 
80  within  that  period  during  the  whole  of  which  the  corpo- 

21  ration  was  in  existence  into  the  sum  of  the  net  Income 

22  for  such  years,  even  though  there  may  have  been  no  net 

23  income   for   one   or   more   of   such   years. 


24 
86 
86 

ZnveBtttd  Capital  27 


FART    v.— INVESTED    CAPITAI.. 


"Intangible 
Property" 

"Tangrible 
Property" 


'Borrowed 
Capital" 

'Inadmissible 
Assets" 


Stock  of  No  Par 
Value 


29  SECTION  325.      (a)   That  as  used   in   this  title— 

30  The  term  "intangible  property"  means  patents,  copy- 

31  rights,  secret  processes  and  formulae,  good  will,  trade - 

32  marks,  trade-brands,  franchises,  and  other  like  property; 

33  The    term    "tangible   property"    means    stocks,    bonds, 

34  notes,   and    other   evidences   of   indebtedness,    bills   and 

35  accounts  receivable,  leaseholds,  and  other  property  other 

36  than   intangible   property; 

37  The  term  "borrowed  capital"  means  money  or  other 

38  property  borrowed,  whether  represented  by  bonds,  notes, 

39  open  accounts,  or  otherwise; 

40  The  term  "inadmissible  assets"  means  stocks,  bonds, 

41  and  other  obligations  (other  than  obligations  of  the 
48  United    States),   the   dividends   or   interest   from   which 

43  is  not  included  in  computing  net  income,  but  where  the 

44  Income   derived   from    such   assets    consists   in    part   of 

45  gain  or  profit  derived   from   the  sale  or  other  disposl- 

46  tion   thereof,   or  where  all   or  part   of   the   interest   de- 

47  rived    from    such    assets    Is    in    effect    included    In    the 

48  net  Income  because  of  the  limitation  on  the  deduction 

49  of  Interest  under  paragraph  (2)  of  subdivision  (a)  of 
60  section  234,  a  corresponding  part  of  the  capital  in- 
51  vested  In  Such  assets  shall  not  be  deemed  to  be  inad- 
52*mlsslble  assets.  The  term  "admissible  assets"  means 
63'all  assets  other  than  Inadmissible  assets,  valued  In 
54iaccordance  with  the  provisions  of  subdivision  (a)  of 
56»sectlon   826,   section   830,  and  section   331. 

56  (b)  For  the  purpose  of  this  title,  the  par  value  of 
87fstock  or  shares  shall,  In  the  case  of  stock  or  shares 
68  issued  at  a  nominal  value  or  having  no  par  value,  be 


94 


deemed  to  be  the  fair  market  value  as  of  the  date  or 
dates  of  issue  of  such  stock  or  shares. 


SECTION    326.      (a)   That   as    used^in    this    title    the    4  Definition  of 
term  "invested  capital"  for  any  year  means   (except  as    5       "Invested 
provided  in  subdivisions    (b)   and    (c)    of  this   section):    6       Capital" 

(1)  Actual  cash  bona  fide  paid  in  for  stock  or  shares;    7 

(2)  Actual  cash  value  of  tangible  property,  other  8 
than  cash,  bona  fide  paid  in  for  stock  or  shares,  at  the  9 
time  of  such  payment,  but  in  no  case  to  exceed  the  10 
par  Value  of  the  original  stock  or  shares  specifically  11 
issued  therefor,  unless  the  actual  cash  value  of  such  12 
tangible  property  at  the  time  paid  in  is  shown  to  the  13 
satisfaction  of  the  Commissioner  to  have  been  clearly  14 
and  substantially  in  excess  of  such  par  value,  in  which  15 
case  such  excess  shall  be  treated  as  paid-in  surplus:  16 
Provided,  That  the  Commissioner  shall  keep  a  record  17 
of  all  cases  in  which  tangible  property  is  included  in  18 
invested  capital  at  a  value  in  excess  of  the  stock  or  19 
shares  issued  therefor,  containing  the  name  and  ad-  20 
dress  of  each  taxpayer,  the  business  in  which  engaged,  21 
the  amount  of  invested  capital  and  net  income  shown  22 
by  the  return,  the  value  of  the  tangible  property  at  the  23 
time  paid  in,  the  par  value  of  the  stock  or  shares  spe-  24 
cifically  issued  therefor,  and  the  amount  included  un-  25 
der  this  paragraph  as  paid-in  surplus.  The  Commis-  26 
sioner  shall  furnish  a  copy  of  such  record  and  other  27 
detailed  information  with  respect  to  such  cases  when  28 
required  by  resolution  of  either  House  of  Congress,  29 
without  regard  to  the  restrictions  contained  in  section  20 
257;  31 

(3)  Paid-in  or  earned  surplus  and  undivided  profits;  32 
not  including  surplus  and  undivided  profits  earned  dur-  33 
ing  the  year;  34 

(4)  Intangible  property  bona  fide  paid  in  for  stock  35 
or  shares  prior  to  March  3,  1917,  in  an  amount  not  36 
exceeding  (a)  the  actual  cash  value  of  such  property  37 
at  the  time  paid  in,  (b)  the  par  value  of  the  stock  or  38 
shares  issued  therefor,  or  (c)  in  the  aggregate  25  per  39 
centum  of  the  par  value  of  the  total  stock  or  shares  40 
of  the  corporation  outstanding  on  March  3,  1917,  which-  41 
ever  is  lowest;  42 

(5)  Intangible  property  bona  fide  paid  in  for  stock  43 
or  shares  on  or  after  March  3,  1917,  in  an  amount  not  44 
exceeding  (a)  the  actual  cash  value  of  such  property  at  45 
the  time  paid  in,  (b)  the  par  value  of  the  stock  or  46 
shares  issued  therefor,  or  (c)  in  the  aggregate  25  per  47 
centum  of  the  par  value  of  the  total  stock  or  shares  of  40 
the  corporation  outstanding  at  the  beginning  of  the  49 
taxable  year,  whichever  is  lowest:  Provided,  That  in  50 
no  case  shall  the  total  amount  included  under  para-  51 
graphs  (4)  and  (5)  exceed  in  the  aggregate  25  per  52 
centum  of  the  par  value  of  the  total  stock  or  shares  of  53 
the  corporation  outstanding  at  the  beginning  of  the  54 
taxable  year;  but  55 

(b)  As  used  in  this  title  the  term  "invested  capital"  56 
does  not  include  borrowed  capital.  57 

(c)  There  shall  be  deducted  from  invested  capital  as  58 


95 


1  above  defined  a  percentage  thereof  equal  to  the  per- 
g  centago  which  the  amount  of  inadmissible  assets  Is  of 
8  Lhe  amount  of  admissible  and  Inadmissible  assets  held 
4  during  the  taxable  year. 

§  (d)  The  Invested  capital  for  any  period  shall  be  the 
0  average   invested   capital   for   such   period,    but   in   tne 

7  case  of  a  corporation  making  a  return  for  a  fractional 

8  part  of  a  year,  it  shall  (except  for  the  purpose  of  para- 
8  graph    (2)    of   subdivision    (a)    of   section    311)    be   the 

10  iiame  fractional  part  of  such  average  invested  capital. 

11  The  average  invested  capital  for  the  prewar  period 
18  Hhall  be  determined  by  dividing  the  number  of  years 

18  within  that  period  during  the  whole  of  which  the  cor- 
14  poratlon  was  in  existence  into  the  sum  of  the  average 
10  invested  capital  for  such  years. 

16 
Special  17      SECTION  327. — That  in   the  following  cases  the  tax 

Computation     18  «hall  be  determined  as  provided  in  section  328: 

19  (a)  Where  the  Commissioner  is  unable  to  determine 
80  the  invested  capital  as  provided  in  section  326; 

21       (b)   In   the  case  of  a  foreign   corporation; 

28      (c)  Where   a   mixed   aggregate   of   tangible   property 

83  and  intangible  property  has  been  paid  in  for  stock  or 

84  for  stock  and  bonds  and  the  Commissioner  is  unable 
86  satisfactorily  to  determine  the  respective  values  of  the 

86  several  classes  of  property  at  the  time^  of  payment,  or 

87  to  distinguish  the  classes  of  property  paid  in  for  stock 
28  and  for  bonds,  respectively; 

89      (d)   Where  upon  application   by   the  corporation   the 

30  Commissioner  finds  and  so  declares  of  record  that  the 

31  tax  if  determined  without  benefit  of  this  section  would, 

32  owing  to  abnormal  conditions  afCectingr  the  capital  or 

33  income  of  the  corporation,  work  upon  the  corporation 

34  an  exceptional  hardship  evidenced  by  gross  dlspropor- 
30  tlon  between  the  tax  computed  without  benefit  of  this 

36  section  and  the  tax  computed  by  reference  to  the  rep- 

37  resentative  corporations  specified  in  section  328.     This 

38  subdivision  shall  not  apply  to  any  case  (1)  in  which 
89  the  tax   (computed  without  benefit  of  this  section)   is 

40  high  merely  because  the  corporation  earned  within  the 

41  taxable  year  a  high  rate  of  profits  upon  a  normal  in- 

42  vested  capital  nor  (2)  in  which  50  per  centum  or  more 

43  of  the  gross  income  of  the  corporation  for  the  taxable 

44  year   (computed  under  section  233  of  Title  II)  consists 

45  of  gains,  profits,  commissions,  or  other  income,  derived 

46  on   a   cost-plus    basis    from   a   government   contract   or 

47  contracts   made  between  April   6,   1917,  and   November 

48  11,  1918,  both  dates  inclusive. 
49 

60     SECTION  328.     (a)  In  the  cases  specified  in  section 

51  327  the  tax  shall  be  the  amount  which  bears  the  same 

52  ratio  to  the  net  income  of  the  taxpayer  (in  excess  of  the 

63  specific  exemption  of  $3,000)   for  the  taxable  year,  as 

64  the  average  tax  of  representative  corporations  engaged 

65  in   a  like  or  similar  trade   or  bHsiness,   bears   to   their 

66  average  net  income  (In  excess  of  the  specific  exemption 

67  of  13,000)  for  such  year.  In  the  case  of  a  foreign  cor- 
68poration  the  tax  shall  be  computed  without  deducting 


the  specific  exemption  of  $3,000  either  for  the  taxpayer    1 
or  the  representative  corporations.  2 

In  computing  the  tax  under  this  section  the  Commls-  3 
sloner  shall  compare  the  taxpayer  only  with  representa-  4 
tive  corporations  whose  invested  capital  can  be  satis-  6 
factorily  determined  under  section  326  and  which  are,  6 
as  nearly  as  may  be,  similarly  circumstanced  with  re-  7 
spect  to  gross  income,  net  income,  profits  per  unit  of  8 
business  transacted  and  capital  employed,  the  amount  9 
and  rate  of  war  profits  or  excess  profits,  and  all  other  10 
relevant  facts  and  circumstances.  11 

(b)  For  the  purposes  of  subdivision  (a)  the  rati'os  12 
between  the  average  tax  and  the  average  net  income  13 
of  representative  corporations  shall  be  determined  by  14 
the  Commissioner  in  accordance  with  regulations  pre-  15 
scribed  by  him  with  the  approval  of  the  Secretary.  16 

In  cases  in  which  the  tax  is  to  be  computed  umJei  17 
this  section,  if  the  tax  as  computed  without  the  bene  HI;  18 
of  this  section  is  less  than  50  per  centum  of  the  net  19 
income  of  the  taxpayer,  the  installments  shall  in  tins  20 
first  instance  be  computed  upon  the  basis  of  such  tajt.;  21 
but  if  the  tax  so  computed  is  50  per  centum  or  moi  »  22 
of  the  net  income,  the  installments  shall  in  the  fiirs  t  23 
instance  be  computed  upon  the  basis  of  a  tax  equal  24 
to  50  per  centum  of  the  net  income.  In  any  case,  thii)  25 
actual  ratio  when  ascertained  shall  be  used  in  dettr-  26 
mining  the  correct  amount  of  the  tax.  If  the  corrtsct  27 
amount  of  the  tax  when  determined  exceeds  50  per  28 
centum  of  the  net  income,  any  excess  of  the  corroci  29 
installments  over  the  amounts  actually  paid  shall  on  30 
notice  and  demand  be  paid  together  with  interest  at  31 
the  rate  of  Vz  of  1  per  centum  per  month  on  such  ex-  32 
cess  from  the  time  the  installment  was  due.  33 

(c)  The  Commissioner  shall  keep  a  record  of  all  34 
cases  in  which  the  tax  is  determined  in  the  manner  pre-  35 
scribed  in  subdivision  (a),  containing  the  name  and  ad- 36 
dress  of  each  taxpayer,  the  business  in  which  engaged,  37 
the  amount  of  invested  capital  and  net  Income  shown  38 
by  the  return,  and  the  amount  of  Invested  capital  as  39 
determined  under  such  subdivision.  The  Commissioner  40 
shall  furnish  a  copy  of  such  record  and  other  detailed  41 
Information  with  respect  to  such  cases  when  required  42 
by  resolution  of  either  House  of  Congress,  without  re- 43 
gard  to  the  restrictions  contained  in  section  257.  44 

45 
46 
47 
PART  VZ.— BZIOBOANIZATZONS.  48  Beorgraulzatlons 

49 
SECTION  330.  That  In  the  case  of  the  reorganlza-  50 
tion,  consolidation,  or  change  of  ownership  after  Jan-  51 
uary  1,  1911,  of  a  trade  or  business  now  carried  on  by  52 
a  corporation,  the  corporation  shall  for  the  purposes  of  53 
this  title  be  deemed  to  have  been  In  existence  prior  to  54 
that  date,  and  the  net  income  and  Invested  capital  of  55 
such  predecessor  trade  or  business  for  all  or  any  part  56 
of  the  prewar  period  prior  to  the  organization  of  the  57 
corporation    now    carrying    on    such    trade    or    business  58 

97 


1  shall  be  deemed  to  have  been  the  net  income  and  in- 
8  vested  capital  of  such  corporation. 

3  If  such  predecessor  trade  or  business  was  carried  on 

4  by  a  partnership  or  Individual  the  net  income  for  the 
6  prewar    period    shall,    under    regulations    prescribed    by 

6  the  Commissioner  with  the  approval  of  the   Secretary, 

7  be  ascertained  and  returned  as  nearly  as  may  be  upon 

8  the   same   basis  and   in    the   same   manner   as   provided 

9  for  corporations  in  Title  II,  including  a  reasonable  de- 

10  duction  for  salary  or  compensation  to  each  partner  or 

11  the  individual  for  personal  services  actually  rendered. 
la      In  the  case  of  the  organization  as  a  corporation  be- 

13  fore   July   1,   1919,   of  any   trade   or   business   in  which 

14  capital  is  a  material  income-producing  factor  and  which 

15  was  previously   owned  by   a  partnership   or   individual, 

16  the  net  income  of  such  trade  or  business  from  January 

17  1,  1918,  to  the  date  of  such  reorganization  may  at  the 

18  option  of  the  individual  or  partnership  be  taxed  as  the 

19  net  income  of  a  corporation  is  taxed  under  Titles  II  and 

20  III;  in  which  event  the  net  income  and  invested  capital 
^             21  of  such  trade  or  business  shall  be  computed  as  if  such 

22  corporation   had  been   in   existence   on  and   after   Janu- 

23  ary   1,   1918,   and   the   undistributed   profits   or   earnings 

24  of  such  trade  or  business  shall  not  be   subject  to  the 

25  surtax    imposed    in    section    211,    but    amounts    distrib- 

26  uted  on  or  after  January  1,  1918,  from  the  earnings  of 

27  such  trade  or  business  shall  be  taxed  to  the  recipients 

28  as  dividends,  and  all  the  provisions  of  Titles  II  and  III 

29  relating    to    corporations    shall,    so    far    as    practicable, 

30  apply   to   such   trade   or  business:    Provided,   That   this 

31  paragraph  shall  not  apply  to  any  trade  or  business  the 

32  net  income  of  which  for  the  taxable  year  1918  was  less 

33  than    20    per   centum   of   its   invested   capital    for    such 
84  year:   Provided  further.   That  any   taxpayer  who   takes 

35  advantage  of  this  paragraph  shall  pay  the  tax  imposed 

36  by  section  1000  of  this  Act  and  by  the  first  subdivision 

37  of  section   407  of  the  Revenue  Act  of  1916,  as  if  such 

38  taxpayer  had  been  a  corporation  on  and  after  January 

39  1,  1918,  with  a  capital  stock  having  no  par  value. 

40  If  any  asset  of  the  trade  or  business  in  existence  both 

41  during   the   taxable   year   and   any    prewar   year   Is    in- 

42  eluded  in  the  Invested  capital  for  the  taxable  year  but 

43  is  not  included  In  the  invested  capital  for  such  prewar 

44  year,   or   is   valued   on   a   different   basis    In    computing 
48  the  invested  capital  for  the  taxable  year  and  such  pre- 

46  war  year,  respectively,  then  under  rules  and  regulations 

47  to    be    prescribed    by    the    Commissioner    with    the    ap- 

48  proval    of    the    Secretary    such    readjustments    shall    be 

49  made  as.  are  necessary  to  place  the  computation  of  the 

60  Invested    capital    for    such    prewar    year    on    the    basis 

61  employed   In   determining   the    invested   capital   for   the 

62  taxable  year. 
63 

Reorganization  54  SECTION  331.  In  the  case  of  the  reorganization, 
After  March  55  consolidation,  or  change  of  ownership  of  a  trade  or 
3,1917  56  business,    or    change    of    owners'hip    of    property,    after 

57  March  3,   1917,   If  an   Interest  or  control  In   such^  trade 

58  or  business  or  property  of  50  per  centum  or  more  re- 

98 


mains  In  the  same  persons,  or  any  of  them,  then  no  1 
asset  transferred  or  received  from  the  previous  owner  2 
shall,  for  the  purpose  of  determining  invested  capital,  3 
be  allowed  a  greater  value  than  would  have  been  4 
allowed  under  this  title  in  computing  the  invested  capi-  6 
tal  of  such  previous  owner  if  such  asset  had  not  been  6 
so  transferred  or  received:  Provided,  That  if  such  pre-  7 
vious  owner  was  not  a  corporation,  then  the  value  of  8 
any  asset  so  transferred  or  received  shall  be  taken  at  9 
its  cost  of  acquisition  (at  the  date  when  acquired  by  10 
such  previous  owner)  with  proper  allowance  for  depre-  11 
elation,  impairment,  betterment  or  development,  but  12 
no  addition  to  the  original  cost  shall  be  made  for  any  13 
charge  or  expenditure  deducted  as  expense  or  otherwise  14 
on  or  after  March  1,  1913,  in  computing  the  net  income  15 
of  such  previous  owner  for  purposes  of  taxation.  16 

17 

18 

PART  VZX.— MZSCEI^IiANEOUS.  19 

20 
SECTION  335.  (a)  That  if  a  corporation  (other  than  21 
a  personal  service  corporation)  makes  return  for  a  22 
fiscal  year  beginning  in  1917  and  ending  in  1918,  the  tax  23 
for  the  first  taxable  year  under  this  title  shall  be  the  24 
sum  of:  25 

(1)  The  same  proportion  of  a  tax  for  the  entire  26 
period  computed  under  Title  II  of  the  Revenue  Act  of  27 

1917  which  the  portion  of  such  period  falling  within  the  28 
calendar  year  1917  is  of  the  entire  period,  and  (2)  the  29 
same  proportion  of  a  tax  for  the  entire  period  com-  30 
puted  under  this  title  at  the  rates  specified  in  sub-  31 
division  (a)  of  section  301  which  the  portion  of  such  32 
period  falling  within  the  calendar  year  1918  is  of  the  33 
entire  period.  34 

Any  amount  heretofore  or  hereafter  paid  on  account  35 
of  the  tax  imposed  for  such  fiscal  year  by  Title  II  of  36 
the  Revenue  Act  of  1917  shall  be  credited  toward  the  37 
payment  of  the  tax  imposed  for  such  fiscal  year  by  this  38 
title,  and  if  the  amount  so  paid  exceeds  the  amount  of  39 
the  tax  imposed  by  this  title,  the  excess  shall  be  40 
credited  or  refunded  to  the  corporation  in  accordance  41 
with  the  provisions  of  section  252.  42 

(b)  If  a  corporation  makes  return  for  a  fiscal  year  43 
beginning  in  1918  and  ending  in  1919,  the  tax  for  such  44 
fiscal  year  under  this  title  shall  be  the  sum  of:  (1)  45 
the  same  proportion  of  a  tax  for  the  entire  period  com-  46 
puted  under  subdivision  (a)  of  section  301  which  the  47 
portion  of  such  period  falling  within  the  calendar  year  48 

1918  is  of  the  entire  period,  and  (2)  the  same  proper-  49 
tion  of  a  tax  for  the  entire  period  computed  under  50 
subdivision  (b)  or  (c)  of  section  301  which  the  portion  51 
of  such  period  falling  within  the  calendar  year  1919  is  52 
of  the  entire  period.  53 

(c)  If  a  partnership  or  a  personal  service  corporation  54 
makes  return  for  a  fiscal  year  beginning  in  1917  and  55 
ending  in  1918,  it  shall  pay  the  same  proportion  of  a  56 
tax  for  the  entire  period  computed  under  Title  II  of  57 
the   Revenue   Act   of   1917   which   the   portion   of   such  58 


Fiscal    Year 
Other  Than 
Calendar 
Years — 
Corporation 


Partnership 
and    Personal 
Service 
Corporation 


99 


1  period  falling  within  the  calendar  year  191?   is  of  the 

2  entire  period. 

Any   tax  paid   by   a  partnership   or   personal   service 

4  corporation  for  any  period  beginning  on  or  after  Janu- 

5  ary  1,  1918,  shall  be  immediately  refunded  to  the  part* 

6  nership  or  corporation  as  a  tax  erroneously  or  illegally 

7  collected. 
H 

Return   and  9      SECTION   336.     That   every   corporation,   not   exempt 

Payment   of     10  under  section  304,  shall  make  a  return  for  the  purposes 
Tax  11  of    this    title.      Such    returns    shall    be    made,    and    the 

12  taxes  imposed  by  this  title  shall  be  paid,  at  the  same 

13  times  and  places.  In  the  same  manner,  and  subject  to 

14  the  same  conditions,  as  is  provided  in  the  case  of  re- 

15  turns  and  payment  of  income  tax  by  corporations  for 

16  the  purposes  of  Title  II,  and  all  the  provisions  of  that 

17  title  not   Inapplicable,   Including   penalties,   are   hereby 

18  made  applicable  to  the  taxes  Imposed  by  this  title. 
19 

Mines,    Oil    and  20      SECTION  337.     That  In  the  case  of  a  bona  fide  sale 
Gas  Wells        21  of    mines,    oil   or    gas    wells,    or   any    interest    therein, 

22  where    the   principal   value   of   the    property    has    been 

23  demonstrated  by  prospecting  or  exploration  and  discov- 

24  ery  work  done  by  the  taxpayer,  the  portion  of  the  tax 

25  imposed  by  this  title  attributable  to  such  sale  shall  not 

26  exceed  20  per  centum  of  the  selling  price  of  such  prop- 
27erty  or  interest. 

28 


Definitions 
"Executor' 


'Collector' 


37 
38 
39 
40 
41 
42 
43 
44 
45 
Schedule  of  46 
Tax  Rates  47 
43 
49 
60 
61 


TITLE  IV.— ESTATE  TAX. 

SECTION  400.     That  when  used  In  this  title— 

The  term  "executor"  means  the  executor  or  adminis- 
trator of  the  decedent,  or.  If  there  Is  no  executor  or 
administrator,  any  person  who  takes  possession  of  any 
property  of  the  decedent;  and 

The  term  "collector"  means  the  collector  of  Internal 
revenue  of  the  district  in  which  was  the  domicile  of 
the  decedent  at  the  time  of  his  death,  or.  If  there  was 
no  such  domicile  In  the  United  States,  then  the  collector 
of  the  district  In  which  is  situated  the  part  of  the  gross 
estate  of  the  decedent  In  the  United  States,  or,  if  such 
part  of  the  gross  estate  Is  situated  in  more  than  one 
district,  then  the  collector  of  Internal  revenue  of  such 
district  as  may  be  designated  by  the  Commissioner. 

SECTION  401.  That  (In  lieu  of  the  tax  Imposed  by 
Title  II  of  the  Revenue  Act  of  1916,  as  amended,  and 
in  lieu  of  the  tax  Imposed  by  Title  IX  of  the  Revenue 
Act  of  1917)  a  tax  equal  to  the  sum  of  the  following 
percentages  of  the  value  of  the  net  estate  (determined 
as  provided  In  section  403)  Is  hereby  Imposed  upon  the 
transfer  of  the  net  estate  of  every  decedent  dying  after 
the  passage  of  this  Act,  whether  a  resident  or  non- 
resident of  the  United  States: 

1  per  centum  of  the  amount  of  the  net  estate  not  In 
excess  of  |50,000; 

2  per  centum  of  the  amount  by  which  the  net  estate 
exceeds  $50,000  and  does  not  exceed  $150,000; 


100 


3  per  centum  of  the  amount  by  which  tne  ijet  estate  1 
exceeds  ?150,000  and  does  not  exceed  $250,000^     ,      ,  ,-.     2 

4  per  centum  of  the  amount  by  which,  tne  net  estate  3 
exceeds  $250,000  and  does  not  exceed  $450,000;  4 

6  per  centum  of  the  amount  by  which  the  net  estate  5 
exceeds  $450,000  and  does  not  exceed  $750,000;  6 

8  per  centum  of  the  amount  by  which  the  net  estate  7 
exceeds  $750,000  and  does  not  exceed  $1,000,000;  8 

10  per  centum  of  the  amount  by  which  the  net  estate  9 
exceed  $1,000,000  and  does  not  exceed  $1,500,000;  10 

12  per  centum  of  the  amount  by  which  the  net  estate  H 
exceeds  $1,500,000  and  does  not  exceed  $2,000,000;  12 

14  per  centum  of  the  amount  by  which  the  net  estate  13 
exceeds  $2,000,000  and  does  not  exceed  $3,000,000;  14 

16  per  centum  of  the  amount  by  which  the  net  estate  15 
exceeds  $3,000,000  and  does  not  exceed  $4,000,000;  16 

18  per  centum  of  the  amount  by  which  the  net  estate  17 
exceeds  $4,000,000  and  does  not  exceed  $5,000,000;  18 

20  per  centum  of  the  amount  by  which  the  net  estate  19 
exceeds  $5,000,000  and  does  not  exceed  $8,000,000;  20 

22  per  centum  of  the  amount  by  which  the  net  estate  21 
exceeds  $8,000,000  and  does  not  exceed  $10,000,000;  and  22 

25  per  centum  of  the  amount  by  which  the  net  estate  23 
exceeds  $10,000,000.  24 

The  taxes  imposed  by  this  title  or  by  Title  II  of  the  85 
Revenue  Act  of  1916  (as  amended  by  the  Act  entitled  26 
"An  Act  to  provide  increased  revenue  to  defray  the  27 
expenses  of  the  increased  appropriations  for  the  army  28 
and  navy  and  the  extensions  of  fortifications,  and  for  29 
other  purposes,"  approved  March  3,  1917)  or  by  Title  30 
IX  of  the  Revenue  Act  of  1917,  shall  not  apply  to  the  3^ 
transfer  of  the  net  estate  of  any  decedent  who  has  died  32 
or  may  die  while  serving  in  the  military  or  naval  forces  33 
of  the  United  States  in  the  present  war  or  from  in-  34 
juries  received  or  disease  contracted  while  in  such  35 
service,  and  any  such  tax  collected  upon  such  transfer  36 
shall  be  refunded  to  the  executor.  37 

38 

SECTION  402.     That  the  value  of  the   gross  estate  39  Gross  Value  of 
of  the  decedent  shall  be  determined  by  including  the  40       Estate — How 
value  at  the  time  of  his  death  of  all  property,  real  or  41       Determined 
personal,  tangible  or  intangible,  wherever  situated —      42 

(a)  To  the  extent  of  the  interest  therein  of  the  de-  43 
cedent  at  the  time  of  his  death  which  after  his  death  is  44 
subject  to  the  paj-^ment  of  the  charges  against  his  es-  45 
tate  and  the  expenses  of  its  administration  and  is  sub-  46 
ject  to  distribution  as  part  of  his  estate;  47 

(b)  To  the  extent  of  any  interest  therein  of  the  sur-  48 
viving  spouse,  existing  at  the  time  of  the  decedent's  49 
death  as  dower,  courtesy,  or  by  virtue  of  a  statute  50 
creating  an  estate  in  lieu  of  dower  or  courtesy;  51 

(c)  To  the  extent  of  any  interest  therein  of  which  52 
the  decedent  has  at  any  time  made  a  transfer,  or  with  53 
respect  to  which  he  has  at  any  time  created  a  trust,  in  54 
contemplation  of  or  intended  to  take  effect  in  possession  55 
or  enjoyment  at  or  after  his  death  (whether  such  trans-  56 
fer  or  trust  is  made  or  created  before  or  after  the  pas-  57 
sage  of  this  act),  except  in  case  of  a  bona  fide  sale  for  68 

101 


Net  Value  of 
Estate 


How 

Determined 


.l.a  fair  consideration  In  money  or  money's  worth.     Any 

•'  2  tr^hsf<?r  'qf.  ,a  aiaterial  part  of  his  property  in  the  na- 

'  «3  ture  of  a  final  disposition  or  distribution  thereof,  made 

4  by   the   decedent   within   two   years   prior   to   his   death 

6  without    such   a   consideration,    shall,    unless    shown    to 

6  the  contrary,  be  deemed  to  have  been  made  in  contem- 

7  plation  of  death  within  the  meaning  of  this  title; 

8  (d)  To  the  extent  of  the  interest  therein  held  jointly 

9  or  as  tenants  in  the  entirety  by  the  decedent  and  any 

10  other   person,   or   deposited   in   banks   or   other   institu- 

11  tions  in  their  joint  names  and  payable  to  either  or  the 

12  survivor,  except  such  part  thereof  as  may  be  shown  to 
1»  have    originally    belonged    to    such    other    person    and 

14  never  to  have  belonged  to  the  decedent; 

15  (e)    To    the    extent    of    any    property    passing    under 

16  a  general   power  of  appointment   exercised   by   the   de- 

17  cedent    (1)    by   will,   or    (2)    by   deed   executed   in   con- 

18  templation  of,  or  intended  to  take  effect  in  possession 
19ior  enjoyment  at  or  after,  his  death,  except  in  case  of  a 

20  bona   fide    sale    for    a   fair    consideration    in    money    or 

21  money's  worth;  and 

22  (f)    To   the  extent  of   the   amount   receivable   by   the 
23f«xecutor  as  insurance  under  policies  taken  out  by  the 

24  decedent  upon  his  own  life;  and  to  the  extent  of  the 

25  excess   over    $40,000    of    the    amount    receivable    by    all 

26  other   beneficiaries    as    insurance    under    policies   taken 

27  out  by  the  decedent  upon  his  own  life. 
28 

29  SECTION  403.     That  for  the  purpose  of  the  tax  the 

30  value  of  the  net  estate  shall  be  determined — 

31  (a)  In  the  case  of  a  resident,  by  deducting  from  the 

32  value  of  the  gross  estate — 

33  (1)    Such  amounts  for  funeral   expenses,   administra- 

34  tion  expenses,  claims  against  the  estate,  unpaid  mort- 
36  gages,  losses  Incurred  during  the  settlement  of  the  es- 

36  tate    arising    from    fires,    storms,    shipwreck,    or    other 

37  casualty,  or  from  theft,  when  such  losses  are  not  com- 

38  pensated    for    by    insurance    or    otherwise,    and    such 

39  amounts    reasonably    required    and    actually    expended 

40  for  the  support  during  the  settlement  of  the  estate  of 

41  those  dependent  upon   the  decedent,  as  are  allowed  by 

42  the  laws  of  the  jurisdiction,  whether  within  or  without 

43  the  United  States,  under  which  the  estate  Is  being  ad- 

44  ministered,    but   not   Including   any   Income   taxes   upon 

45  Income   received    after    the    death    of    the    decedent,    or 

46  any  estate,  succession,  legacy,  or  Inheritance  taxes; 

47  (2)  An  amount  equal  to  the  value  at  the  time  of  the 

48  decedent's    death    of    any    property,    real,    personal,    or 

49  mixed,  which  can  be  identified  as  having  been  received 
60  by  the  decedent  as  a  share  In  the  estate  of  any  person 

51  who  died   within   five  years   prior   to   the   death   of   the 

52  decedent,    or   which    can    bo    identified    as    having    been 

53  acquired  by  the  decedent  in  exchange  for  property  so 

54  received,   If   an   estate   tax   under   the   Revenue   Act   of 

55  1917    or    under   this   Act   was   collected    from    such    es- 

56  tate,  and  if  such  property  is  included  in  the  decedent's 

57  gross  estate; 

58  (3)  The  amount  of  all  bequests,  legacies,  devises,  or 


102 


gifts,  to  or  for  the  use  of  the  United  States,  any  State,  1 
Territory,  any  political  subdivision  thereof,  or  the  Dis-  2 
trict  of  Columbia,  for  exclusively  pubUc  purposes,  or  3 
to  or  for  the  use  of  any  corporation  organized  and  oper-  4 
ated  exclusively  for  religious,  charitable,  scientific,  5 
literary,  or  educational  purposes,  including  the  encour-  6 
agement  of  art  and  the  prevention  of  cruelty  to  chil-  7 
dren  or  animals,  no  part  of  the  net  earnings  of  which  8 
inures  to  the  benefit  of  any  private  stockholder  or  in-  9 
dividual,  or  to  a  trustee  or  trustees  exclusively  for  10 
such  religious,  charitable,  scientific,  literary,  or  educa-  H 
tional  purposes.  This  deduction  shall  be  made  in  case  12 
of  the  estates  of  all  decedents  who  have  died  since  De-  13 
cember  31,  1917;  and  14 

(4)  An  exemption  of  $50,000;  15 

(b)  In  the  case  of  a  nonresident,  by  deducting  from  ^° 
the  value  of  that  part  of  his  gross  estate  which  at  the  ' 
time  of  his  death  is  situated  in  the  United  States —        *° 

(1)  T^fia't  propbfiion  '61  the  deductions  specified  in  __ 
paragraph  (1)  of  subdivision  (a)  of  this  section  which  g. 
the  value  of  such  part  bears  to  the  value  of  his  entire  „_ 
gross  estate,  wherever  situated,  but  in  no  case  shall  „_ 
the  amount  so  deducted  exceed  10  per  centum  of  the  „. 
value  of  that  part  of  his  gross  estate  which  at  the  c;me  gg 
of  his  death  is  situated  in  the  United  States;  _g 

(2)  An  amount  equal  to  the  value  at  the  time  of  the  27 
decedent's  death  of  any  property,  real,  personal,  or  23 
mixed,  which  can  be  identified  as  having  been  received  29 
by  the  decedent  as  a  share  in  the  estate  of  any  person  qq 
who  died  within  five  years  prior  to  the  death  of  the  31 
decedent,  or  which  can  be  identified  as  having  been  ac-  32 
quired  by  the  decedent  in  exchange  for  property  so  re-  33 
ceived,  if  an  estate  tax  under  the  Revenue  Act  of  1917  34 
or  under  this  Act  was  collected  from  such  estate,  and  35 
if  such  property  is  included  in  that  part  of  the  deced-  qq 
ent's  gross  estate  which  at  the  time  of  his  death  is  37 
situated  in  the  United  States;  and  38 

(3)  The  amount  of  all  bequests,  legacies,  devises,  or  39 
gifts,  to  or  for  the  use  of  the  United  States,  any  State,  40 
Territory,  any  political  subdivision  thereof,  or  the  Dis-  41 
trict  of  Columbia,  for  exclusively  public  purposes,  or  to  42 
or  for  the  use  of  any  domestic  corporation  organized  43 
and  operated  exclusively  for  religious,  charitable,  sci-  44 
entific,  literary,  or  educational  purposes,  including  the  45 
encouragement  of  art  and  the  prevention  of  cruelty  to  46 
children  or  animals,  no  part  of  the  net  earnings  of  47 
which  inures  to  the  benefit  of  any  private  stockholder  48 
or  individual,  or  to  a  trustee  or  trustees  exclusively  for  49 
such  religious,  charitable,  scientific,  literary,  or  educa-  50 
tional  purposes  within  the  United  States.  This  deduc-  51 
tion  shall  be  made  in  case  of  the  estates  of  all  deced-  52 
ents  who  have  died  since  December  31,  1917;  and  53 

No  deductions  shall  be  allowed  in  the  case  of  a  non-  54 
resident  unless  the  executor  includes  in  the  return  re-  55 
quired  to  be  filed  under  section  404  the  value  at  the  time  56 
of  his  death  of  that  part  of  the  gross  estate  of  the  non-  57 
resident  not  situated  in  the  United   States.  58 

X03 


Notice    to 
Collector 


Returns 


45 

46 

47 

48 

49 

50 

51 

52 

Collector  to  53 

Make  Return    54 

— When  55 

56 

57 

68 


For  the  purpose  of  this  title  stock  in  a  domestic  cor- 
poration owned  and  held  by  a  nonresident  decedent, 
and  the  amount  receivable  as  insurance  upon  the  life 
of  a  nonresident  decedent  where  the  insurer  is  a  do- 
mestic corporation,  shall  be  deemed  property  within 
the  United  States,  and  any  property  of  which  the  de- 
cedent has  made  a  transfer  or  with  respect  to  which 
he  has  created  a  trust,  within  the  meaning  of  subdivi- 
sion (c)  of  section  402,  shall  be  deemed  to  be  situated 
in  the  United  States,  if  so  situated  either  at  the  time  of 
the  transfer  or  the  creation  of  the  trust,  or  at  the 
time  of  the  decedent's  death. 

In  the  case  of  any  estate  in  respect  to  which  the 
tax  under  existing  law  has  been  paid,  if  necessary  to 
allow  the  benefit  of  the  deduction  under  paragraph  (3) 
of  subdivision  (a)  or  (b)  the  tax  shall  be  redetermined 
and  any  excess  of  tax  paid  shall  be  refunded  to  the 
executor. 

SECTION  404.  That  the  executor,  within  sixty  days 
after  qualifying  as  such,  or  after  coming  into  posses- 
sion of  any  property  of  the  decedent,  whichever  event 
first  occurs,  shall  give  written  notice  thereof  to  the 
collector.  The  executor  shall  also,  at  such  times  and 
in  such  manner  as  may  be  required  by  regulations 
made  pursuant  to  law,  file  with  the  collector  a  return 
under  oath  in  duplicate,  setting  forth  (a)  the  value  of 
the  gross  estate  of  the  decedent  at  the  time  of  his  death, 
or,  in  case  of  a  nonresident,  of  that  part  of  his  gross 
estate  situated  in  the  United  States;  (b)  the  deductions 
allowed  under  section  403;  (c)  the  value  of  the  net 
estate  of  the  decedent  as  defined  in  section  403;  and  (d) 
the  tax  paid  or  payable  thereon;  or  such  part  of  such 
information  as  may  at  the  time  be  ascertainable  and 
such  supplemental  data  as  may  be  necessary  to  estab- 
lish the  correct  tax. 

Return  shall  be  made  in  all  cases  where  the  gross 
estate  at  the  death  of  the  decedent  exceeds  $50,000,  and 
in  the  case  of  the  estate  of  every  nonresident  any  part 
of  whose  gross  estate  is  situated  In  the  United  States. 
If  the  executor  is  unable  to  make  a  complete  return 
as  to  any  part  of  the  gross  estate  of  the  decedent,  he 
shall  include  in  his  return  a  description  of  such  part 
and  the  name  of  every  person  holding  a  legal  or  bene- 
ficial interest  therein,  and  upon  notice  from  the  col- 
lector such  person  shall  in  like  manner  make  a  return 
as  to  such  part  of  the  gross  estate.  The  Commissioner 
shall  make  all  assessments  of  the  tax  under  the  au- 
thority of  existing  administrative  special  and  general 
provisions  of  law  relating  to  the  assessment  and  col- 
lection of  taxes. 

SECTION  405.  That  if  no  administration  is  granted 
upon  the  estate  of  a  decedent,  or  if  no  return  is  filed 
as  provided  in  section  404,  or  if  a  return  contains  a 
false  or  Incorrect  statement  of  a  material  fact,  the 
collector  or  deputy  collector  shall  make  a  return  and 
the  Commissioner  shall  assess  the  tax  thereon. 


104 


SECTION  406.     That  the  tax  shall  be  due  one  year    1  Payment  of 
after  the  decedent's  death;  but  in  any  case  where  the    2       Taxes — 
Commissioner    finds    that    payment   of   the    tax    within    3       Penalty 
one  year  after  the  decedent's  death  would  impose  undue    4 
hardship   upon  the  estate,   he   may   grant  an   extension    5 
of  time  for  the  payment  of  the  tax  for  a  period  not  to    6 
exceed  three  years  from   the   due   date.     If  the   tax   is    7 
not   paid  within   one  year  and   180    days  after  the  de-    8 
cedent's  death,  interest  at  the  rate  of  6  per  centum  per    9 
annum  from  the  expiration  of  one  year  after  the  deced-  10 
ent's  death  shall  be  added  as  part  of  the  tax.  11 

12 

SECTION  407.  That  the  executor  shall  pay  the  tax  13 
to  the  collector  or  deputy  collector.  If  the  amount  of  14 
the  tax  can  not  be  determined,  the  payment  of  a  sum  of  15 
money  sufficient,  in  the  opinion  of  the  collector,  to  dis-  16 
charge  the  tax  shall  be  deemed  payment  in  full  of  the  17 
tax,  except  as  in  this  section  otherwise  provided.  If  18 
the  amount  so  paid  exceeds  the  amount  of  the  tax  as  19 
finally  determined,  the  Commissioner  shall  refund  such  20 
excess  to  the  executor.  If  the  amount  of  the  tax  as  21 
finally  determined  exceeds  the  amount  so  paid,  the  22 
collector  shall  notify  the  executor  of  the  amount  of  23 
such  excess  and  demand  payment  thereof.  If  such  24 
excess  part  of  the  tax  is  not  paid  within  thirty  days  25 
after  such  notification.  Interest  shall  be  added  thereto  26 
at  the  rate  of  10  per  centum  per  annum  from  the  ex- 27 
piration  of  such  thirty  days'  period  until  paid,  and  the  28 
amount  of  such  excess  shall  be  in  a  lien  upon  the  ontire*29 
gross  estate,  except  such  part  thereof  as  may  have '30 
been  sold  to  a  bona  fide  purchaser  for  a  fair  considera-51 
tion   in   money  or   money's  worth.  132 

The  collector  shall  grant  to  the  person  paying  the  33 
tax  duplicate  receipts,  either  of  which  shall  be  suffi-  34 
cient  evidence  of  such  payment,  and  shall  entitle  the  35 
executor  to  be  credited  and  allowed  the  j-mount  thereofSe 
by  any  court  having  jurisdiction  to  audit  or  settle  his  37 
accounts.  38 

89 

SECTION  408.  That  if  the  tax  herein  imposed  is  not  40  Failure  to  Pay 
paid  within  180  days  after  it  is  due,  the  collector  shall,  41 
unless  there  is  reasonable  cause  for  further  delay,  pro-  42 
ceed  to  collect  the  tax  under  the  provisions  of  general  43 
law,  or  commence  appropriate  proceedings  in  any  court  44 
of  the  United  States,  in  the  name  of  the  United  States,  46 
to  subject  the  property  of  the  decedent  to  be  sold  under  46 
the  judgment  or  decree  of  the  court.  From  the  pro-  47 
ceeds  of  such  sale  the  amount  of  the  tax,  together  with  48 
the  costs  and  expenses  of  every  description  to  be  al-  49 
lowed  by  the  court,  shall  be  first  paid  and  the  balance  60 
shall  be  deposited  according  to  the  order  of  the  court,  61 
to  be  paid  under  its  direction  to  the  person  entitled} 62 
thereto.  1 53 

If  the  tax  or  any  part  thereof  is  paid  by,  or  collected,  54 
out  of  that  part  of  the  estate  passing  to  or  In  thcil55 
possession  of,  any  person  other  than  the  executor  in|56 
his  capacity  as  such,  such  person  shall  be  entitled  to|57 
reimbursement  out  of  any  part  of  the  estate  still  un-'68 

lOS 


1  distributed  or  by  a  just  and  equitable  contribution  by 

2  the  persons  whose  interest  in  the  estate  of  the  decedent 
8  would  have  been  reduced  if  the  tax  had  been  paid  before 
4  the  distribution  of  the  estate  or  whose  interest  is  sub- 

6  ject  to  equal  or  prior  liability  for  the  payment  of  taxes, 
«  debts,  or  other  charges  against  the  estate,  it  being  the 

7  x)urpose  and  intent  of  this  title  that  so  far  as  is  prac- 

•  'ticable  and  unless  otherwise  directed  by  the  will  of  the 

•  decedent  the  tax  shall  be  paid  out  of  the  estate  before 

10  its  distribution.     If  any  part  of  the  gross  estate  con- 

11  Ijists  of  proceeds  or  policies  of  insurance  upon  the  life 

12  of  the  decedent  receivable  by  a  beneficiary  other  than 

13  the  executor,   the  executor  shall  be  entitled  to  recover 

14  from  such  beneficiary  such  portion  of  the  total  tax  paid 

15  as  the  proceeds,  in  excess  of  $40,000,  of  such  policies 

16  bear  to  the  net  estate.     If  there  is  more  than  one  such 

17  beneficiary    the    executor    shall    be    entitled    to    recover 

18  from  such  beneficiaries  in  the  same  ratio. 
19 

Tax  Due  to  20  SECTION  409.  That  unless  the  tax  is  sooner  paid  in 
Become  Ten-  21  full,  it  shall  be  a  lien  for  ten  years  upon  the  gross 
Year  Lien         22  estate   of   the   decedent,    except   that   such   part   of   the 

23  gross    estate    as   is   used    for    the    payment   of    charges 

24  against  the  estate  and  expenses  of  its  administration, 

25  allowed  by  any  court  having  jurisdiction  thereof,  shall 

26  be  divested  of  such  lien.     If  the  Commissioner  is  satls- 

27  fied  that  the  tax  liability  of  an  estate  has  been  fully  dis- 
23  jharged  or  provided  for,  he  may,  under  regulations  pre- 

29  scribed  by  him  with  the  approval  of  the  Secretary,  issue 

30  his    certificate    releasing   any    or    all    property    of    such 

31  estate  from  the  lien  herein  Imposed. 

32  If  (a)  the  decedent  makes  a  transfer  of,  or  creates  a 

33  trust  with  respect  to,  any  property  in  contemplation  of 

34  or   intended   to  take   effect   in   possession  or   enjoyment 

35  at  or  after  his  death  (except  in  the  case  of  a  bona  fide 

36  sale    for    a    fair    consideration    in    money    or    money's 

37  worth)  or  (b)  if  insurance  passes  under  a  contract  ex- 

38  acuted  by  the  decedent  in  favor  of  a  specific  beneficiary, 

39  and  if  in  either  case  the  tax  in  respect  thereto  is  not 

40  paid   when   due,   then   the   transferee,   trustee,   or   bene- 

41  flciary  shall  be  personally  liable  for  such  tax,  and  such 

42  property,  to  the  extent  of  the  decedent's  interest  therein 

43  at  the  time  of  such  transfer,  or  to  the  extent  of  such 

44  beneficiary's  interest  under  such  contract  of  insurance, 

45  shall  be  subject  to  a  like  lien  equal  to  the  amount  of 

46  such    tax.      Any    part    of    such    property    sold    by    such 

47  transferee  or  trustee  to  a  bona  fide  purchaser  for  a  fair 

48  consideration  In  money  or  money's  worth   shall  be  di- 

49  vested  of  the  lien  and  a  like  lien  shall  then  attach  to 

50  all   the  property  of  such  transferee   or   trustee,   except 

51  any  part  sold  to  a  bona  fide  purchaser  for  a  fair  con- 

52  sideration  In  money  or  money's  worth. 
53 

Penalities  54:^    SECTION  410.     That  whoever  knowingly  makes  any 

5ff^alse  statement  in  any  notice*  or  return  required  to  be 
58^1ed  under  this  title  shall  be  liable  to  a  penalty  of  not 
57  exceeding  $5,000,  or  Imprisonment  not  exceeding  one 
68  3'ear,  or  both. 

106 


Whoever  fails  to  comply  with  any  duty  imposed  upon  1 
him  by  section  404,  or,  having  in  his  possession  or  2 
control  any  record,  file,  or  paper,  containing  or  supposed  3 
to  contain  any  information  concerning*  the  estate  of  4 
the  decedent,  or,  having  in  his  possession  or  control  any  & 
property  comprised  in  the  gross  estate  of  the  decedent,  6 
fails  to  exhibit  the  same  upon  request  to  the  Commis-  7 
sioner  or  any  collector  or  law  officer  of  the  United  8 
States,  or  his  duly  authorized  deputy  or  agent,  who  de-  9 
sires  to  examine  the  same  in  the  performance  of  his  10 
duties  under  this  title,  shall  be  liable  to  a  penalty  of  11 
not  exceeding  $500,  to  be  recovered,  with  costs  of  suit,  12 
in  a  civil  action  in  the  name  of  the  United  States.  13 

14 

15 

TITLE  v.— TAX  ON  TRANSPORTATION  AND  OTHER  le 

FACILITIES,  AND  ON  INSURANCE.  17 

18 

SECTION  500.  That  from  and  after  April  1,  1919,  19 
there  shall  be  levied,  assessed,  collected,  and  paid,  in  20 
lieu  of  the  taxes  imposed  by  section  500  of  the  Revenue  21 
Act  of  1917—  22 

(a)  A  tax  equivalent  to  3  per  centum  of  the  amount  23  Rail  and  Water 
paid   for  the  transportation   on  or  after  such   date,   by  24       Transpor- 
rail    or    water    or    by    any    form    of    mechanical    motor  25       tation 
power    when    in    competition    with    carriers    by    rail    or  26 

water,  of  property  by  freight  transported  from  one  27 
point  in  the  United  States  to  another;  and  a  like  ta>.  28 
on  the  amount  paid  for  such  transportation  withlrj  29 
the  United  States  of  property  transported  from  a  poin^  30 
without  the  United  States  to  a  point  within  the  United  31 
States;  32 

(b)  A  tax  of  1  cent  for  each  20  cents  or  fraction  33 
thereof  of  the  amount  paid  to  any  person  for  the  34 
transportation  on  or  after  such  date,  by  rail  or  water  36 
or  by  any  form  of  mechanical  motor  power  when  in  36 
competition  with  express  by  rail  or  water,  of  any  37 
package,  parcel,  or  shipment,  by  express,  transported  38 
from  one  point  in  the  United  States  to  another;  and  39 
a  like  tax  on  the  amount  paid  for  such  transportation  40 
within  the  United  States  of  property  transported  from  41 
a  point  without  the  United  States  to  a  point  within  the  42 
United    States;  43 

(c)  A  tax  equivalent  to  8  per  centum  of  the  amount  44 
paid  for  the  transportation  on  or  after  such  date  of  45 
persons  by  rail  or  water,  or  by  any  form  of  mechanical  46 
motor  power  on  a  regular  established  line  when  in  47 
competition  with  carriers  by  rail  or  water,  from  one  48 
point  in  the  United  States  to  another  or  to  any  point  49 
in  Canada  or  Mexico,  where  the  ticket  or  order  therefor  50 
is  sold  or  issued  in  the  United  States,  not  including  51 
the  amount  paid  for  commutation  or  season  tickets  for  52 
trips  less  than  thirty  miles,  or  for  transportation  the  53 
fare  for  which  does  not  exceed  42  cents:  Provided,  54 
That  where  such  water  transportation  lines  are  in  55 
competition  between  American  ports  with  foreign  water  56 
transportation  lines  from  adjacent  foreign  ports,  the  tax  57 
imposed    under   this    subdivision    on    amounts    paid    for  58 

107 


staterooms 
Parlor  Cars 
Etc. 


Oil  Pipe  Line 


Telegraph, 
Telephone, 
Cables 


Leased  Wires 


Exemption 


Payer    for 

Service 

Taxable 
Mileage  Books, 

Tickets,   etc. 


1  water  transportation  between  American  ports  shall  not 

2  exceed  the  amount  of  the  transportation  tax  to  which 

3  such  foreign  water  transportation  lines  are  subjected  by 

4  their  Government  corresponding  to  this  tax; 

B      (d)  A  tax  equivalent  to  8  per  centum  of  the  amount 

6  paid  for  seats,  berths,  and  staterooms  in  parlor  cars, 

7  sleeping  cars,  or  on  vessels,  used  on  or  after  such  date 

8  in    connection    with   transportation    upon    which    tax   Is 
•  imposed  by  subdivision   (c) ; 

10  (e)  A  tax  equivalent  to  8  per  centum  of  the  amount 

11  paid  for  the   transportation   on   or  after  such  date  of 

12  oil  by  pipe  line; 

13  (f)  In   the  case  of  each   telegraph,   telephone,   cable, 

14  or  radio,  dispatch,  message,  or  conversation,  which 
16  originates    on    or   after    such    date    within    the    United 

16  States,  and  for  the  transmission  of  which  the  charge 

17  is  more  than  14  cents  and  not  more  than  50  cents,  a 

18  tax  of  5  cents;  and  if  the  charge  is  more  than  50  cents, 

19  a  tax  of  10  cents:  Provided,  That  only  one  payment 
80  of  such  tax  shall  be  required,  notwithstanding  the  lines 
21  or  stations  of  one  or  more  persons  are  used  for  the 
02  transmission  of  such   dispatch,   message,   or  conversa- 

23  tion;   and 

24  (g)  A  tax  equivalent  to  10  per  centum  of  the  amount 

25  paid    after    such    date    to    any    telegraph    or    telephone 

26  company  for  any  leased  wire  or  talking  circuit  special 

27  service    furnished    after    such    date.      This    subdivision 

28  shall   not   apply    to   the   amount    paid   for    so    much   of 

29  such   service   as   is   utilized    (1)    in   the   collection   and 

80  dissemination    of    news    through    the    public    press,    or 

81  (2)   in  the  conduct,  by  a  common  carrier  or  telegraph 

82  or  telephone  company,  of  its  business  as  such. 

83  (h)   No  tax  shall  be  imposed  under  this  section  upon 

84  any    payment    received    for    services    rendered    to    the 

85  United  States  or  to  any  State  or  Territory  or  the  Dis- 
88  trict  of  Columbia.     The  right  to  exemption  under  this 

87  subdivision  shall  be  evidenced  In  such  manner  as  the 

88  Commissioner,  with  the  approval  of  the  Secretary,  may 

89  by  regulation  prescribe. 
40 

41  SECTION  501.     (a)  That  the  taxes  imposed   by   sec- 

42  tion   500    shall   be   paid   by   the   person    paying   for   the 

43  services  or  facilities  rendered. 

44  (b)   If    a    mileage    book    used    for    transportation    or 

45  accommodation  was  purchased  before  November  1,  1917, 
48  or  if  cash  fare  is  paid,  the  tax  imposed  by  section 
417  500  shall  be  collected  from  the  person  presenting  the 

48  mileage   book,    or   paying    the    cash   fare,    by    the    con- 

49  ductor  or  other  agent,  when  presented  for  such  trans- 

50  portation    or   accommodation,    and    the    amount    so   col- 

51  lected  shall  be  paid  to  the  United  States  in  such  manner 
88  and  at  such  times  as  the  Commissioner,  with  the 
68  approval  of  the  Secretary,  may  prescribe;  If  a  ticket 
64  (other  than  a  mileage  book)  was  bought  and  partially 
66  used  before  November  1,  1917,  It  shall  not  be  taxed, 
66  but  if  bought  but  not  so  used  before  section  500  takes 
57  effect.  It  shall  not  be  valid  for  passage  until  the  tax 
68  has    been    paid    and    such    payment    evidenced    on    the 


108 


ticket  in  such  manner  as  the  Commissioner,  with  the  1 
approval  of  the  Secretary,  may  by  regulation  prescribe.    2 

(c)  The  taxes  Imposed  by  section  5Q0  shall  apply  3 
to  all  services  or  facilities  specified  in  such  section  4 
when  rendered  for  hire,  whether  or  not  the  agency  6 
rendering  them  is  a  common  carrier.  In  case  a  carrier  6 
(other  than  a  pipe  line)  principally  engaged  in  ren-  7 
derlng  transportation  services  or  facilities  for  hire  8 
does  not,  because  of  its  ownership  of  the  goods  trans-  9 
ported,  or  for  any  other  reason,  receive  the  amount  10 
which  as  a  carrier  it  would  otherwise  charge,  such  11 
carrier  shall  pay  a  tax  equivalent  to  the  tax  which  12 
would  be  imposed  upon  the  transportation  of  such  goods  13 
if  the  carrier  received  payment  for  such  transporta-  14 
tion,  such  tax,  if  It  can  not  be  computed  from  actual  15 
rates  or  tariffs  of  the  carrier,  to  be  computed  on  the  16 
basis  of  the  rates  or  tariffs  of  other  carriers  for  like  17 
services  as  determined  by  the  Commissioner.  In  the  18 
case  of  any  carrier  (other  than  a  pipe  line)  the  prin-  19 
cipal  business  of  which  is  to  transport  goods  belonging  20 
to  it  on  its  own  account  and  which  only  Incidentally  21 
renders  services  for  hire,  the  tax  shall  apply  to  such  22 
services  or  facilities  only  as  are  actually  rendered  by  23 
it  for  hire.  Nothing  in  this  or  the  preceding  section  24 
shall  be  construed  as  imposing  a  tax  (1)  upon  the  25 
transportation  of  any  commodity  which  is  necessary  26 
for  the  use  of  the  carrier  in  the  conduct  of  its  business  27 
as  such  and  is  intended  to  be  so  used  or  has  been  so  28 
used;  or  (2)  upon  the  transportation  of  company  ma-  29 
terial  transported  by  one  carrier,  which  constitutes  a  30 
part  of  a  railroad  system,  for  another  carrier  wtilch  31 
is  also  a  part  of  the  same  system.  33 

(d)  The  tax  imposed   by   subdivision    (e)    of   section  33  Oil  and  Pipe 
500    shall   apply   to   all   transportation    of   oil   by    pipe  34       Lines 

line.  In  case  no  charge  for  transportation  is  made,  35 
by  reason  of  ownership  of  the  commodity  transported,  36 
or  for  any  other  reason,  the  person  transportingr  by  37 
pipe  line  shall  pay  a  tax  equivalent  to  the  tax  which  38 
would  be  imposed  if  such  person  received  payment  for  39 
such  transportation,  and  if  the  tax  can  not  be  com-  40 
puted  from  actual  bona  fide  rates  or  tariffs,  it  shall  be  41 
computed  (1)  on  the  basis  of  the  rates  or  tariffs  of  42 
other  pipe  lines  for  like  services,  as  determined  by  43 
the  Commissioner,  or  (2)  if  no  such  rates  or  tariffs  44 
exist,  on  the  basis  of  a  reasonable  charge  for  such  45 
transportation,  as  determined  by  the  Commissioner.        46 

47 

SECTION  502.     That  each  person  receiving  any  pay-  48  Monthly 
ments    referred    to    in    section    500    shall    collect    the  49       Returns   of 
amount   of   the    tax,    if   any,    imposed   by    such    section  50       Tax 
from  the  person  making  such  payments,  and  shall  make  51       Collected 
monthly  returns  under  oath,  in  duplicate,  and  pay  the  52 
taxes  so  collected  and  the  taxes  Imposed  upon  it  under  53 
subdivision    (c)    or    (d)    of   section    501   to   the  collector  54 
of  the  district  In  which  the  principal  office  or  place  of  55 
business   is   located.  ,  56 

No  carrier  collecting  the  taxes  imposed  by  subdivi-  57 
sion  (a)  or  (b)  of  section  500  shall  be  required  to  list  58 

109 


1  the  amount  of  such  tax  separately  in  any  bill  of  lading, 

2  freight  or  express  receipt,  or  other  similar  document, 

3  if   the   total  amount  of   the   transportation   charge   and 

4  the   tax  is  stated  therein. 

6      Any   person   making  a  refund   of  any   payment   upon 

6  which   tax   is   collected    under   this    section    may    repay 

7  therewith    the    amount    of    the    tax    collected    on    such 

8  payment;    and   the   amount   so   repaid   may   be   credited 

9  against  amounts   included   in   any    subsequent   monthly 

10  return. 

11  The  returns  required  under  this  section  shall  contain 

12  such   information,   and   be   made   at  such  times   and   in 

13  such  manner,  as  the  Commissioner,   with  the  approval 

14  of  the  Secretary,  may  by  regulation  prescribe. 

15  The   tax   shall,   without  assessment   by   the   Commis- 

16  sioner   or   notice   from   the   collector,   be   due   and   pay- 

17  able    to    the    collector    at    the    time    so    fixed    for    filing 

18  the   return.      If    the    tax   is   not   paid    when    due,    there 

19  shall   be  added  as  part  of  the  tax  a   penalty  of  5  per 

20  centum,    together   with    interest    at    the    rate    of    1    per 

21  centum  for  each   full   month,   from   the  time  when   the 

22  tax   became    due. 


Insurance  24  Insurance. 

25 

26  SECTION   503.     That   from   and   after   April    1,    1919, 

27  there  shall  be  levied,  assessed,   collected,   and  paid,   in 

28  lieu  of  the  taxes  imposed  by  section  504  of  the  Revenue 
^              29  Act  of  1917,  the  following  taxes  on  the  issuance  of  in- 

30  surance   policies,   including,    in   the  case   of   policies   is- 

31  sued   outside   the  United   States    (except   those   taxable 

32  under  Subdivision  15  of  Schedule  A  of  Title  XI),  their 

33  delivery    within    the    United    States    by    any    agent    or 

34  broker,  whether  acting  for  the  insurer  or  the  insured; 
36  such  taxes  to  be  paid  by  the  insurer,  or  by  such  agent 
30  or  broker: 

Life  Insurance    37      (a)   Life  insurance:     A  tax  equivalent  to   8   cents  on 
Policies  38  each  $100  or  fractional  part  thereof  of  the  amount  for 

39  which  any  life  is  insured  under  any  policy  of  insurance, 

40  or   other    Instrument,    by    whatever    name    the    same    is 

41  called:     Provided,  That  on  all  policies  for  life  insurance 

42  only  by  which  a  life  is  insured  not  in  excess  of  $500, 

43  issued    on    the    industrial    or    weekly    or    monthly    pay- 

44  raent  plan  of  insurance,  the  tax  shall  be  40  per  centum 

45  of  the  amount  of  the  first  weekly  premium  or  20  per 

46  centum  of  the  amount  of  the  first  monthly  premium,  as 

47  the  case   may   be:      Provided   further.   That  on   policies 

48  of    group   life    insurance,    covering   groups    of   not    less 

49  than  25  lives  In  the  employ  of  the  same  person,  for  the 

60  benefit   of    persons    other   than    the    employer,    the    tax 

61  shall    be    equivalent    to    4    cents    on    each    $100    of    the 

62  aggregate  amount  for  which  the  group  policy  is  issued 

63  and   of  any  net  Increase   in    the  amount  of   the   insur- 

64  ance   under   such   policy:      And   provided   further.   That 

65  on  all   policies   covering   life,   health,   and  accident   in- 

66  surance  combined  in  one  policy  by  which  a  life  is  In- 

67  sured  not  in  excess  of  $500,  Issued  on  the  industrial,  or 

68  weekly    or    monthly    payment    plan    of    insurance,    the 

110 


tax  shall  be  40  per  centum  of  the  amount  of  the  first  1 
weekly  premium  or  20  per  centum  of  the  amount  of  2 
the  first  monthly  premium,  as  the  cas^^  may  be;  3 

(b)  Marine,  inland,  and  fire  insurance:  A  tax  equiv-  4  Marine,  Fire 
alent  to  1  cent  on  each  dollar  or  fractional  part  there-  5  Insurance 
of   of   the   premium   charged   under   each   policy   of   in-    6 

surance  or  other  instrument  by  whatever  name  the  7 
same  is  called  whereby  insurance  is  made  or  renewed  8 
upon  property  of  any  description  (including  rents  or  9 
profits),  whether  against  peril  by  sea  or  inland  waters,  10 
or  by  fire  or  lightning',  or  other  peril;  11 

(c)  Casualty  insurance:     A  tax  equivalent  to  1   cent  12  Casualty 

on  each  dollar  or  fractional  part  thereof  of  the  premium  13       Insurance 

charged  under  each  policy  of  insurance  or  obligation  of  14 

the  nature  of  indemnity   for  loss,   damage,   or  liability  15 

(except  bonds  and  policies  taxable  under  subdivision  2  16 

of  schedule  A  of  Title   XI)    issued   or   executed   or  re-  17 

newed  by  any  person  transacting  the  business  of  em    18 

ployer's    liability,     workmen's    compensation,    accident,  19 

health,    tornado,    plate    glass,     steam    boiler,    elevator,  20 

burglary,     automatic    sprinkler,     automobile,     or    other  21 

branch  of  insurance   (except  life  insurance,  and  Insurt  22 

ance  described  and  taxed  in  the  preceding  subdivision):  23 

Provided,  That  in  case  of  policies  of  insurance  issued  on  24 

the    industrial    or    weekly    or    monthly    payment    plan  25 

the  tax  shall  be   40   per  centum  of  the  amount  of   the  26 

first  weekly  premium  or  20  per  centum  of  the  amount  27 

of  the  first  monthly  premium,  as  the  case  may  be;  28 

(d)  Policies  issued  by  any  corporation  enumerated  in  29  Exempt 
section  231  and  policies  of  reinsurance,  shall  be  exempt  30       Corporations 
from  the  taxes  imposed  by  this  section.  31 

32 
SECTION    504.     That    every    person    issuing    policie.-i  33  Monthly 
of  Insurance  upon  the  issuance  of  which  a  tax  is  im^  34       Returns  and 
posed  by  section  503  shall  make  monthly  returns  under  35       Payment    of 
oath,    in   duplicate,    and   pay   such   tax   to    the   collector  36       Tax 
of  the  district  in  which  the  principal  office  or  place  of,  37 
business  of  such  person  is  located.     Such  returns  shalj  38 
contain   such   information   and   be   made   at   such   timeg  39 
and    in    such    manner    as    the    Commissioner,    with    the  40 
approval  of  the  Secretary,  may  by  regulation  prescribe.    41 
The   tax    shall,   without   assessment   by   the   Commis-  42 
sioner  or  notice  from  the  collector,  be  due  and  payable  43 
to  the  collector  at  the  time  so  fixed  for  filing  the  return.  44 
If  the  tax  is  not  paid  when  due,  there  shall  be  added  as  45 
part  of  the  tax  a  penalty  of  5  per  centum,  together  with  46 
interest  at  the  rate  of  1  per  centum  for  each  full  month,  47 
from  the  time  when  the  tax  became  due.  48 

49 
50 
51 
TITLE  VI.— TAX  ON  BEVERAGES.  52  Tax  on 

53       Beverasres 
SECTION   600.     (a)  That   there   shall   be   levied   and  54      Distilled 
collected   on    all   distilled   spirits  now   in   bond   or   that  55       Spirits 
have   been    or    that   may    be   hereafter   produced    In    or  56 
Imported  Into  the  United   States,  except  such  distilled  57 
spirits  as  are   subject  to   the   tax  provided   In   section  58 

111 


1  604,  In  lieu  of  the  internal-revenue  taxes  now  imposed 
fl  thereon  by  law,  a  tax  of  $2.20  (or,  If  withdrawn  for 
8  beverage   purposes   or  for   use   in   the   manufacture   or 

4  production  of  any  article  used  or  intended  for  use  as 

5  a  beverage,   a   tax   of   $6.40)    on   each   proof   gallon,    or 

6  wine    gallon    when    below    proof,    and    a    proportionate 

7  tax  at  a  like  rate  on  all  fractional  parts  of  such  proof 

•  or  wine  gallon,  to  be  paid  by  the  distiller  or  importer 

•  when    withdrawn,    and    collected    under    the    provisions 

10  of  existing  law. 

11  (b)   That    the    tax    imposed    by    subdivision     (a)     on 

12  distilled  spirits  intended  for  beverage  purposes  shall 
18  not  be  due  or  payable  on  such  spirits  while  stored  in 
14  any  distillery,  bonded  warehouse,  or  special  or  general 
16  bonded    warehouse,    and    which,    pursuant    to    any    Act 

16  of  Congress   or  proclamation   of  the   President  of   the 

17  United    States,    can    not   be    lawfully    sold    or   removed 

18  from  any  such  warehouse  during  the  period  of  prohi- 
18  bition  fixed  by  such  Act  or  proclamation;  and  all  ware- 
80  housing  bonds  or  transportation  and  warehousing  bonds 

21  conditioned  for  the  payment  of  tax  on  any  such  spirits 

22  so    stored    on    the    date    such    prohibition    takes    effect 

23  shall  as  to  all  such  spirits  actually  so  stored  be  can-^ 

24  celed  and  discharged,  provided  the  distiller  of  such 
28  spirits  shall  in  lieu  of  such  bonds  and  prior  to  their 
28  cancellation    execute    a   bond    in    a    penal    sum    of   not 

87  less  than  $10,000,  with  sureties  satisfactory  to  the 
28  collector  of  the  district,  conditioned  that  the  principal 
89  shall,  during  the  period  of  such  prohibition,  safely 
80  keep   or   cause   to   be   kept   in   good   condition   all   such 

31  spirits  and  the  warehouse  in  which  the  same  are  stored, 

32  and    shall   not   remove   or   suffer   to   be   removed   from 

33  warehouse,  contrary  to  law,  any  such  spirits  during 
84  the  period  of  such  prohibition ;  and  the  bond  herein 
35  prescribed    shall    be    in    such    further    sum    and    shall 

88  contain  such  further  conditions  as  the  Commissioner, 
87  with  the  approval  of  the  Secretary,  may  by  regula- 
38tions   require.     The   distiller  may,   subject  to  the   pro- 

39  visions  of  this  section,  be  permitted  to  retain   in  any 

40  such  bonded  warehouse  distilled  spirits  on  which,  under 

41  the  terms  of  any  existing  bond,  the  tax  imposed  thereon 
48  becomes  due  and  payable  prior  to  the  date  such  pro- 
48  hibition  takes  effect:  Provided,  That  on  the  removal 
44  of  such  prohibition  the  distiller  shall,  as  to  all  spirits 
48  as   to   which   the   bonded   period   fixed   by    law   has   not 

46  expired  and  which  remain  stored  in  warehouse,  execute 

47  new   and    satisfactory    bond    In    the    form    required    by 

48  existing   law,   conditioned   for   the   payment  of  the   tax 

49  on  all  such  spirits;  and  all  provisions  of  existing  law 

60  relating    to    such    bonded    warehouses,    or    the    storage 

61  of  spirits  therein,  or  to  the  execution  of  new  or  addi- 

62  tlonal    bonds,    so   far   as   applicable,    shall    continue   In 

63  force    as    to    all    distilled    spirits    rebonded    under    the 

64  provisions  of  this  section. 

65  Upon  the  withdrawal  of  distilled  spirits  from  bonded 

66  warehouse,   after   the   period   of   prohibition   has   ended, 

57  and  under  the  conditions  Imposed  by  section  50  of  an 

58  Act    entitled    "An    Act    to    reduce    taxation,    to    provide 

112 


revenue   for   the   support   of   the   Government,   and   for    1 

other  purposes,"   approved   August   28,,. 1894,   an  allow-    2 

ance  for  loss  by  leakage  or  other  unavoidable   cause,    3 

not  exceeding  one   proof   gallon   as   to    packages   of   a    4 

capacity  of  not  less  than  40  wine  gallons,  may  be  made    6 

in    addition    to    that    provided    in    said    section    50,    as    6 

amended;  and  a  like  additional  allowance  of  one  proof    7 

gallon   as   to    each   package   withdrawn    may    be   made    8 

for   each   period   of   four   months,   or   fraction   thereof,    9 

for  such  spirits  as  shall  have  remained  in  warehouse  10 

during  the  period  of  prohibition  and  after  the  expira-  ii  > 

tion    of    the    maximum    leakage    period    fixed    by    that  12 

section.  13 

Under  regulations  prescribed  by  the  Secretary,  any  14 
imported  distilled  spirits,  wines  or  other  liquors  which  IB 
may  be  in  any  customs  bonded  warehouse  under  the  16 
customs  laws  on,  the  date  such  prohibition  takes  effect  17 
shall  be  permitted  to  remain  therein  without  payment  18 
of  any  taxes  or  duties  thereon,  beyond  the  three-year  19 
period  provided  in  section  2971  of  the  Revised  Statutes,  20 
during  such  period  of  prohibition ;  and  may  be  ex-  21 
ported  at  any  time  during  such  extended  period.  Any  22 
imported  spirits,  wines  or  other  liquors  as  to  which  23 
the  three-year  bonded  period  may  expire  after  the  24 
passage  of  this  Act  and  prior  to  the  date  such  pro-  25 
hibition  takes  effect  may  at  the  option  of  the  owner  26 
remain  in  bond  during  such  period  of  prohibition.  27 

(c)  In  lieu  of  the  internal-revenue  tax  now  imposed  28  Perfumes 
thereon  by  law  there  shall  be  levied  and  collected  upon  29 
all  perfumes  hereafter  imported  into  the  United  States  30 
containing  distilled  spirits,  a  tax  of  $1.10  per  wine  31 
gallon,  and  a  proportionate  tax  at  a  like  rate  on  all  32 
fractional  parts  of  such  wine  gallon.  Such  tax  shall  (33 
be  collected  by  the  collector  of  customs  and  deposited  34 
as  internal-revenue  collections,  under  such  rules  and  35 
regulations  as  the  Commissioner,  with  the  approval  of  36 
the  Secretary,  may  prescribe.  37 

38 

SECTION    601.     That    no    distilled    spirits    produced  39  Importation   of 
after  October  3,  1917,  shall  be  imported  into  the  United  40       Distilled 
States  from  any  foreign   country,   or  from  the  Virgin  41       Spirits  for 
Islands    (unless    produced    from    products    the    growth  42       Beverage 
of  such  Islands,  and  not  then  into  any  State  or  Terri-  43       Purposes 
tory    or   District   of    the    United    States    in    which    the  44      Prohibited 
manufacture    or    sale    of    intoxicating    liquor    is    pro-  45 
hibited),  or  from  Porto  Rico,  or  the  Philippine  Islands.  46 
Under  such  rules,   regulations,  and  bonds  as  the  Sec-  47 
retary    may    prescribe,    the    provisions    of   this    section  48 
shall  not  apply  to  distilled  spirits  imported  for  other  49 
than    (1)   beverage  purposes  or   (2)    use   in   the  manu- 50 
facture  or  production  of  any  article  used  or  intended  51 
for  use  as  a  beverage.  52 

53 

SECTION    602.     That   at   registered    distilleries    pro-  54  Regulations  for 
duclng   alcohol,    or   other   high-proof    spirits,    packages  55       Distilleries 
may   be   filled    with   such    spirits    reduced    to   not    less  56 
than    one    hundred   proof    from    the    receiving    cisterns  67 
and  tax  paid  without  being  entered  into  bonded  ware-  58 

113 


1  house.  Such  spirits  may  be  also  transferred  from  the 
f  receiving  cisterns  at  such  distilleries,  by  means  of 
8  pipe  lines,  direct  to  storage  tanks  in  the  bonded  ware- 
4  house  and  may  be  warehoused  in  such  storage  tanks. 
B  Such  spirits  may  be  also  transferred  in  tanks  or  tank 
g  cars  to  general  bonded  warehouses  for  storage  therein, 
f  either  in  storage  tanks  in  such  warehouses  or  in  the 

8  tanks   in   which    they    were   transferred.      Such    spirits 

9  may    also    be    transferred    from    receiving    cisterns    or 

10  warehouse  storage  tanks  to  barrels,  drums,  tanks,  tank 

11  cars,  or  other  approved  containers,  and  may  be  trans- 

12  ported  in  such  containers  for  exportation  or  other  law- 

13  ful    purposes.      The   Commissioner,    with    the    approval 

14  of  the  Secretary,  is  hereby  empowered  to  prescribe  all 

15  necessary  regulations  relating  to  the  drawing  off,  trans- 
18  ferring,    gauging,    storing,    and    transporting    of    such 

17  spirits;  the  records  to  be  kept  and  returns  to  be  made; 

18  the  size  and  kind  of  packages  and  tanks  to  be  used; 

19  the  marking,  branding,  numbering,  and  stamping  of 
SO  such  packages  and  tanks;  the  kinds  of  stamps,  if  any, 

21  to  be  used;   and   the  time  and   manner  of   paying   the 

22  tax;  the  kind  of  bond  and  the  penal  sum  of  same.     The 

23  tax  prescribed  by  law  must  be  paid  before  such  spirits 

24  are  removed  from  the  distillery  premises,  or  from 
26  general  bonded  warehouse  in  the  case  of  spirits  trans- 
26  ferred  thereto,  except  as  otherwise  provided  by  law. 

87  Under   such   regulations   as   the   Commissioner,    with 

28  the  approval  of  the  Secretary,  may  prescribe,  distilled 

29  spirits    may    hereafter   be    drawn    from    receiving    cis- 

30  terns   and   deposited    in   distillery    warehouses   without 

31  having   affixed   to   the   packages   containing   the    same, 

32  distillery  warehouse  stamps,  and  such  packages,  when 
38  so  deposited  in  warehouse,  may  be  withdrawn  there- 
84  from  on  the  original  gauge  where  the  same  have  re- 

38  mained  In  such  warehouse  for  a  period  not  exceeding 

88  thirty  days  from  the  date  of  deposit. 

87  Under   such    regulations   as    the   Commissioner,   with 

88  the  approval  of  the  Secretary,  may  prescribe,  the  manu- 

39  facture,  warehousing,  withdrawal,  and  shipment,  under 

40  the   provisions    of   existing    law,    of    ethyl    alcohol    for 

41  other  than  (1)  beverage  purposes  or  (2)  use  in  the 
48  manufacture  or  production  of  any  article  used  or  in- 
48  tended  for  use  as  a  beverage,  and  denatured  alcohol, 
44  may  be  exempted  from  the  provisions  of  section  3283 
46  of  the  Revised  Statutes. 

Ethyl  46      The    Commissioner,    with    the    approval    of    the    Sec- 

Alcohol  47  retary,  may  by  regulations   exempt  distillers  of  ethyl 

48  alcohol,  for  use  in  the  production  of  munitions  of 
48  war,  or  for  other  non-beverage  purposes,  from  so  much 

60  of  the  provisions  of  sections  3264,  3285,  or  3309  of  the 

61  Revised    Statutes,    and    Acts    amendatory    thereof,    re- 

62  specting  the   survey  of  distilleries,   the  period  of  fer- 

63  mentation,  the  filling  and  emptying  of  fermenting  tubs, 

64  and  assessments,  as,  in  his  judgment,  may  be  expedi- 
66  ent:      Provided,    That    the    bond    prescribed    in    section 

66  3260  of  the  Revised  Statutes  shall,  in  the  cases  herein 

67  provided,    be    In    such    sum   and    contain    such    further 

68  conditions  as  the  Commissioner  may  require, 

'--^"  114  . 


SECTION  603.  That  under  such  regulations  as  the  1 
Commissioner,  with  the  approval  of  the  Secretary,  8 
may  prescribe,  ethyl  alcohol  of  not  less  than  180  de-  8 
grees  proof,  produced  at  any  central  distilling  and  4 
denaturing  plant  established  under  the  provisions  of  6 
subsection  2,  paragraph  N,  of  section  IV  of  the  Act  6 
entitled  "An  Act  to  reduce  tariff  duties  and  to  provide  7 
revenue  for  the  Government,  and  for  other  purposes,"  8 
approved  October  3,  1913,  may  be  removed  from  such  9 
plant  to  any  central  denaturing  bonded  warehouse  for  10 
denaturation,  or  may,  before  or  after  denaturation,  be  ll 
removed  from  such  plant  or  from  such  denaturing  18 
bonded  warehouse,  free  of  tax,  for  use  of  the  United  13 
States  or  for  shipment  to  any  nation  while  engaged  14 
against  the  German  Government  in  the  present  war  is 
and  the  removal  herein  authorized  may  be  made  in  le 
such  tank  vessels,  tank  cars,  drums,  casks,  or  other  17 
containers  as  may  be  approved  by  the  Commissioner.  18 
It  shall  be  lawful,  under  regulations  prescribed  by  19 
the  Commissioner,  with  the  approval  of  the  Secretary,  80 
for  an  allowance  to  be  made  for  leakage  or  loss  by  81 
unavoidable  accident  and  without  fault  or  negligence  88 
of  the  distiller,  owner,  carrier,  or  his  agents  or  em-  83 
ployees,  which  may  occur  during  the  transportation  84 
of  such  spirits  or  while  the  same  are  lawfully  stored  80 
on  either  of  the  premises  herein  described.  86 

87 

SECTION   604.     That  upon   all   distilled   spirits   pro-  88  Floor  Tax  on 
duced  in  or  imported  into  the  United  States  upon  which  89       Distilled 
the  internal-revenue  tax  now  imposed  by  law  has  been  30       Spirits 
paid,  and  which,  on  the  day  after  the  passage  of  this  31 
Act,  are  held  by  any  person  and  intended  for  sale  or  38 
for  use  In  the  manufacture  or  production  of  any  article  83 
intended  for  sale,  there  shall  be  levied,  assessed,  col-  34 
lected,  and  paid  a  floor  tax  of  $3.20  (if  intended  for  sale  35 
for  beverage  purposes  or  for  use  in  the  manufacture  or  36 
production  of  any  article  used  or  intended  for  use  as  a  37 
beverage)  on  each  proof  gallon,  and  a  proportionate  tax  38 
at   a    like   rate   on   all   fractional   parts   of   such    proof  88 
gallon.  40 

41 

SECTION  605.  That  in  addition  to  the  tax  imposed  48  Additional  Tax 
by  this  Act  on  distilled  spirits  and  wines,  there  shall  43  on  Spirits 
be  levied,  assessed,  collected,  and  paid,  in  lieu  of  the  44 
tax  imposed  by  section  304  of  the  Revenue  Act  of  45 
1917,  a  tax  of  30  cents  on  each  proof  gallon  and  a  46 
proportionate  tax  at  a  like  rate  on  all  fractional  parts  47 
of  such  proof  gallon  on  all  distilled  spirits  or  wines  48 
hereafter  rectified,  purified,  or  refined  in  such  manner,  49 
and  on  all  mixtures  hereafter  produced  In  such  man-  50 
ner,  that  the  person  so  rectifying,  purifying,  refining,  51 
or  mixing  the  same  is  a  rectifier  within  the  meaning  58 
of  section  3244  of  the  Revised  Statutes,  as  amended:  53 
Provided,  That  this  tax  shall  not  apply  to  gin  pro-  54 
duced  by  the  redistillation  of  a  pure  spirit  over  juniper  55 
berries  and  other  aromatics.  56 

Upon  all  such  articles  heretofore  produced,  and  57 
which  on   the  day  after  the  passage   of  this  Act  are  68 

116 


Iheld  by  any  person  and  intended  for  sale,   there  shall 

2  be  levied,  assessed,   collected,   and  paid  a  floor  tax  of 

3  15  cents  on  each  proof  gallon,  and  a  proportionate  tax 

4  at   a   like   rate   on   all   fractional   parts   of   each   proof 
6  gallon;   and  all  such  distilled   spirits   so  held  and  not 

6  contained  in  the  distillers'  original  stamped  packages, 

7  or  in  bottles  or  other  containers  bearing  the  distillers' 

8  original   labels,    shall   for   the    purpose   of   this    section 

9  be  regarded  as  rectified  spirits. 

10  When    the   process   of   rectification    is   completed   and 

11  the   taxes   prescribed   by   this   section   have   been   paid, 

12  it   shall   be   unlawful   for   the   rectifier   or   other   dealer 

13  to   reduce   in   proof  or  increase  in   volume   such  spirits 

14  or  wine  by  the  addition   of  water  or  other  substance; 

15  nothing    herein    contained    shall,    however,    prevent    a 

16  rectifier  from  using  again  in  the  process  of  rectification 

17  spirits  already  rectified  and  upon  which  the  taxes  have 

18  theretofore  been  paid. 

Cordials  19      The  taxes  imposed   by   this   section   shall   not  attach 

Liqueurs  20  to  cordials  or  liqueurs  on  which  a  tax  is  imposed  and 

21  paid  under  section   611   or   613,   nor  to   the   mixing  and 

22  blending  of  wines,  where  such  blending  is  for  the  sole 

23  purpose  of  perfecting  such  wines  according  to  com- 
24mercial   standards,   nor   to   blends   made   exclusively   of 

25  two  or  more  pure   straight  whiskies  aged  in  wood  for 

26  a    period    not    less    than    four    years    and    without    the 

27  addition   of  coloring  or   flavoring   matter   or   any   other 

28  substance   than    pure   water  and    if   not   reduced    below 

29  ninety    proof:      Provided,    That   such    blended    whiskies 

30  shall  be  exempt  from  tax  under  this  section  only  when 

31  compounded    under    the    immediate    supervision    of    a 

32  revenue    officer,    in    such    tanks    and    under    such    con- 

33  ditions  and  supervision  as  the  Commissioner,  with  the 

34  approval   of    the   Secretary,    may    prescribe. 
Uniform                 35      All    distilled    spirits    or    wines    taxable    under    this 

Regulations      36  section    shall    be    subject    to    uniform    regulations    con- 
37cerning  the   use  thereof  in   the  manufacture,   blending, 

38  compounding,   mixing,   marking,   branding,   and    sale   of 

39  whisky    and    rectified    spirits,    and    no    discrimination 

40  whatsoever   shall   be    made   by    reason    of   a   difference 

41  in  the  character  of  the  material  from  which  same  may 

42  have  been  produced. 

43  The  business  of  a  rectifier  of  spirits  shall  be  car- 
44ried  on,  and  the  tax  on  rectified  spirits  shall  be  paid, 
45  under  such  rules,  regulations,  and  bonds  as  may  be 
48  prescribed  by  the  Commissioner,  with  the  approval  of 
47  the  Secretary. 

Penalties  48     Whoever  violates  any  of  the  provisions  of  this  sec- 

49tion  shall  be  deemed  to  be  guilty  of  a  misdemeanor 
BO  and,  upon  conviction,  shall  be  fined  not  more  than 
63  $1,000    or    Imprisoned    not    more    than    two    years,    and 

52  shall.   In   addition,   be   liable  to  double  the   tax  evaded. 

53  together  with  the   tax,   to  be   collected   by   assessment 

54  or   on   any   bond    given. 
65 

Stamp  56      SECTION    606.     That    hereafter    collectors    shall    not 

Regulations      67  furnish    wholesale    liquor    dealer's    stamps    In    lieu    of 

68  and  in  exchange  for  stamps  for  rectified  spirits  unless 


116 


the  package  covered   by   stamp  for  rectified   spirits   is    1 
to  be  broken  into  smaller  packages.  2 

The  Commissioner,  with  the  approval  of  the  Sec-  3 
retary,  Is  authorized  to  discontinue'  the  use  of  the  4 
following  stamps  whenever  in  his  judgment  the  In-  6 
terests  of  the  Government  will  be  subserved  thereby:        6 

Distillery  warehouse,  special  bonded  warehouse,  spe-  7 
cial  bonded  rewarehouse,  general  bonded  warehouse,  8 
general  bonded  retransfer,  transfer  brandy,  export  9 
tobacco,  export  cigars,  export  oleomargarine,  and  export  10 
fermented-liquor  stamps.  11 

IS 

SECTION    607.     That    the    Commissioner,    with    the  13  Installation    of 
approval    of    the    Secretary,    is    hereby    authorized    to  14      Facilities  for 
require  at  distilleries,  breweries,  rectifying  houses,  and  15       Protecting 
wherever    else    in    his    judgment    such    action    may   be  16       Revenue 
deemed    advisable,    the    installation    of    meters,    tanks,  17       Required 
pipes,  or  any  other  apparatus  for  the  purpose  of  pro-  18 
tecting  the  revenue,  and  such  meters,  tanks,  and  pipes  19 
and   all   necessary    labor   incident   thereto   shall    be   at  20 
the  expense  of  the  person  on  whose  premises  the  In-  21 
stallatlon    is    required.      Any    such    person    refusing    or  22 
neglecting  to  install  such  apparatus  when  so  required  23 
by   the   Commissioner   shall   not   be   permitted   to   con-  24 
duct  business  on  such  premises.  25 

26 

SECTION  608.     That  there   shall  be  levied  and  col-  27  Tax  on  Beer, 
lected   on   all   beer,    lager   beer,   ale,   porter,   and   other  28      Ale,  Porter, 
similar   fermented    liquor,    containing   one-half    of    one  29       Etc. 
per  centum,   or  more,   of  alcohol,  brewed  or  manufac-  30 
tured  and  hereafter  sold,  or  removed  for  consumption  31 
or  sale,   within   the  United  States,   by   whatever  name  32 
such   liquors   may   be   called.    In    lieu   of   the   internal- 33 
revenue  taxes  now  imposed  thereon  by  law,   a  tax  of  34 
$6.00  for  every  barrel  containing  not  more  than  thirty- 35 
one  gallons,  and  at  a  like  rate  for  any  other  quantity  36 
or  for  the  fractional  parts  of  a  barrel  authorized  and  37 
defined  by  law,  to  be  collected  under  the  provisions  of  38 
existing  law.  39 

40 

SECTION  609.       That  from  and  after  the  passage  of  41  Removal  From 
this   Act   taxable  fermented   liquors   may   be   conveyed  42       Brewery  to 
without   payment   of   tax    from   the   brewery    premises  43       Distillery 
where  produced  to  a  contiguous  industrial  distillery  of  44 
either    class    established    under    the    Act    entitled    "An  45 
Act  to  reduce  tariff  duties  and  to  provide  revenue  for  46 
the    Government,    and    for    other    purposes,"    approved  47 
October  3,  1913,  to  be  used  as  distilling  material,  and  48 
the  residue  from  such  distillation,  containing  less  than  49 
one-half  of  1  per  centum  of  alcohol  by  volume,  which  50 
is  to  be  used  In  making  beverages,  may  be  manipulated  51 
by  cooling,   fiavoring,   carbonating,   settling,  and  filter-  52 
ing  on  the  distillery  premises  or  elsewhere.  53 

The  removal  of  the  taxable  fermented  liquor  from  54 
the  brewery  to  the  distillery  and  the  operation  of  the  55 
distillery  and  removal  of  the  residue  therefrom  shall  56 
be  under  the  supervision  of  such  officer  or  officers  as  57 
the    Commissioner    shall    deem    proper,    and    the    Com-  68 

117 


1  missioner,  with  the  approval  of  the  Secretary,  I9  here- 
8  by  authorized   to  make  such  regulations  from  time  to 
8  time  as  may  be  necessary  to   give  force  and  effect  to 
4  this  section  and  to  safeguard  the  revenue. 
6 

8      SECTION  610.     That  natural  wine  within  the  mean- 
Natural  Wine —   6  ing  of  this  Act  shall  be  deemed  to  be  the  product  made 
Definition  7  from   the   normal   alcoholic   fermentation   of   the   juice 

8  of  sound,  ripe  grapes,  without  addition  or  abstraction, 

10  except   such  as   may   occur   in   the   usual  cellar   treat- 

11  ment  of  clarifying  and  aging:  Provided,  however.  That 
18  the  product  made  from  the  juice  of  sound,  ripe  grapes 
18  by  complete  fermentation  of  the  must  under  proper 
14  cellar  treatment  and  corrected  by  the  addition  (under 
IB  the  supervision  of  a  ganger  or  storekeeper-ganger  in 
18  the   capacity   of   ganger)    of   a   solution   of   water   and 

17  pure  cane,  beet,  or  dextrose  sugar  (containing,  respec- 

18  tively,   not  less   than   95    per  centum   of  actual   sugar, 

19  calculated  on  a  dry  basis)  to  the  must  or  to  the  wine, 
80  to  correct  natural  deficiencies,  when  such  addition  shall 

21  not  increase  the  volume  of  the  resultant  product  more 

22  than    35    per   centum,   and    the   resultant   product   does 

83  not  contain  less  than  five  parts  per  thousand  of  acid 
24  before  fermentation  and  not  more  than  13  per  centum 
26  of  alcohol  after  complete  fermentation,  shall  be  deemed 

26  to  be  wine  within  the  meaning  of  this  Act,  and  may 

27  be   labeled,   transported,   and  sold   as   "wine,"   qualified 

28  by  the  name  of  the  locality  where  produced,  and  may 

29  be  further  qualified  by  the  name  of  its  own  particular 

30  type  or  variety:     And  provided  further.  That  wine  as 

31  defined   in    this    section    may   be    sweetened    with   cane 

32  sugar  or  beet  sugar  or  pure  condensed  grape  must  and 

33  fortified  under  the   provisions   of  this  Act,  and  wines 

84  so    sweetened    or    fortified    shall    be    considered    sweet 

85  wine  within  the  meaning  of  this  Act. 


87 

Still  Wines  38      SECTION  611.     That  upon  all  still  wines,  including 

89  vermuth,  and  all  artificial  or  imitation  wines  or  com- 

40  pounds    sold    as    still   wine,    which   are    hereafter   pro- 

41  duced  In  or  imported  Into  the  United  States,  or  which 

42  on  the  day  after  the  passage  of  this  Act  are  on  any 

43  winery  premises  or  other  bonded  premises  or  in  transit 

44  thereto  or  at  any   customhouse,   there  shall  be  levied, 

45  collected,  and  paid,  in  lieu  of  the  Internal-revenue  taxes 

46  now  Imposed  thereon  by  law,  taxes  at  rates  as  follows, 

47  when  sold,  or  removed  for  consumption  or  sale: 

48  On   wines   containing   not   more   than   14    per   centum 

49  of  absolute  alcohol,  16  cents  per  wine  gallon,  the  per 

60  centum    of    alcohol    taxable    under    this    section    to   be 

61  reckoned  by  volume  and  not  by  weight; 

62  On  wines  containing  more  than  14  per  centum  and 
68  not  exceeding  21  per  centum  of  absolute  alcohol,  40 
64  cents  per  wine  gallon; 

66      On  wines  containing  more  than   21   per  centum  and 

66  not   exceeding   24   per   centum   of   absolute   alcohol,    |1 

67  per  wine  gallon; 

68  All  such  wines  containing  more  than  24  per  centum 


118 


of  absolute  alcohol  by  volume  shall  be  classed  as  dis- 
tilled spirits  and  shall  pay  tax  accordingly. 

SECTION  612.  That  under  such  regulations  and  of- 
ficial supervision  and  upon  the  giving  of  such  notices, 
entries,  bonds,  and  other  security  as  the  Commis- 
sioner, with  the  approval  of  the  Secretary,  may  pre- 
scribe, any  producer  of  wines  defined  under  the  pro- 
visions of  this  title,  may  withdraw  from  any  fruit 
distillery  or  special  bonded  warehouse  grape  brandy, 
or  wine  spirits,  for  the  fortification  of  such  wines  on 
the  premises  where  actually  made:  Provided,  That 
there  shall  be  levied  and  assessed  against  the  pro- 
ducer of  such  wines  a  tax  (in  lieu  of  the  internal- 
revenue  tax  now  imposed  thereon  by  law)  of  60  cents 
per  proof  gallon  of  grape  brandy  or  wine  spirits  when- 
ever withdrawn  and  hereafter  so  used  by  him  in  the 
fortification  of  such  wines  during  the  preceding  month, 
which  assessment  shall  be  paid  by  him  within  ten 
months  from  the  date  of  notice  thereof:  Provided 
further,  That  nothing  contained  in  this  section  shall  be 
construed  as  exempting  any  wines,  cordials,  liqueurs,  or 
similar  compounds  from  the  payment  of  any  tax  pro- 
vided for  in  this  title. 

SECTION  613.  That  upon  the  following  articles 
which  are  hereafter  produced  in  or  Imported  into  the 
United  States,  or  which  on  the  day  after  the  passage 
of  this  Act  are  on  any  winery  premises  or  other  bonded 
premises  or  In  transit  thereto  or  at  any  customhouse, 
there  shall  be  levied,  collected,  and  paid  taxes  at  rates 
as  follows,  when  sold,  or  removed  for  consumption  or 
sale: 

On  each  bottle  or  other  container  of  champagne  or 
sparkling  wine,  12  cents  on  each  one-half  pint  or  frac- 
tion  thereof: 

On  each  bottle  or  other  container  of  artificially  car- 
bonated wine,  6  cents  on  each  one-half  pint  or  fraction 
thereof: 

On  each  bottle  or  other  container  of  liqueurs,  cor- 
dials, or  similar  compounds,  by  whatever  name  sold  or 
offered  for  sale,  containing  sweet  wine  fortified  with 
grape  brandy,  6  cents  on  each  one-half  pint  or  fraction 
thereof. 

The  tax  Imposed  by  this  section  shall,  in  the  case 
of  any  article  upon  which  a  corresponding  internal- 
revenue  tax  is  now  Imposed  by  law,  be  in  lieu  of  such 
tax. 

SECTION  614.  That  upon  all  articles  specified  In 
section  611  or  613  upon  which  the  internal-revenue  tax 
now  imposed  by  law  has  been  paid  and  which  are  on 
the  day  after  the  passage  of  this  Act  held  by  any 
person  and  Intended  for  sale,  there  shall  be  levied,  col- 
lected, and  paid  a  floor  tax  equal  to  the  difference  be- 
tween the  tax  imposed  by  this  Act  and  the  tax  so  paid. 

SECTION  615.  That  upon  all  sweet  wines  held  for 
sale  by  the   producer  thereof  upon   the  day  after  the 


Withdrawal 
From  Bond- 
Regulations 


Champagne 


Artificially 
Carbonated 
Wine 

Liqueurs, 
Cordials 


See  also  Sec. 
611,  613 


Sweet  Wines 


119 


1  passage  of  this  Act  there  shall  be  levied,  assessed, 
a  collected,  and  paid  a  floor  tax  equivalent  to   30   cents 

•  per  proof  gallon  upon  the  grape  brandy  or  wine  spirits 
4  used  in  the  fortification  of  such  wine. 

B 
Payment   of  6      SECTION    616.     That   the    taxes    imposed    by    section 

Tax  7  611   or  613   shall  be  paid  by   stamp  on  removal  of  the 

8  wines  from  the  customhouse,  winery,  or  other  bonded 

•  place  of  storage  for  consumption  or  sale,  and  every 
10  person  hereafter  producing,  or  having  in  his  possession 
H  or  under  his  control  when  this  title  takes  effect,  any 
18  wines  subject  to  the  tax  imposed  in  section  611  or  613 

13  shall  file  such  notice,  describing  the  premises  on  which 

14  such  wines  are  produced  or  stored;  shall  execute  a 
18  bond  in  such  form;  shall  make  such  inventories  under 

16  oath;  and  shall,  prior  to  sale  or  removal  for  consump- 

17  tion,  affix  to  each  cask  or  vessel  containing  such  wine 

18  such    marks,    labels,    or    stamps    as    the    Commissioner, 

19  with  the  approval  of  the  Secretary,  may  from  time 
80  to  time  prescribe;   and  the  premises  described   in   such 

21  notice  shall,  for  the  purpose  of  this  Act,   be  regarded 

22  as   bonded   premises.      But   the   provisions   of   this   sec- 

23  tion,   except  as   to   payment  of  tax  and  the  affixing  of 

24  the  required  stamps  or  labels,  shall  not  apply  to  wines 

25  held   by    retail    dealers,    as    defined    in    section    3244    of 

26  the  Revised  Statutes,  nor,   subject  to   regulations   pre- 

27  scribed    by    the    Commissioner,    with    the    approval    of 

28  the    Secretary,    shall    the    tax   imposed   by    section    611 

29  apply    to    wines    produced    for    the    family    use    of    the 

30  duly  registered  producer  thereof  and  not  sold  or  other- 

31  wise  removed  from  the  place  of  manufacture  and  not 
38  exceeding  in  any  case  two  hundred  gallons  per  year. 
33 

84  SECTION  617.  That  sections  42,  43,  and  45  of  the 
35  Act  entitled  "An  Act  to  reduce  the  revenue  and  equal- 

86  ize    duties    on    imports,    and    for    other    purposes,"    ap- 

87  proved  October  1,  1890,  as  amended  by  section  68  of 
38  the  Act  entitled  "An  Act  to  reduce  taxation,  to  provide 

88  revenue  for  the  Government  and  for  other  purposes," 

40  approved  August  27,  1894,  are  further  amended  to  read 

41  as   follows: 

Sweet  Wines  42  "Section  42.  That  any  producer  of  pure  sweet  wines 
48  may  use  in  the  preparation  of  such  sweet  wines,  under 
44  such  regulations  and  after  the  filing  of  such  notices 
48  and  bonds,  together  with  the  keeping  of  such  records 
48  and  the  rendition  of  such  reports  as  to  materials  and 

47  products    as    the    Commissioner    of    Internal    Revenue, 

48  with  the  approval  of  the  Secretary  of  the  Treasury, 
40  may  prescribe,  wine  spirits  produced  by  any  duly  au- 

50  thorized    distiller,    and    the    Commissioner    of    Internal 

51  Revenue,  In  determining  the  liability  of  any  distiller 
58  of  wine  spirits  to  assessment  under  section  3309  of  the 
58  Revised  Statutes,  is  authorized  to  allow  such  distiller 

54  credit   In   his   computations   for   the   wine  spirits   with- 

55  drawn  to  be  used  in  fortifying  ^weet  wines  under  this 

56  Act. 

Wine  Spirits  57  "Section  43.  That  the  wine  spirits  mentioned  in 
68  section    42   is   the  product   resulting  from   the  dlstllla- 


120 


tion  of  fermented  grape  juice,  to  which  water  may  have  1 
been  added  prior  to,  during,  or  after  fermentation,  for  2 
the  sole  purpose  of  facilitating  the  •  fermentation  and  3 
economical  distillation  thereof,  and  shall  be  held  to  4 
include  the  product  from  grapes  or  their  residues  com-  5 
monly  known  as  grape  brandy,  and  shall  include  com-  6 
mercial  grape  brandy  which  may  have  been  colored  7 
with  burnt  sugar  or  caramel;  and  the  pure  sweet  wine  8 
which  may  be  fortified  with  wine  spirits  under  the  9 
provisions  of  this  Act  is  fermented  or  partially  fer- 10 
mented  grape  juice  only,  with  the  usual  cellar  treat-  H 
ment,  and  shall  contain  no  other  substance  whatever  12 
introduced  before,  at  the  time  of,  or  after  fermenta-  13 
tion,  except  as  herein  expressly  provided:  Provided,  14 
That  the  addition  of  pure  boiled  or  condensed  grape  15 
must  or  pure  crystallized  cane  or  beet  sugar,  or  pure  16 
dextrose  sugar  containing,  respectively,  not  less  than  17 
95  per  centum  of  actual  sugar,  calculated  on  a  dry  18 
basis,  or  water,  or  any  or  all  of  them,  to  the  pure  19 
grape  juice  before  fermentation,  or  to  the  fermented  20 
product  of  such  grape  juice,  or  to  both,  prior  to  the  21 
fortification  herein  provided  for,  either  for  the  pur-  22 
pose  of  perfecting  sweet  wines  according  to  commer-  23 
cial  standards  or  for  mechanical  purposes,  shall  not  24 
be  excluded  by  the  definition  of  pure  sweet  wine  afore-  25 
said:  Provided,  however.  That  the  cane  or  beet  sugar,  26 
or  pure  dextrose  sugar  added  for  sweetening  purposes  27 
shall  not  be  in  excess  of  11  per  centum  of  the  weight  28 
of  the  wine  to  be  fortified:  And  provided  further.  That  29 
the  addition  of  water  herein  authorized  shall  be  under  30 
such  regulations  as  the  Commissioner  of  Internal  Rev-  31 
enue,  with  the  approval  of  the  Secretary  of  the  Treas-  32 
ury,  may  from  time  to  time  prescribe :  Provided,  how-  33 
ever.  That  records  kept  in  accordance  with  such  regu-  34 
lations  as  to  the  percentage  of  saccharine,  acid,  alco-  35 
holic,  and  added  water  content  of  the  wine  offered  for  36 
fortification  shall  be  open  to  inspection  by  any  official  37 
of  the  Department  of  Agriculture  thereto  duly  author-  38 
ized  by  the  Secretary  of  Agriculture;  but  in  no  case  39 
shall  such  wines  to  which  water  has  been  added  be  40 
eligible  for  fortification  under  the  provisions  of  this  41 
Act,  w^here  the  same,  after  fermentation  and  before  42 
fortification,  have  an  alcoholic  strength  of  less  than  43 
5  per  centum  of  their  volume.  44 

"Section  45.  That  under  such  regulations  and  of-  45 
ficial  supervision,  and  upon  the  execution  of  such  en-  46 
tries  and  the  giving  of  such  bonds,  bills  of  lading,  and  47 
other  security  as  the  Commissioner  of  ^  Internal  Rev-  48 
enue,  with  the  approval  of  the  Secretary  of  the  Treas-  49 
ury,  shall  prescribe,  any  producer  of  pure  sweet  wines  50 
as  defined  by  this  Act  may  withdraw  wine  spirits  from  51 
any  special  bonded  warehouse  in  original  packages  or  52 
from  any  registered  distillery  in  any  quantity  not  less  53 
than  eighty  wine  gallons,  and  may  use  so  much  of  the  54 
same  as  may  be  required  by  him  under  such  regula-  55 
tiong,  and  after  the  filing  of  such  notices  and  bonds  56 
and  the  keeping  of  such  records  and  the  rendition  of  57 
such    reports    as    to    materials    and    products    and    the  58 

121 


Removal  of 
Wines  Prom 
Winery 


1  disposition  of  the  same  as  the  Commissioner  of  In- 
3  ternal    Revenue,    with    the    approval    of    the    Secretary 

3  of  the  Treasury,  shall  prescribe,  In  fortifying  the  pure 

4  sweet  wines  made  by  him,  and  for  no  other  purpose, 
B  In  accordance  with  the  foregoing  limitations  and  pro- 
•  visions;  and  the  Commissioner  of  Internal  Revenue, 
7  with  the  approval  of  the  Secretary  of  the  Treasury,  Is 
elauthorized  whenever  he  shall  deem  It  to  be  necessary 

for   the   prevention   of   violations   of   this   law    to   pre- 

10  scribe  that  wine  spirits  withdrawn  under  this  section 

11  shall  not  be  used  to  fortify  wines  except  at  a  certain 

12  distance   prescribed   by    him   from   any   distillery,    rec- 

13  tifying  house,  winery,  or  other  establishment  used  for 


producing  or  storing  distilled  spirits,  or  for  making 
or  storing  wines  other  than  wines  which  are  so  for- 
lejtlfied,  and  that  in  the  building  in  which  such  forti- 
fication of  wines  is  practiced  no  wines  or  spirits  other 
than  those  permitted  by  this  regulation  shall  be  stored 
in  any  room  or  part  of  the  building  In  which  forti- 
fication of  wines  is  practiced.     The  use  of  wine  spirits 


Orape  Wines 


19 
80 

21  for  the  fortification  of  sweet  wines  under  this  Act 
22||shall  be  under  the  immediate  supervision  of  an  officer 

of  Internal  revenue,  who  shall  make  returns  describing 
243the  kinds  and  quantities  of  wine  so  fortified,  and  shall 
25JafCix  such  stamps  and  seals  to  the  packages  containing 

such  wines  as  may  be  prescribed  by  the  Commissioner 
arjof  Internal  Revenue,  with  the  approval  of  the  Secre- 
28|tary  of  the  Treasury:  and  the  Commissioner  of  In- 
M  ternal  Revenue,  with  the  approval  of  the  Secretary  of 

30  the   Treasury,    shall   provide    by    regulations    the    time 

31  within  which  wines  so  fortified  with  the  wine  spirits 
38  so   withdrawn   may   be   subject   to   inspection,   and   for 

33  final  accounting  for  the  use  of  such  wine  spirits  and 

34  for  rewarehousing  or  for  payment  of  the  tax  on  any 
88  portion  of  such  wine  spirits  which  remain  not  used 
88  in  fortifying  pure  sweet  wines." 

37 

38      SECTION  618.     (a)  That  under  such  regulations  and 

.39  upon  the  execution  of  such  notices,  entries,  bonds,  and 

40  other  security  as  the  Commissioner,  with  the  approval 

41  of  the  Secretary,  may  prescribe,  domestic  wines  sub- 
48  ject  to  the  tax  Imposed  by  section  611  may  be  removed 

43  from  the  winery  where  produced,  free  of  tax,  for  stor- 

44  age  on   other  bonded   premises  or  from  such  premises 

45  to  other  bonded  premises  (but  not  more  than  one  such 
48  additional  removal  shall  be  allowed),  or  for  exporta- 
4T  tlon  from  the  United  States  or  for  use  as  distilling  ma- 
48terial  at  any  regularly  registered  distillery:  Provided. 
48  however.  That  the  distiller  using  any  such  wine  as  ma- 
80  terial  shall,  subject  to  the  provisions  of  section  3309 
61  of  the  Revised  Statutes,  as  amended,  be  held  to  pay 
68  the  tax  on   the  product  of  such  wines  as  will  Include 

63  both    the   alcoholic   strength    therein    produced   by   fer- 

64  mentation  and  that  obtained  from  the  brandy  or  wine 
66  spirits  added  to  such  wines  at  the  time  of  fortification. 
68  (b)  Under  regulations  prescribed  by  the  Commis- 
67sloner  with  the  approval  of  the  Secretary,  it  shall  be 
68  lawful  to  produce  grape  wines  on  bpnded  winery  prem- 


123 


ises  by  the  usual  method,  and  to  transport  and  use  1 
the  same,  and  like  wines  heretofore  produced  and  now  8 
stored  on  bonded  winery  premises,  as  distilling  mate-  • 
rial  for  the  production  of  nonbeverage  spirits  In  the  4 
production  of  nonalcoholic  wines,  containing  less  than  6 
%  of  1  per  centum  of  alcohol  by  volume.  In  any  fruit  • 
brandy  or  industrial  distillery:  Provided,  That  all  7 
alcoholic  spirits  so  obtained  at  any  industrial  distillery  8 
shall  be  denatured,  and  all  spirits  so  obtained  at  any  8 
fruit  distillery  shall  be  removed  and  used  only  for  non-  10 
beverage  purposes  or  for  denaturatlon.  11 

la 

SECTION  619.     That  the  collection  of  the  tax  on  Im-  13  Imported 
ported    still   wines,    including   vermuth,    and    sparkling  14      Wines 
wines,  Including  champagne,  and  on  imported  liqueurs,  18 
cordials,  and  similar  compounds,  may  be  made  within  16 
the  discretion  of  the  Commissioner,  with  the  approval  17 
of  the  Secretary,  by  assessment  Instead  of  by  stamps.    18 

19 

SECTION  620.  That  whoever  evades  or  attempts  to  20  Penalties 
evade  any  tax  Imposed  by  sections  611  to  615,  both  81 
Inclusive,  or  any  requirement  of  sections  610  to  621, 28 
both  inclusive,  or  regulation  Issued  pursuant  thereto,  23 
or  whoever,  otherwise  than  as  provided  in  such  sec-  24 
tions,  recovers  or  attempts  to  recover  any  spirits  from  25 
domestic  or  Imported  wine,  or  whoever  rectifies,  mixes,  26 
or  compounds  with  distilled  spirits  any  domestic  wines,  27 
other  than  In  the  manufacture  of  liqueurs,  cordials,  or  28 
similar  compounds,  shall,  on  conviction,  be  punished  29 
for  each  such  offense  by  a  fine  of  not  exceeding  $5,000,  30 
or  Imprisonment  for  not  more  than  five  years,  or  both,  31 
and  in  addition  thereto  by  a  penalty  of  double  the  tax  32 
evaded,  or  attempted  to  be  evaded,  to  be  assessed  and  33 
collected  in  the  same  manner  as  taxes  are  assessed  34 
and  collected,  and  all  wines,  spirits,  liqueurs,  cordials,  35 
or  similar  compounds  as  to  which  such  violation  occurs  36 
shall  be  forfeited  to  the  United  States.  But  the  pro- 37 
visions  of  this  section  and  the  provisions  of  section  38 
3244  of  the  Revised  Statutes,  as  amended,  relating  to  39 
rectification,  or  other  Internal-revenue  laws  of  the  40 
United  States,  shall  not  be  held  to  apply  to  or  prohibit  41 
the  mixing  or  blending  of  wines  subject  to  tax  under  43 
the  provisions  of  sections  611  to  615,  both  inclusive,  43 
with  each  other  or  with  other  wines  for  the  sole  pur-  44 
pose  of  perfecting  such  wines  according  to  commercial  45 
standards:  Provided,  That  nothing  herein  contained  46 
shall  be  construed  as  prohibiting  the  use  of  tax-paid  47 
grain  or  other  ethyl  alcohol  In  the  fortification  of  sweet  48 
wines  as  defined  In  section  610  of  this  Act  and  section  49 
43  of  the  Act  entitled  "An  Act  to  reduce  the  revenue  50 
and  equalize  duties  on  Imports,  and  for  other  purposes,"  51 
approved  October  1,  1890,  as  amended  by  this  Act.  52 

53 

SECTION   621.     That   the   Commissioner,   by   regula-  54  Apparatus  and 
tions  to  be  approved  by  the  Secretary,  may  require  the  55       Gangers 
use  at  each  fruit  distillery  of  such  spirit  meters,  and  56 
such  locks  and  seals  to  be  affixed  to  fermenters,  tanks,  57 
or  other  vessels  and  to  such  pipe  connections  as  may  68 

183 


Loss  While  in 
Storage 


Mash  Beer 


Regulations  for 
Manufacture 


Withdrawal 
From 
Receiving 
Cistern  for 
Export 


1  in  his  Judgment  be  necessary  or  expedient,  and  Is  here- 

2  by  authorized  to  assign  to  any  such  distillery  and  to 

3  each  winery  where  wines  are  to  be  fortified  such  num- 

4  ber  of  gangers  or  storekeeper-gangers  in  the  capacity 
6  of  gangers  as  may  be  necessary  for  the  proper  super- 

6  vision  of  the  manufacture  of  brandy  or  the  making  or 

7  fortifying  of  wines  subject  to  tax  imposed  by  this  sec- 
Stion;  and  the  compensation  of  such  officers  shall  not 
9  exceed   $5   per  diem  while   so  assigned,   together  with 

10  their  actual  and  necessary  traveling  expenses,  and  also 

11  a  reasonable  allowance  for  their  board  bills,  to  be  fixed 

12  by  the  Commissioner,  with  the  approval  of  the  Secre- 

13  tary,  but  not  to  exceed  $2.50  per  diem  for  such  board 

14  bills. 
15 

16  SECTION  622.     That  the  Commissioner,  with  the  ap- 

17  proval  of  the  Secretary,  is  hereby  authorized  to  make 

18  such  allowances   for  unavoidable   loss   of   wines   while 

19  on  storage  or  during  cellar  treatment  as  in  his  Judg- 

20  ment  may  be  just  and  proper. 
21 

22  SECTION  623.     That  the  second  paragraph  of  section 

23  3264  of  the  Revised   Statutes,  as  amended  by   section 

24  5  of  the  Act  of  March  1,  1879,  and  as  further  amended 

25  by  the  Act  of  June  22,  1910,  be  amended  so  as  to  read 

26  as  follows: 

27  "In   all   surveys   forty-five   gallons   of  mash   or  beer 

28  brewed   or   fermented   from    grain    shall   represent   not 

29  less   than   one   bushel   of   grain,   and   seven   gallons   of 

30  mash  or  beer  brewed  or  fermented  from  molasses  shall 

31  represent  not  less  than  one  gallon  of  molasses,  except 

32  in  distilleries  operated  on  the  sour-mash  principle,   in 

33  which  distilleries  sixty  gallons  of  beer  brewed  or  fer- 

34  mented  from  grain  shall   represent  not  less   than   one 

35  bushel  of  grain,  and  except  that  in   distilleries  where 

36  the    filtration-aeration    process    is    used,    with    the    ap- 

37  proval  of  the  Commissioner  of  Internal  Revenue;  that 

38  is,   where   the  mash   after   it   leaves   the   mash   tub    Is 

39  passed  through  a  filtering  machine  before  it  is  run  into 

40  the  fermenting  tub,  and  only  the  filtered  liquor  passes 

41  into   the   fermenting   tub,    there   shall   hereafter  be  no 

42  limitation  upon  the  number  of  gallons  of  water  which 

43  may  be  used  in  the  process  of  mashing  or  filtration  for 

44  fermentation;   but  the  Commissioner  of   Internal   Rev- 

45  enue,  with  the  approval  of  the  Secretary  of  the  Treas- 

46  ury,  in  order  to  protect  the  revenue,  shall  be  authorized 

47  to  prescribe  by  regulation,   to   be  made  by  him,   such 

48  character  of  survey  as  he  may  find  suitable  for  distil- 

49  leries  using  such  filtration-aeration  process.  The  provi- 
so sions  hereof  relating  to  filtration-aeration  process  shall 
51  apply  only  to  sweet-mash  distilleries." 

52 

53  SECTION   624.     That  under  such  regulations  as   the 

54  Commissioner,  with  the  approval  of  the  Secretary,  may 

55  prescribe,  alcohol  or  other  distiiled   spirits  of  a  proof 

56  strength  of  not  less  than  one  hundred  and  eighty  de- 

57  grees  intended  for  export  free  of  tax  may  be  drawn 
§8  from  receiving  cisterns  at  any  distillery,  or  from  stor- 


124 


age  tanks  in  any  distillery  warehouse,  for  transfer  to  1 
tanks  or  tank  cars  for  export  from  the  United  States,  3 
and  all  provisions  of  existing  law  relating  to  the  3 
exportation  of  distilled  spirits  not  inconsistent  herewith  4 
shall  apply  to  spirits  removed  for  export  under  the  pro-  6 
visions  of  this  Act.  6 

7 

SECTION    625.      That    section    3255    of    the    Revl&ed    8 

Statutes  as  amended  by  the  Act  of  June  3,  1896,  and  as    9 

further  amended  by  the  Act  of  March  2,  1911,  be  further  XO 

amended  so  as  to  read  as  follows:  11 

12 
"Section  3255.  The  Commissioner  of  Internal  Reve- 13  Brandy 
nue,  with  the  approval  of  the  Secretary  of  the  Treas-  14 
ury,  may  exempt  distillers  of  brandy  made  exclu- 15 
sively  from  apples,  peaches,  grapes,  pears,  pineapples,  16 
oranges,  apricots,  berries,  plums,  pawpaws,  persimmons,  17 
prunes,  figs,  or  cherries  from  any  provision  of  this  title  18 
relating  to  the  manufacture  of  spirits,  except  as  to  the  19 
tax  thereon,  when  in  his  judgment  it  may  seem  ex-  20 
pedient  to  do  so:  Provided,  That  where.  In  the  manu- 21 
f  acture  of  wine,  artificial  sweetening  has  been  used  the  22 
wine  or  the  fruit  pomace  residuum  may  be  used  in  the  23 
distillation  of  brandy,  and  such  use  shall  not  prevent  24 
the  Commissioner  of  Internal  Revenue,  with  the  ap-  25 
proval  of  the  Secretary  of  the  Treasury,  from  exempt-  26 
ing  such  distiller  from  any  provision  of  this  title  relat-  27 
ing  to  the  manufacture  of  spirits,  except  as  to  the  tax  28 
thereon,  when  in  his  judgment  it  may  seem  expedient  29 
to  do  so:  And  provided  further.  That  the  distillers  30 
mentioned  in  this  section  may  add  to  not  less  than  five  31 
hundred  gallons  (or  ten  barrels)  of  grape  cheese  not  32 
more  than  five  hundred  gallons  of  a  sugar  solution  33 
made  from  cane,  beet,  starch,  or  corn  sugar,  95  per  34 
centum  pure,  such  solution  to  have  a  saccharine  35 
strength  of  not  to  exceed  10  per  centum,  and  may  fer-  36 
ment  the  resultant  mixture  on  a  winery  or  distillery  37 
premises,  and  such  fermented  product  shall  be  regarded  38 
as  distilling  material."  39 

40 
SECTION  626.  That  distilled  spirits  known  commer- 41  Gin 
cially  as  gin  of  not  less  than  80  per  centum  proof  may  42 
at  any  time  within  eight  years  after  entry  In  bond  at  43 
any  distillery  be  bottled  In  bond  at  such  distillery  for  44 
export  without  the  payment  of  tax,  under  such  rules  45 
and  regulations  as  the  Commissioner,  with  the  approval  46 
of  the  Secretary,  may  prescribe.  47 

48 

SECTION    627.     That    section    3354    of    the    Revised  49 

Statutes  as  amended  by  the  Act  approved  June  18,  1890,  50 

be  and  is  hereby,  amended  to  read  as  follows:  51 

52 
"Section  3354.  Every  person  who  withdraws  any  53  Penalties 
fermented  liquor  from  any  hogshead,  barrel,  keg,  or  54 
other  vessels  upon  which  the  proper  stamp  has  not  55 
been  affixed  for  the  purpose  of  bottling  the  same,  or  56 
who  carries  on  or  attempts  to  carry  on  the  business  of  57 
bottling  fermented  liquor  in  any  brewery  or  other  place  68 

125 


&  in  which  fermented  liquor  Is  made,  or  upon  any  prem- 
illses  having  communication  with  such  brewery,  or  any 

3  warehouse,  shall  be  liable  to  a  fine  of  $500,  and  the  prop- 

4  erty  used  In  such  bottling  or  business  shall  be  liable  to 
6  forfeiture:  Provided,   however.   That  this  section   shall 

6  not  be  construed  to  prevent  the  withdrawal  and  trans- 

7  fer  of  unfermented,  partially  fermented,  or  fermented 

8  liquors  from  any  of  the  vats  in  any  brewery  by  way 
8  of  a  pipe  line  or  other  conduit  to  another  building  or 

10  place  for  the  sole  purpose  of  bottling  the  same,  such 

11  pipe  line  or  conduit  to  be  constructed  and  operated  in 

12  such  manner  and  with  such  cisterns,  vats,  tanks,  valves, 

13  cocks,  faucets,  and  gauges,  or  other  utensils  or  appa- 

14  ratus,   either  on   the   premises   of  the  brewery  or  the 

15  bottling  house,  and  with  such  changes  of  or  additions 

16  thereto,  and  such  locks,  seals,  or  other  fastenings,  and 

17  under    such    rules    and    regulations    as    shall    be    from 

18  time   to   time   prescribed   by   the   Commissioner   of   In- 

19  ternal  Revenue,  subject  to  the  approval  of  the  Secre- 

20  tary  of  the  Treasury,  and  all  locks  and  seals  prescribed 

21  shall  be  provided  by  the  Commissioner  of  Internal  Kev- 

22  enue  at   the   expense   of   the   United    States:    Provided 

23  further,  That  the  tax  imposed  in  section   3339   of  the 

24  Revised  Statutes  shall  be  paid  on  all  fermented  liquor 
28  removed  from  a  brewery  to  a  bottling  house  by  means 

26  of  a  pipe  or  conduit,  at  the  time  of  such  removal,  by  the 

27  cancellation    and   defacement,   by   the   collector   of    the 

28  district  or  his  deputy,  in  the  presence  of  the  brewer, 

29  of  the  number  of  stamps  denoting  the  tax  on  the  fer- 

30  mented   liquor   thus   removed.      The   stamps   thus   can- 

31  celed  and  defaced  shall  be  disposed  of  and  accounted  for 

32  in  the  manner  directed  by  the  Commissioner  of  Internal 

33  Revenue,    with   the   approval   of   the   Secretary    of   the 

34  Treasury.     And  any  violation  of  the  rules  and  regula- 
38  tions     hereafter    prescribed     by    the    Commissioner    of 

36  Internal  Revenue,  with  the  approval  of  the  Secretary 

37  of  the  Treasury,  in  pursuance  of  these  provisions,  shall 

38  be  subject  to  the  penalties  above  provided  by  this  sec- 

39  tlon.     Every   owner,    agent,    or   superintendent   of   any 

40  brewery  or  bottling  house  who  removes,  or  connives  at 

41  the  removal  of,  any  fermented  liquor  through  a  pipe 

42  line  or  conduit,  without  payment  of  the  tax  thereon,  or 
48  who  attempts   in   any  manner  to  defraud   the   revenue 

44  as  above,  shall  forfeit  all  the  liquors  made  by  and  for 

45  him,  and  all  the  vessels,  utensils,  and  apparatus  used 

46  in  making  the  same." 
47 

Other  48     SECTION  628.     That  there  shall  be  levied,  assessed, 

Beverages         49  collected,    and    paid   in    lieu   of    the    taxes    imposed    by 

Derived  From  60  sections  313  and  315  of  the  Revenue  Act  of  1917 — 

Cereals  61      (a)  Upon    all   beverages    derived    wholly   or   in    part 

62  from  cereals  or  substitutes  therefor,  and  containing  less 

68  than   one-half  of   one   per  centum  of  alcohol,   sold   by 

64  the  manufacturer,   producer,  or  importer,  in  bottles  or 

66  other    closed    containers,    a    tax    equivalent    to    15    per 
Soft  Drinks          66  centum  of  the  price  for  which  so  sold;   and  upon   all 

67  unfermented  grape  juice,   ginger  ale,  root  beer,   sarsa- 

68  parilla,    pop,    artificial   mineral    waters    (carbonated    or 

196 


not  carbonated),  other  carbonated  waters  or  beverages.  1 
and  other  soft  drinks,  sold  by  the  manufacturer,  pro-  3 
ducer,  or  importer,  in  bottles  or  other  closed  containers,  3 
a  tax  equivalent  to  10  per  centum  of  the  price  for  4 
which  so  sold;  and  5  '] 

(b)  Upon  all  natural  mineral  waters  or  table  waters,  6 
sold  by   the   producer,  bottler,   or  importer  thereof,   in    7  ; 

bottles  or  other  closed  containers,  at  over  10  cents  per  8 
gallon,  a  tax  of  2  cents  per  gallon.  9 

10 

SECTION    629.     That    each    manufacturer,    producer,  11  Monthly 
bottler,  or  Importer  of  any  of  the  articles  enumerated  in  12       Return  and 
section  628  shall  make  monthly  returns  under  oath  in  13       Payment  of 
duplicate  and  pay  the  taxes  imposed  in  respect  to  such  14      Tax 
articles  by  such  section  to  the  collector  for  the  district  15 
in  which  is  located  the  principal  place  of  business,  con-  16 
taining  such  information  necessary  for  the  assessment  17 
of  the  tax,  and  at  such  times  and  In  such  manner  as  18 
the  Commissioner,  with  the  approval  of  the  Secretary,  19 
may  by  regulation  prescribe.  20 

The  tax  shall,  without  assessment  by  the  Commis-  21 
sioner  or  notice  from  the  collector,  be  due  and  payable  22 
to  the  collector  at  the  time  so  fixed  for  filing  the  re-  23 
turn.  If  the  tax  Is  not  paid  when  due,  there  shall  be  24 
added  as  part  of  the  tax  a  penalty  of  5  per  centum,  25 
together  with  interest  at  the  rate  of  1  per  centum  for  26 
each  full  month,  from  the  time  when  the  tax  became  27 
due.  28 

29 

SECTION  630.     That  on  and  after  May  1,  1919,  there  30  Ice   Cream 
shall  be  levied,  assessed,  collected,  and  paid  a  tax  of  31       Parlors,  Soda 
1    cent   for   each   10   cents   or   fraction    thereof   of    the  32       Fountains, 
amount  paid  to  any  person  conducting  a  soda  fountain,  33       Soft    Drinks 
ice-cream  parlor,  or  other  similar  place  of  business,  for  34 
drinks   commonly    known    as   soft    drinks,    compounded  85 
or  mixed  at  such  place  of  business,  or  for  ice  cream,  86 
ice-cream  sodas,   sundaes,  or  other  similar  articles   of  37 
food  or  drink,  when  any  of  the  above  are  sold  on  or  38 
after  such  date  for  consumption  in  or  in  proximity  to  39 
such  place  of  business.     Such  tax  shall  be  paid  by  the  40 
purchaser  to  the   vendor  at   the  time  of  the   sale  and  41 
shall   be   collected,    returned,    and    paid    to    the   United  42 
States  by  such  vendor  in  the  same  manner  as  provided  43 
in  section  502.  44 

45 

TITLE  VII.— TAX  ON  CIGARS,  TOBACCO  AND       ^7 
MANUFACTURES    THEREOF.  48 

49 
SECTION  700.  (a)  That  upon  cigars  and  cigarettes  50  Cigars  and 
manufactured  in  or  Imported  into  the  United  States,  51  Cigarettes 
and  hereafter  sold  by  the  manufacturer  or  importer,  62 
or  removed  for  consumption  or  sale,  there  shall  be  63 
levied,  collected,  and  paid  under  the  provisions  of  64 
existing  law,  in  lieu  of  the  internal-revenue  taxes  now  55 
Imposed  thereon  by  law,  the  following  taxes,  to  be  56 
paid  by  the  manufacturer  or  importer  thereof—  57 

On    cigars    of   all    descriptions    made    of    tobacco,    or  58  Cigars 

127 


Cigarettes 


Tobacco, 
Snuff 


any  substitute  therefor,  and  weighing  not  more  man 
three  pounds  per  thousand,   $1.50   per  thousand; 

On  cigars  made  of  tobacco,  or  any  substitute  therefor, 
and  weighing  more  than  three  pounds  per  thousand,  if 
manufactured  or  imported  to  retail  at  not  more  than 
5  cents  each.  $4  per  thousand; 

If  manufactured  or  imported  to  retail  at  more  than 
5  cents  each  and  not  more  than  8  cents  each,  $6  per 
thousand; 

If  manufactured  or  imported  to  retail  at  more  than 
than  8  cents  each  and  not  more  than  15  cents  each,  $9 
per  thousand; 

If  manufactured  or  imported  to  retail  at  more  than 
15  cents  each  and  not  more  than  20  cents  each,  $12 
per  thousand; 

Tf  manufactured  or  irnpbrted  to  retail  at  more  than 
20  cents  each,  $15  per  thousand; 

On  cigarettes  made  of  tobacco,  or  any  substitute 
therefor,  and  weighing  not  more  than  three  pounds  per 
thousand,  $3  per  thousand; 

Weighing  more  than  three  pounds  per  thousand,  $7.20 
per  thousand. 

(b)  Whenever  in  this  section  reference  Is  made  to 
cigars  manufactured  or  imported  to  retail  at  not  over 
a  certain  price  each,  then  In  determining  the  tax  to  be 
paid  regard  shall  be  had  to  the  ordinary  retail  price 
of  a  single  cigar. 

(c)  The  Commissioner  may,  by  regulation,  require  the 
manufacturer  or  Importer  to  affix  to  each  box,  package, 
or  container  a  conspicuous  label  indicating  the  clause 
of  this  section  under  which  the  cigars  therein  con- 
tained have  been  tax-paid,  which  must  correspond  with 
the  tax-paid  stamp  on  such  box  or  container. 

(d)  Every  manufacturer  of  cigarettes  (including 
small  cigars  weighing  not  more  than  three  pounds  per 
thousand)  shall  put  up  all  the  cigarettes  and  such 
small  cigars  that  he  manufactures  or  has  manufactured 
for  him,  and  sells  or  removes  for  consumption  or  sale, 
in  packages  or  parcels  containing  five,  eight,  ten, 
twelve,  fifteen,  sixteen,  twenty,  twenty-four,  forty, 
fifty,  eighty,  or  one  hundred  cigarettes  each,  and  shall 
securely  affix  to  each  of  such  packages  or  parcels  a 
suitable  stamp  denoting  the  tax  thereon  and  shall  prop- 
erly cancel  the  same  prior  to  such  sale  or  removal  for 
consumption  or  sale  under  such  regulations  as  the 
Commissioner,  with  the  approval  of  the  Secretary,  shall 
prescribe;  and  all  cigarettes  imported  from  a  foreign 
country  shall  be  packed,  stamped,  and  the  stamps  can- 
celed in  a  like  manner,  in  addition  to  the  import  stamp 
Indicating  inspection  of  the  custom  house  before  they 
are  withdrawn   therefrom. 

SECTION  701.  (a)  That  upon  all  tobacco  and  snuff 
manufactured  in  or  imported  into  the  United  States,  and 
hereafter  sold  by  the  manufacturer  or  importer,  or  re- 
moved for  consumption  or  sale,  there  shall  be  levied, 
collected,  and  paid,  in  lieu  of  the  Internal-revenue  taxes 
now    Imposed    thereon   by    law,    a   tax    of    18    cents    per 


128 


pound,    to    be    paid    by    the    manufacturer    or    importer    1 
thereof.  2 

(b)  Section  3362  of  the  Revised  Statutes,  as  amended.  3 
is  hereby  amended  to  read  as  follows:,  4 

6 

"Section    3362.      All    manufactured    tobacco    shall    be    6  Regulation  of 
put  up  and  prepared  by  the  manufacturer  for  sale,   or    7       Packages 
removal   for   sale   or   consumption,    in   packages   of   the    8 
following  description  and  in  no  other  manner:  9 

"All  smoking  tobacco,  snuff,  fine-cut  chewing  tobacco,  10 
all  cut  and  granulated  tobacco,  all  shorts,  the  refuse  11 
of  fine-cut  chewing,  which  has  passed  through  a  riddle  12 
of  thirty-six  meshes  to  the  square  inch,  and  all  refuse  13 
scraps,  clippings,  cuttings,  and  sweepings  of  tobacco,  14 
and  all  other  kinds  of  tobacco  not  otherwise  provided  15 
for,  in  packages  containing  one-eighth  of  an  ounce,  16 
three-eighths  of  an  ounce,  and  further  packages  with  a  17 
difference  between  each  package  and  the  one  next  small-  18 
er  of  one-eighth  of  an  ounce  up  to  and  including  two  19 
ounces,  and  further  packages  with  a  difference  between  20 
each  package  and  the  one  next  smaller  of  one-fourth  of  21 
an  ounce  up  to  and  including  four  ounces,  and  packages  22 
of  five  ounces,  six  ounces,  seven  ounces,  eight  ounces,  23 
ten  ounces,  twelve  ounces,  fourteen  ounces,  and  sixteen  24 
ounces:  Provided,  That  snuff  may,  at  the  option  of  the  25 
manufacturer,  be  put  up  in  bladders  and  in  jars  con-  26 
taining  not  exceeding  twenty  pounds.  27 

"All  cavendish,  plug,  and  twist  tobacco,  in  wooden  28 
packages  not  exceeding  two  hundred  pounds  net  weight.  29 

"And  every  such  wooden  package  shall  have  printed  30 
or  marked  thereon  the  manufacturer's  name  and  place  31 
of  manufacture,  the  registered  number  of  the  manu-  32 
factory,  and  the  gross  weight,  the  tare,  and  the  net  33 
weight  of  the  tobacco  in  each  package:  Provided,  That  34 
these  limitations  and  descriptions  of  packages  shall  35 
not  apply  to  tobacco  and  snuff  transported  in  bond  for  36 
exportation  and  actually  exported:  And  provided  fur- 37 
ther.  That  perique  tobacco,  snuff  flour,  fine-cut  shorts,  38 
the  refuse  of  fine-cut  chewing  tobacco,  refuse  scraps,  39 
clippings,  cuttings,  and  sweepings  of  tobacco,  may  be  40 
sold  in  bulk  as  material,  and  without  the  payment  of  41 
tax,  by  one  manufacturer  directly  to  another  manufac-  42 
turer,  or  for  export,  under  such  restrictions,  rules,  and  43 
regulations  as  the  Commissioner  of  Internal  Revenue  44 
may  prescribe:  And  provided  further.  That  wood,  metal,  45 
paper,  or  other  materials  may  be  used  separately  or  in  46 
combination  for  packing  tobacco,  snuff,  and  cigars,  un-47 
der  such  regulations  as  the  Commissioner  of  Internal  48 
Revenue  may  establish."  49 

50 

SECTION  702.     That  upon  all  the  articles  enumerated  51  Floor  Tax  on 
in    section    700    or    701,    which    were    manufactured    or  52       Tobacco  and 
imported,    and    removed    from    factory    or    customhouse  53       Tobacco 
on  or  prior  to  the  date  of  the  passage  of  this  Act,  and  54       Products 
upon  which  the  tax  imposed  by  existing  law  has  been  55 
paid,  and  which  are,  on  the  day  after  the  passage  of  this  56 
Act,   held   by   any   person   and   intended   for   sale,   there  57 
shall  be  levied,  assessed,  collected,  and  paid  a  floor  tax  58 

129 


1  equal  to  the  difference  between  (a)  the  tax  imposed  by 
8  this  Act  upon  such  articles  according  to  the  class  in 
8  which  they  are  placed  by  this  title,  and  (b)  the  tax  Im- 
4  posed  upon  such  articles  by  existing  law  other  than 
6  section  403  of  the  Revenue  Act  of  1917. 
• 
Cigarette  7      SECTION  703.     That  there  shall  be  levied,  collected. 

Paper  8  and  paid,  in   lieu  of  the  taxes  imposed  by  section  404 

8  of  the  Revenue  Act  of  1917,  upon  cigarette  paper  made 

10  up  Into  packages,  books,  sets,  or  tubes,  made  up  in  or 

11  imported  into  the  United  States  and  hereafter  sold  by 

12  the  manufacturer  or  importer  to  any  person  (other  than 

13  to  a  manufacturer  of  cigarettes  for  use  by  him  in  the 

14  manufacture  of  cigarettes)   the  following  taxes,  to  be 

15  paid  by  the  manufacturer  or  importer:  On  each  package, 
10  book,  or  set,  containing  more  than  twenty-five  but  not 

17  more  than  fifty  papers,    y2   cent;  containing  more  than 

18  fifty  but  not  more  than  one  hundred  papers,  1  cent; 
18  containing  more  than  one  hundred  papers,  %  cent  for 
80  each  fifty  papers  or  fractional  part  thereof;  and  upon 

21  tubes,   1   cent  for   each   fifty   tubes   or   fractional   part 

22  thereof. 

23  Every    manufacturer    of    cigarettes    purchasing    any 

24  cigarette  paper  made  up  into  tubes  (a)  shall  give  bond 

25  in  an  amount  and  with  sureties  satisfactory  to  the  Com- 
28  missioner  that  he  will  use  such  tubes  in  the  manufac- 
87  ture  of  cigarettes  or  pay  thereon  a  tax  equivalent  to  the 
28  tax  Imposed  by  this  section,  and  (b)  shall  keep  such 
28  records  and  render  under  oath  such  returns  as  the  Com- 
80  missioner  finds  necessary  to  show  the  disposition  of  all 
31  tubes  purchased  or  imported  by  such  manufacturer  of 
38  cigarettes. 


Repeal   of   Sec.   34 

35  of  Act  of     35 

Aug.   5,  1909     36 

37 


40 
41 

Regulations  for  42 
Dealers  in  43 
Leaf  Tobacco  44 
46 
48 
47 
48 
48 
60 
61 
62 
63 
64 
66 
60 
67 


SECTION  704.  That  section  35  of  the  Act  entitled 
"An  Act  to  provide  revenue,  equalize  duties  and  encour- 
age the  Industries  of  the  United  States,  and  for  other 
purposes,"  approved  August  5,  1909,  be,  and  is  hereby, 
repealed,  to  take  effect  April  1,  1919. 

That  section  3360  of  the  Revised  Statutes  be,  and  is 
hereby,  amended  to  read  as  follows: 

"Section  3360.  (a)  Every  dealer  in  leaf  tobacco 
shall  file  with  the  collector  of  the  district  in  which  his 
business  is  carried  on,  a  statement  in  duplicate,  sub- 
scribed under  oath,  setting  forth  the  place,  and  if  In  a 
city,  the  street  and  number  of  the  street,  where  his 
business  Is  to  be  carried  on,  and  the  exact  location  of 
each  place  where  leaf  tobacco  is  held  by  him  on  storage, 
and,  whenever  he  adds  to  or  discontinues  any  of  his  leaf 
tobacco  storage  places,  he  shall  give  immediate  notice 
to  the  collector  of  the  district  In  which  he  Is  registered. 

"Every  such  dealer  shall  give  a  bond  with  surety,  sat- 
isfactory to,  and  to  be  approved  by,  the  collector  of  the 
district,  In  such  penal  sum  as  the  collector  may  require, 
not  less  than  $500;  and  a  new  bond  may  be  required  in 
the  discretion  of  the  collector  or  under  instructions  of 
the  Commissioner. 

"Every  such  dealer  shall   be  assigned  a  number  by 


130 


the  collector  of  the  district,  which  number  shall  appear  1 
In  every  inventory,  invoice  and  report  rendered  by  the  2 
dealer,  who  shall  also  obtain  certificates  from  the  col-  8 
lector  of  the  district  setting  forth  the  place  where  his  4 
business  Is  carried  on  and  the  places  designated  by  B 
the  dealer  as  the  places  of  storage  of  his  tobacco,  which  6 
certificates  shall  be  posted  conspicuously  within  the  7 
dealer's  registered  place  of  business,  and  within  each  8 
designated  place  of  storage.  9 

"(b)  Every  dealer  in  leaf  tobacco  shall  make  and  10 
deliver  to  the  collector  of  the  district  a  true  inventory  11 
of  the  Quantity  of  the  different  kinds  of  tobacco  held  12 
or  owned,  and  where  stored  by  him,  on  the  first  day  of  13 
January  of  each  year,  or  at  the  time  of  commencing  14 
and  at  the  time  of  concluding  business,  if  before  or  15 
after  the  first  day  of  January,  such  inventory  to  be  16 
made  under  oath  and  rendered  in  such  form  as  may  17 
be  prescribed  by  the  Commissioner.  18 

"Every  dealer  in  leaf  tobacco  shall  render  such  19 
invoices  and  keep  such  records  as  shall  be  prescribed  20 
by  the  Commissioner,  and  shall  enter  therein,  day  by  21 
day,  and  upon  the  same  day  on  which  the  circum-  22 
stance,  thing  or  act  to  be  recorded  is  done  or  occurs,  23 
an  accurate  account  of  the  number  of  hogsheads,  24 
tierces,  cases  and  bales,  and  quantity  of  leaf  tobacco  25 
contained  therein,  purchased  or  received  by  him,  on  26 
assignment,  consignment,  for  storage,  by  transfer  or  27 
otherwise,  and  of  whom  purchased  or  received,  and  the  28 
number  of  hogsheads,  tierces,  cases  and  bales,  and  29 
the  quantity  of  leaf  tobacco  contained  therein,  sold  30 
by  him,  with  the  name  and  residence  in  each  instance  31 
of  the  person  to  whom  sold,  and  if  shipped,  to  whom  32 
shipped,  and  to  what  district;  such  records  shall  be  33 
kept  at  his  place  of  business  at  all  times  and  pre-  34 
served  for  a  period  of  two  years,  and  the  same  shall  35 
be  open  at  all  hours  for  the  Inspection  of  any  Internal-  36 
revenue   officer  or  agent.  37 

"Every  dealer  in  leaf  tobacco  on  or  before  the  tenth  38 
day  of  each  month,  shall  furnish  to  the  collector  of  39 
the  district  a  true  and  complete  report  of  all  pur-  40 
chases,  receipts,  sales  and  shipments  of  leaf  tobacco  41 
made  by  him  during  the  month  next  preceding,  which  42 
report  shall  be  verified  and  rendered  in  such  form  as  43 
the  Commissioner,  with  the  approval  of  the  Secretary,  44 
shall  prescribe.  45 

"(c)  Sales  or  shipments  of  leaf  tobacco  by  a  dealer  46 
in  leaf  tobacco  shall  be  in  quantities  of  not  less  than  47 
a  hogshead,  tierce,  case,  or  bale,  except  loose  leaf  48 
tobacco  comprising  the  breaks  on  warehouse  floors,  49 
and  except  to  a  duly  registered  manufacturer  of  cigars  50 
for  use  in  his  own  manufactory  exclusively.  51 

"Dealers  in  leaf  tobacco  shall  make  shipments  of  52 
leaf  tobacco  only  to  other  dealers  In  leaf  tobacco,  to  53 
registered  manufacturers  of  tobacco,  snuff,  cigars  or  54 
cigarettes,   or  for  export.  55 

"(d)  Upon  all  leaf  tobacco  sold,  removed  or  shipped  56 
by  any  dealer  in  leaf  tobacco  in  violation  of  the  pro-  57 
visions  of  subdivision    (c),  or  in   respect  to  which  no  58 

131 


1  report  has  been  made  by  such  dealer  in  accordance 
S  with  the  provisions  of  subdivision  (b),  there  shall  be 
8  levied,  assessed,  collected  and  paid  a  tax  equal  to  the 

4  tax  then  in  force  upon  manufactured  tobacco,  such  tax 

5  to  be  assessed  and  collected  in  the  same  manner  as 
e  the  tax  on  manufactured  tobacco. 

Penalties  7      "(e)  Every  dealer  in  leaf  tobacco 

8  "(1)  who  neglects  or  refuses  to  furnish  the  state- 
8  ment,  to  give  bond,  to  keep  books,  to  file  inventory  or 

10  to  render  the  invoices,  returns  or  reports  required  by 

11  the    Commissioner,    or    to    notify    the    collector    of    the 

12  district  of  additions  to  his  places  of  storage;  or 

13  "(2)  who    ships   or   delivers   leaf   tobacco,    except   as 

14  herein  provided;   or 

16      "(3)  who  fraudulently  omits  to  account  for  tobacco 

16  purchased,  received,  sold,  or  shipped; 

17  shall  be  fined  not  less  than  $100  or  more  than  $500,  or 

18  imprisoned  not  more  than  one  year,  or  both. 

19  "(f)  For   the   purposes   of   this   section   a   farmer   or 

20  grower  of  tobacco  shall  not  be  regarded  as  a  dealer  in 

21  leaf   tobacco   in    respect   to   the   leaf   tobacco   produced 

22  by   him." 


24 

2B      TITLE  VIIL—TAX  ON  ADMISSIONS  AND  DUES. 

88 

27  SECTION    800.      (a)  That    from    and    after    April    1, 

28  1919,  there  shall  be  levied,  assessed,  collected,  and  paid, 

29  in    lieu    of   the    taxes   imposed    by    section    700    of    the 

30  Revenue  Act  of  1917 — 

10%    Tax  31       (1)  A   tax   of   1    cent   for   each   10    cents    or   fraction 

38  thereof  of  the  amount  paid  for  admission  to  any  place 

33  on   or  after   such  date,   including  admission   by   season 

34  ticket  or  subscription,  to  be  paid  by  the  person  paying 

35  for   such  admission; 

Persons  36      (2)  In  the  case  of  persons  (except  bona  fide  employees, 

Admitted  37  municipal   officers   on   oflEicial  business,    persons   in   the 

Free   or   at       38  military  or  naval  forces  of  the  United  States  when   in 
Reduced  39  uniform,  and  children  under  twelve  years  of  age)   ad- 

Rates  40  mitted  free  or  at  reduced  rates  to  any  place  at  a  time 

41  when  and  under  circumstances  under  which  an  admis- 

42  sion  charge  is  made  to  other  persons,  a  tax  of  1  cent 

43  for  each  10   cents  or  fraction   thereof  of  the  price   so 

44  charged  to  such  other  persons  for  the  same  or  similar 

45  accommodations,  to  be  paid  by  the  person  so  admitted; 
Theatres,               46      (3)  Upon  tickets  or  cards  of  admission   to   theatres, 

Operas  47  operas,  and  other  places  of  amusement,   sold  at  news 

48  stands,  hotels,  and  places  other  than   the  ticket  offices 

49  of    such    theatres,    operas,    or    other    places    of    amuse- 

60  ment,  at  not  to  exceed   50  cents  in   excess  of  the  sum 

61  of  the  established  price  therefor  at  such  ticket  offices 

62  plus  the  amount  of  any  tax  imposed  under  paragraph 

63  (1),  a  tax   equivalent   to   5   per  centum  of   the   amount 

64  of  such  excess;  and  if  sold  for  more  than  50  cents  in 
66  excess  of  the   sum   of  such   established   price   plus   the 

66  amount   of   any    tax    imposed    under    paragraph    (1),    a 

67  tax  equivalent  to  50  per  centum  of  the  whole  amount 

68  of   such   excess,    such   taxes   to   be   returned   and   paid, 

132 


in  the  manner  provided  in  section  903,  by  the  person  1 
selling  such  tickets;  2 

(4)  A  tax  equivalent  to  50  per  centum  of  the  amounts  50%  Tax  on 
for  which  the  proprietors,   managers,   or  employees  of  4       Tickets    Sold 
any  opera  house,  theater,  or  other  place  of  amusement  5       Above 

sell    or   dispose    of    tickets    or    cards    of    admission    in  6       Regular    Price 
excess   of   the   regular   or   established   price   or   charge    7 
therefor,    such    tax    to    be    returned    and    paid,    in    the    8 
manner  provided  in  section  903,  by  the  person  selling    9 
such  tickets;  10 

(5)  In  the  case  of  persons  having  the  permanent  use  11  Boxes  or  Seats 
of  boxes  or  seats  in  an  opera  house  or  any   place  of  12      Permanently 
amusement  or  a  lease  for  the  use  of  such  box  or  seat  13       Leased 

in  such  opera  house  or  place  of  amusement  (in  lieu  of  14 
the  tax  imposed  by  paragraph  (1)),  a  tax  equivalent  to  15 
10  per  centum  of  the  amount  for  which  a  similar  box  16 
or  seat  is  sold  for  each  performance  or  exhibition  at  17 
which  the  box  or  seat  is  used  or  reserved  by  or  for  18 
the  lessee  or  holder,  such  tax  to  be  paid  by  the  lessee  19 
or  holder;  and  20 

(6)  A  tax  of  1%  cents  for  each  10  cents  or  fraction  21  Roof  Gardens, 
thereof  of  the  amount  paid  for  admission  to  any  public  22       Cabarets 
performance    for    profit    at    any    roof    garden,    cabaret,  23 

or  other  similar  entertainment,  to  which  the  charge  for  24 
admission  is  wholly  or  in  part  included  in  the  price  25 
paid  for  refreshment,  service,  or  merchandise;  the  26 
amount  paid  for  such  admission  to  be  deemed  to  be  27 
20  per  centum  of  the  amount  paid  for  refreshment,  28 
service,  and  merchandise;  such  tax  to  be  paid  by  the  29 
person  paying  for  such  refreshment,  service,  or  mer-  30 
chandise.  31 

(b)  No  tax  shall  be  levied  under  this  title  in  respect  32  Religious, 

to    any    admissions    all    the    proceeds    of    which    inure  33       Charitable, 
exclusively  to  the  benefit  of  religious,   educational,   or  34      Educational, 
charitable   institutions,    societies,    or   organizations,    so-  35       Etc., 
cieties    for    the    prevention    of    cruelty    to    children    or  36       Entertain- 
animals,  or  exclusively  to  the  benefit  of  organizations  37       ments 
conducted  for  the  sole  purpose  of  maintaining  symphony  38 
orchestras  and  receiving  substantial  support  from  vol-  39 
untary  contributions,  none  of  the  profits  of  which  are  40 
distributed     to     members     of     such     organizations,     or  41 
exclusively    to    the   benefit   of   persons    in    the    military  42 
or  naval  forces  of  the  United  States,  or  admissions  to  43 
agricultural    fairs    none    of    the    profits    of    which    are  44 
distributed    to    stockholders    or    members    of    the    asso-  45 
elation  conducting  the   same.  46 

(c)  The   term    "admission"   as   used   in    this   title   in-  47  "Admission" 
eludes    seats    and    tables,    reserved    or    otherwise,    and  48       Defined 
other   similar   accommodations,    and   the    charges   made  49 

therefor.  1 50 

(d)  The   price    (exclusive   of   the   tax   to   be   paid   by  51  Price  and 

the  person   paying  for  admission)    at  which  every  ad- 52       Other  Details 

mission   ticket   or  card   is   sold   shall   be   conspicuously  53       to  be 

and  indelibly  printed,   stamped,  or  written  on  the  face  54       Stamped  on 

or  back  thereof,  together  with  the  name  of  the  vendor  55       Tickets 

If  sold   other  than   at  the   ticket  office   of   the    theater,  56 

opera,    or   other   place   of    amusement.      Whoever    sells  57 

an  admission  ticket  or  card  on  which  the  name  of  the  58 


133 


1  vendor  and  price  Is  not  so  printed,  stamped,  or  written, 

2  or  at  a  price  in  excess  of  the  price  so  printed,  stamped, 
8  or  written  thereon,  is  guilty  of  a  misdemeanor,  and 
4  upon  conviction  thereof  shall  be  fined  not  more  than 
0  $100. 

6 
Club  Dues  7      SECTION  801.     That  from   and  after  April   1,   1919, 

8  there  shall  be  levied,  assessed,  collected,  and  paid,  in 

9  lieu  of  the  taxes  imposed  by  section   701  of  the  Rev- 

10  enue  Act  of  1917,  a  tax  equivalent  to  10   per  centum 

11  of   any  amount   paid   on   or   after   such   date,   for   any 

12  period  after  such  date,  (a)  as  dues  or  membership  fees 

13  (where  the  dues  or  fees  of  an  active  resident  annual 

14  member  are  in  excess  of  $10  per  year)  to  any  social, 
16  athletic,   or   sporting   club   or   organization;    or    (b)    as 

16  initiation  fees  to  such  a  club  or  organization,  if  such 

17  fees  amount  to  more  than  $10,  or  if  the  dues  or  mem- 

18  bership    fees    <not    including    initiation    fees)     of    an 

19  active  resident  annual  member  are  in  excess  of  $10 
flO  per  year;  such  taxes  to  be  paid  by  the  person  paying 

21  such  dues  or  fees:     Provided,  That  there  shall  be  ex- 

22  empted  from  the  provisions  of  this  section  all  amounts 

23  paid  as  dues  or  fees  to  a  fraternal  society,  order,  or 

24  association,  operating  under  the  lodge  system.  In 
26  the  case  of  life  memberships  a  life  member  shall  pay 

26  annually,    at    the    time    for    the    payment    of    dues    by 

27  active   resident   annual   members,   a   tax   equivalent   to 

28  the  tax  upon  the  amount  paid  by  such  a  member,  but 

29  shall  pay  no  tax  upon  the  amount  paid  for  life  member- 

30  ship. 
31 

Return  and  32     SECTION  802.     That  every  person  (a)  receiving  any 

Payment  of      33  payments  for  such  admission,  dues,  or  fees  shall  col- 
Tax  34  lect  the  amount  of  the  tax  imposed  by  section  800  or 
86  801    from   the   person   making   such   payments,    or    (b) 

86  admitting  any  person  free  to  any  place  for  admission 

87  to  which  a  charge  is   made,   shall  collect   the  amount 

88  of   the   tax   imposed   by    section    800    from   the    person 

89  so   admitted.     Every   club   or  organization   having   life 

40  members,  shall  collect  from  such  members  the  amount 

41  of  the  tax  imposed  by  section   801.     In  all  the  above 

42  cases  returns  and  payments  of  the  amount  so  collected 
48  shall  be  made  at  the  same  time  and  in  the  same 
44  manner  as  provided  in  section  602. 


47 
48 


TITLE  IX.— EXCISE  TAXES. 


Automobiles 
and 
Accessories 


50  SECTION  900.  That  there  shall  be  levied,  assessed, 
61  collected,  and  paid  upon  the  following  articles  sold 
52  or  leased  by  the  manufacturer,  producer,  or  Importer, 

63  a  tax  equivalent   to   the   following  percentages  of  the 

64  price  for  which  so  sold  or  leased — 

55  (1)     Automobile  trucks  and  automobile  wagons,    (in- 

56  eluding  tires,  inner  tubes,  parts,  and  acces.sories  there- 

57  for,  sold  on  or  In  connection  therewith  or  with  the 
68  sale  thereof),  3  per  centum; 


134 


(2)  Other  automobiles  and  motorcycles,  (including  1 
tires,  inner  tubes,  parts,  and  accessories  therefor,  sold  2 
on  or  in  connection  therewith  or  with  the  sale  thereof),  3 
except  tractors,  5  per  centum;  4 

(3)  Tires,  inner  tubes,  parts,  or  accessories,  for  any  6 
of  the  articles  enumerated  in  subdivision  (1)  or  (2)  6 
sold  to  any  person  other  than  a  manufacturer  or  pro-  7 
ducer  of  any  of  the  articles  enumerated  in  subdivision  8 
(1)   or   (2),  5  per  centum;  9 

(4)  Pianos,   organs    (other  than   pipe   organs),    piano  10  Musical 
players,  graphophones,  phonographs,  talking  machines,  11       Instruments 
music  boxes,  and  records  used  in  connection  with  any  12       and 
musical  Instrument,  piano  player,  graphophone,  phono- 13      Accessories 
graph,  or  talking  machine,  5  per  centum;  14 

(5)  Tennis  rackets,  nets,  racket  covers  and  presses,  15  Sporting 
skates,  snowshoes,  skis,  toboggans,  canoe  paddles  and  16       Equipment 
cushions,    polo    mallets,    baseball    bats,    gloves,    masks,  17 
protectors,  shoes  and  uniforms,  football  helmets,   har-  18 

ness  and  goals,  basket-ball  goals  and  uniforms,  golf  19 
bags  and  clubs,  lacrosse  sticks,  balls  of  all  kinds,  in-  20 
eluding  baseballs,  footballs,  tennis,  golf,  lacrosse,  bil-  21 
Hard  and  pool  balls,  fishing  rods  and  reels,  billiard  and  22 
pool  tables,  chess  and  checker  boards  and  pieces,  dice;  28 
games  and  parts  of  games  (except  playing  cards  and  24 
children's  toys  and  games),  and  all  similar  articles  25 
commonly  or  commercially  known  as  sporting  goods,  26 
10  per  centum;  27 

(6)  Chewing    gum    or    substitutes    therefor,    3    per  28  Chewing  Gum 
centum;  29 

(7)  Cameras,  weighing  not  more  than  100  pounds,  10  30  Cameras,    Etc. 
per  centum;  31 

(8)  Photographic  films  and  plates,  other  than  mov-32 
ing-picture  films,  5  per  centum;  33 

(9)  Candy,  5  per  centum;  34  Candy 

(10)  Firearms,    shells,    and    cartridges,    except    those  35  Firearms  and 
sold  for  the  use  of  the  United  States,  any  State,  Ter-36      Accessories 
ritory,  or  possession  of  the  United  States,  any  political  37 
subdivision   thereof,   the   District  of   Columbia,   or  any  38 

foreign  country  while  engaged  against  the  German  39 
Government  in  the  present  war,  10  per  centum;  40 

(11)  Hunting  and  bowie  knives,  10  per  centum;  41  Hunting 

(12)  Dirk    knives,    daggers,    sword    canes,    stilettos,  42      Knives 
and  brass  or  metallic  knuckles,  100  per  centum;  43 

(13)  Portable  electric  fans,  5  per  centum;  44  Electric  Fans 

(14)  Thermos  and  thermostatic  bottles,  carafes,  jugs,  45  Thermos 
or  other  thermostatic  containers,   5   per  centum;  46  Containers 

(15)  Cigar  or  cigarette  holders  and  pipes,  composed  47  Smoking 
wholly  or  In  part  of  meerschaum  or  amber,  humidors,  48      Accessories 
and  smoking  stands,  10  per  centum;  49 

(16)  Automatic   slot-device  vending  machines,    5    per  50  Vending 
centum,  and  automatic  slot-device   weighing  machines,  51       Machines 
10  per  centum;   if  the  manufacturer,   producer,  or  im-  52 

porter  of  any  such  machine  operates  it  for  profit,  he  63 
shall  pay  a  tax  In  respect  to  each  such  machine  put  54 
into  operation  equivalent  to  5  per  centum  of  its?  fair  6B 
market  value  in  the  case  of  a  vending  machine,  and  58 
10  per  centum  of  its  fair  market  value  In  the  case  of  a  57 
weighing  machine;  58 

135 


Liveries,  etc. 
Sport  Garments 
Fur 

Pleasure  Craft 


Soaps 

Wholesale  and 
Retail  Price 


Motion  Picture 
Films 


Objects  oi   Art 


1  (17)  Liveries    and    livery    boots    and    hats,    10    per 

2  centum; 

3  (18)  Hunting     and     shooting     garments     and     riding 

4  habits,  10  per  centum; 

5  (19)  Articles  made  of  fur  on  the  hide  or  pelt,  or  of 

6  which  any  such  fur  is  the  component  material  of  chief 

7  value,  10  per  centum; 

8  (20)  Yachts  and  motor  boats  not  designed  for  trade, 

9  fishing,    or    national    defense;    and    pleasure    boats    and 

10  pleasure  canoes  if  sold  for  more  than  $15,   10  per  cen- 

11  turn;   and 

12  (21)   Toilet    soaps    and    toilet    soap    powders,    3    per 

13  centum. 

14  If  any  manufacturer,  producer,  or  importer  of  any  of 

15  the  articles  enumerated  in  this  section  customarily  sells 

16  such  articles  both  at  v.'holesale  and  at  retail,   the  tax 

17  in  the  case  of  any  article  sold  by  him  at  retail  shall 

18  be   computed   on   the   price   for  which   like   articles  are 

19  sold  by  him  at  wholesale. 

20  The  taxes  imposed  by  this  section  shall,  in  the  case 

21  of  any  article  in  respect  to  which  a  corresponding  tax 

22  is  imposed  by  section  600  of  the  Revenue  Act  of  1917, 

23  be  in  lieu  of  such  tax. 
24 

25  SECTION    901.     That    if    any    person    manufactures, 

26  produces  or  imports  any  article  enumerated  in  section 

27  900,   or  leases   or   licenses   for   exhibition   any   positive 

28  motion-picture  film  containing  a  picture  ready  for  pro- 

29  jection,  and,  whether  through  any  agreement,  arrange- 

30  ment,  or  understanding,  or  otherwise,   sells,   leases,  or 

31  licenses  such  article  at  less  than  the  fair  market  price 

32  obtainable  therefor,   either    (a)    in    such   manner  as   dl- 

33  rectly  or  indirectly  to  benefit  such  person  or  any  person 

34  directly  or  indirectly  interested  in  the  business  of  such 

35  person,   or    (b)    with  intent   to   cause   such  benefit,    the 

36  amount   for   which    such    article    is    sold,    leased    or    11- 

37  censed   shall  be   taken   to  be   the   amount  which   would 

38  have  been  received  from  the  sale,  lease  or  license  of 
89  such  article  if  sold,  leased  or  licensed  at  the  fair 
40  market   price. 

41 

43      SECTION  902.     That  there  shall  be  levied,  assessed, 

43  collected,  and  paid  upon  sculpture,  paintings,  statuary, 

44  art   porcelains,   and  bronzes,   sold   by  any   person   other 

45  than  the  artist,  a  tax  equivalent  to  10  per  centum  of  the 

46  price  for  which  so  sold.     This  section   shall  not  apply 

47  to   the   sale  of  any   such  article   to   an   educational   in- 

48  stitution  or  public  art  museum. 


Monthly  Return  50  SECTION  903.  That  every  person  liable  for  any  tax 
and  Payment  51  imposed  by  section  900,  902,  or  906,  shall  make  monthly 
of  Tax  52  returns    under    oath    in    duplicate    and    pay    the    taxes 

53  imposed  by  such  sections  to   the  collector  for  the  dis- 

54  trict  in  which  is  located  the  principal  place  of  business. 

65  Such    returns    shall    contain    such    information    and    be 

66  made  at  such  times  and  in  such  manner  as  the  Com- 
57  missioner,  with  the  approval  of  the  Secretary,  may 
68  by   regulations   prescribe. 


136 


The  tax  shall,  without  assessment  by  the  Commis-  1 
sloner  or  notice  from  the  collector,  be  due  and  payable  2 
to  the  collector  at  the  time  so  fixed  for  filing  the  return.  3 
If  the  tax  is  not  paid  when  due,  there  ^hall  be  added  as  4 
part  of  the  tax  a  penalty  of  5  per  centum,  together  with  6 
interest  at  the  rate  of  1  per  centum  for  each  full  6 
month,  from  the  time  when  the  tax  became  due.  7 

8 
9 

SECTION  904.  (a)  That  on  and  after  May  1,  1919, 10  Tax  on 
there  shall  be  levied,  assessed,  collected,  and  paid  all  Luxuries 
tax  equivalent  to  10  per  centum  of  so  much  of  the  12 
amount  paid  for  any  of  the  following  articles  as  is  13 
in  excess  of  the  price  hereinafter  specified  as  to  each  14 
such  article,  when  such  article  is  sold  by  or  for  a  dealer  15 
or  his  estate  on  or  after  such  date  for  consumption  or  16 
use —  17 

(1)  Carpets    and    rugs,    including    fiber,    except    im- 18  Carpets,    Rugs 
ported   and   American    rugs    made    principally    of   wool,  19 

on  the  amount  in  excess  of  $5  per  square  yard;  20 

(2)  Picture  frames,  on   the  amount  in  excess  of  $10  21  Picture  Frames 
each;  22 

(3)  Trunks,  on  the  amount  in  excess  of  $50  each;      23  Traveling 

(4)  Valises,    traveling    bags,    suit    cases,    hat    boxes  24       Equipment 
used  by  travelers,  and  fitted  toilet  cases,  on  the  amount  25 

in  excess  of  $25  each;  26 

(5)  Purses,    pocketbooks,    shopping    and    hand    bags,  27  Purses,   Etc. 
on  the  amount  in  excess  of  $7.50  each;  28 

(6)  Portable  lighting  fixtures,  including  lamps  of  all  29  Lighting 
kinds   and   lamp   shades,   on   the   amount   in   excess   of  30       Fixtures 
$25   each;  31 

(7)  Umbrellas,     parasols,     and    sun     shades,    on    the  32  Umbrellas, 
amount  in  excess  of  $4  each;  33       Etc. 

(8)  Fans,  on  the  amount  in  excess  of  $1  each;  34  Fans 

(9)  House  or  smoking  coats  or  jackets,  and  bath  or  35  Clothing 
lounging  robes,  on  the  amount  in  excess  of  $7.50  each;  36 

(10)  Men's  waistcoats,  sold  separately  from  suits,  37 
on  the  amount  in  excess  of  $5  each;  3tJ 

(11)  Women's  and  misses'  hats,  bonnets,  and  hoods,  39  Hats,  Boots, 
on  the  amount  in  excess  of  $15  each;  40       Shoes 

(12)  Men's  and  boys'  hats,  on  the  amount  in  excess  41       Stockings, 
of  $5  each;  42       Night  Robes 

(13)  Men's  and  boys'  caps,  on  the  amount  in  excess  43 
of  $2  each;  44 

(14)  Men's,  women's,  misses',  and  boys'  boots,  shoes,  45 
pumps,  and  slippers,  not  including  shoes  or  appliances  46 
made  to  order  for  any  person  having  a  crippled  or  de-47 
formed  foot  or  ankle,  on  the  amount  in  excess  of  $10  48 
per  pair;  49 

(15)  Men's  and  boys'  neckties  and  neckwear,  on  the  50 
amount  in  excess  of  $2  each;  51 

(16)  Men's  and  boys'  silk  stockings  or  hose,  on  the  52 
amount  in  excess  of  $1  per  pair;  53 

(17)  "Women's  and  misses'  silk  stockings  or  hose,  on  54 
the  amount  in  excess  of  $2  per  pair;  55 

(18)  Men's  shirts,  on  the  amount  in  excess  of  $3  56 
each;  57 

(19)  Men's,    women's,    misses',    and    boys'    pajamas,  58 

137 


1  night  gowns,  and  underwear,  on  the  amount  in  excess 
fl  of  $5  each;  and 

8      (20)  Kimonos,  petticoats,  and  waists,  on  the  amount 
4  in  excess  of  $15  each. 
See  also  1[2  to  US  6      (b)  The  tax  imposed  by  this  section  shall  not  apply 
6  (1)  to  any  article  enumerated  in  paragraphs  (2)  to  (8), 
T  both   inclusive,   of   subdivision    (a),    if   such   article   is 

•  made  of  or  ornamented,   mounted,   or  fitted  with,   pre- 

•  cious  metals  or  Imitations  thereof  or  Ivory,  or   (2)   to 

10  any  article  made  of  fur  on  the  hide  or  pelt,  or  of  which 

11  any  such  fur  is  the  component  material  of  chief  value, 
M  or  to  (3)  any  article  enumerated  in  subdivision  (17)  or 
13  (18)  of  section  900. 

Tax  Paid  by        14      (c)  The  taxes  imposed  by  this  section  shall  be  paid 

Purchaser         16  by  the  purchaser  to  the  vendor  at  the  time  of  the  sale 

10  and    shall    be    collected,    returned,    and    paid    to    the 

17  United  States  by  such  vendor  in  the  same  manner  as 

18  provided   In   section   502. 
19 

Tax  on  Jewelry  20      SECTION  905.     That  on  and  after  April  1,  1919,  there 

Precious  21  shall   be  levied,   assessed,   collected,   and   paid    (in   lieu 

Stones,  22  of  the  tax  imposed  by   subdivision    (e)   of  section   600 

Optical  23  of   the   Revenue   Act   of   1917)    upon   all   articles   com- 

Glasses  24  monly  or  commercially  known  as  jewelry,  whether  real 

80  or  imitation;  pearls,  precious  and  semi-precious  stones, 

80  and  Imitations  thereof;  articles  made  of,  or  ornamented, 

27  mounted  or  fitted  with,   precious  metals  or  imitations 

80  thereof  or  ivory   (not  including  surgical  Instruments) ; 

29  watches;     clocks;     opera     glasses;     lorgnettes;     marine 

80  glasses;  field  glasses;  and  binoculars;  upon  any  of  the 

31  above  when  sold  by  or  for  a  dealer  or  his  estate  for  con- 

38  sumption  or  use,  a  tax  equivalent  to  5  per  centum  of  the 

83  price  for  which  so  sold. 

Monthly  Return  34      Every  person  selling  any  of  the  articles  enumerated 

and  Payment  35  in  this  section  shall  make  returns  under  oath  In  dupli- 

of    Tax  30  cate   (monthly  or  quarterly  as  the  Commissioner,  with 

37  the  approval  of  the  Secretary,  may  prescribe)  and  pay 

38  the  taxes  imposed  in  respect  to  such  articles  by  this 

39  section  to  the  collector  for  the  district  in  which  Is  lo- 

40  cated    the   principal   place   of   business.      Such    returns 

41  shall  contain   such   information   and  be   made   at   such 

48  times  and  In  such  manner  as  the  Commissioner,  with 

43  the    approval    of    the    Secretary,    may    by    regulations 

44  prescribe. 

46  The  tax  shall,  without  assessment  by  the  Commis- 
40  sloner  or  notice  from  the  collector,  be  due  and  payable 

47  to  the  collector  at  the  time  so  fixed  for  filing  the  re- 
40  turn.     If  the  tax  Is  not  paid  when  due,  there  shall  be 

49  added  as  part  of  the  tax  a  penalty  of  5   per  centum, 

60  together  with  Interest  at  the  rate  of  1  per  centum  for 

61  each  full  month,  from  the  time  when  the  tax  became 
69  due. 

63 
Motion  Picture  64      SECTION   906.     That   on    and   after    the    1st   day    of 
Films  66  May,  1919,  any  person  engaged  in  the  business  of  leas- 

60  ing  or  licensing  for  exhibition  positive  motion-picture 

67  films  containing  pictures  ready  for  projection  shall  pay 

68  monthly  an  excise  tax  In  respect  to  carrying  on  such 

138 


business  equal  to  5  per  centum  of  the  total  rentals  1 
earned  from  each  such  lease  or  license  during  the  8 
preceding  month.  If  a  person  owning  such  a  film  ex-  8 
hibita  it  for  profit  he  shall  pay  a  ta?:.  equivalent  to  5  4 
per  centum  of  the  fair  rental  or  license  value  of  such  5 
film  at  the  time  and  place  where  and  for  the  period  6 
during  which  exhibited.  If  any  such  person  has,  prior  7 
to  December  6,  1918,  made  a  bona  fide  contract  with  8 
any  person  for  the  lease  or  licensing,  after  the  tax  9 
imposed  by  this  section  takes  effect,  of  such  a  film  for  10 
exhibition  for  profit,  and  if  such  contract  does  not  per-  11 
mit  the  adding  of  the  whole  of  the  tax  imposed  by  this  12 
section  to  the  amount  to  be  paid  under  such  contract,  13 
then  the  lessee  or  licensee  shall,  in  lieu  of  the  lessor  14 
or  licensor,  pay  so  much  of  such  tax  as  is  not  so  per-  15 
mitted  to  be  added  to  the  contract  price.  The  tax  im-  10 
posed  by  this  section  shall  be  in  lieu  of  the  tax  im-  17 
posed  by  subdivisions  (c)  and  (d)  of  section  600  of  the  18 
Revenue  Act  of  1917.  19 

20 
SECTION  907.  (a)  That  on  and  after  May  1,  1919,  21  Toilet  Articles 
there  shall  be  levied,  assessed,  collected  and  paid  (in  22 
lieu  of  the  taxes  imposed  by*  subdivisions  (g)  and  (h)  23 
of  section  600  of  the  Revenue  Act  of  1917)  a  tax  of  24 
1  cent  for  each  25  cents  or  fraction  thereof  of  the  25 
amount  paid  for  any  of  the  following  articles  when  26 
sold  by  or  for  a  dealer  or  his  estate  on  or  after  such  27 
date  for  consumption  or  use:  28 

(1)  Perfumes,  essences,  extracts,  toilet  waters,  cos-  29 
metics,  petroleum  jellies,  hair  oils,  pomades,  hair  dress-  30 
ings,  hair  restoratives,  hair  dyes,  tooth  and  mouth  31 
washes,  dentrifices,  tooth  pastes,  aromatic  cachous,  toi-  32 
let  powders  (other  than  soap  powders),  or  any  similar  33 
substance,  article,  or  preparation  by  whatsoever  name  34 
known  or  distinguished,  any  of  the  above  which  are  35 
used  or  applied  or  intended  to  be  used  or  applied  for  36 
toilet  purposes;  87 

(2)  Pills,  tablets,  powders,  tinctures,  troches  or  loz-  38  Patent 
enges,   sirups,   medicinal  cordials  or  bitters,  anodynes,  39       Medicine 
tonics,    plasters,    liniments,    salves,    ointments,    pastes,  40 

drops,  waters  (except  those  taxed  under  section  628  41 
of  this  Act),  essences,  spirits,  oils,  and  other  medicinal  42 
preparations,  compounds,  or  composition  (not  includ-  48 
ing  serums  and  antitoxins),  upon  the  amount  paid  for  44 
any  of  the  above  as  to  which  the  manufacturer  or  pro-  45 
ducer  claims  to  have  any  private  formula,  secret,  or  46 
occult  art  for  making  or  preparing  the  same,  or  has  47 
or  claims  to  have  any  exclusive  right  or  title  to  the  48 
making  or  preparing  the  same,  or  which  are  prepared,  49 
uttered,  vended,  or  exposed  for  sale  under  any  letters  50 
patent,  or  trade-mark,  or  which  (if  prepared  by  any  51 
formula,  published  or  unpublished)  are  held  out  or  62 
recommended  to  the  public  by  the  makers,  vendors,  63 
or  proprietors  thereof  as  proprietary  medicines  or  me-  54 
dicinal  proprietary  articles  or  preparations,  or  as  rem-  55 
edies  or  specifics  for  any  disease,  diseases,  or  afCection  56 
whatever  affecting  the  human  or  animal  body:  Pro- 57 
vided,    That   the   provisions   of   this   section    shall   not  58 

139 


1  apply  to  the  sale  of  vaccines  and  bacterines  whicn  are 

2  not  advertised  to  the  general  lay  public,  nor  to  the  sale 

3  by  a  physican  in  personal  attendance  upon  a  patient  of 

4  medicinal  preparations  not  so  advertised. 
Regulation  for      5      (b)  The  taxes  imposed  by  this  section  shall  be  col- 
Collection   of     6  lected    by    whichever    of    the    following    methods    the 
Tax                      7  Commissioner  may  deem  expedient:     (1)   by  stamp  af- 

8  fixed  to  such  article  by  the  vendor,  the  cost  of  which 

9  shall  be   reimbursed   to   the  vendor  by   the  purchaser; 

10  or   (2)   by  payment  to  the  vendor  by  the  purchaser  at 

11  the  time  of  the  sale,  the  taxes  so  collected  being  re- 

12  turned  and  paid  to  the  United  States  by  such  vendor 

13  fji  the  same  manner  as  provided  in  section  502. 
14 

15 

16  TITLE  X.— SPECIAL  TAXES. 

17 

18  SECTION  1000.     (a)  That  on  and  after  July  1,  1918, 

19  in  lieu  of  the  tax  imposed  by  the  first  subdivision  of 

20  section  407  of  the  Revenue  Act  of  1916 — 

21  (1)  Every  domestic  corporation  shall  pay  annually  a 

22  special  excise  tax  with  respect  to  carrying  on  or  doing 

23  business,  equivalent  to  $1  for  each  $1,000  of  so  much  of 

24  the  fair  average  value  of  its  capital  stock  for  the  pre- 

25  ceding  year  ending   June   thirtieth   as   is   in    excess    of 

26  $5,000.      In   estimating   the   value   of   capital    stock    the 

27  surplus  and  undivided  profits  shall  be  included; 

28  (2)  Every   foreign   corporation   shall   pay   annually   a 

29  special  excise  tax  with  respect  to  carrying  on  or  doing 

30  business    in    the    United    States,    equivalent    to    $1    for 

31  each  $1,000  of  the  average  amount  of  capital  employed 

32  in  the  transaction  of  its  business  in  the  United  States 

33  during  the  preceding  year  ending  June  thirtieth. 

34  (b)   In    computing   £Tie  TSS"  in   the   case   of   insurance 

35  companies  such  deposits  and  reserve  funds  as  chey  are 
33  required   by   law  or  contract   to   maintain   or  hold   for 

37  the  protection  of  or  payment  to  or  apportionment  among 

38  policyholders  shall  not  be  included. 

39  (c)  The    taxes    imposed    by    this    section    shall    not 

40  apply   in   any  year   to   any   corporation   which  was  not 

41  engaged  in  business   (or  in  the  case  of  a  foreign  cor- 

42  poratlon  not  engaged  in  business  in  the  United  States) 

43  during  the  preceding  year  ending  June  30,  nor  to  any 

44  corporation  enumerated  in  section  231.     The  taxes  im- 

45  posed  by  this  section  shall  apply  to  mutual   insurance 

46  companies,  and  in  the  case  of  every  such  domestic  com- 

47  pany  the  tax  shall  be  equivalent  to  $1  for  each  $1,000 

48  of  the   excess   over   $5,000   of   the   sum   of   its   surplus 

49  Of  contingent  reserves  maintained  for  the  general  use 

50  of  the  business  and  any  reserves  the  net  additions  to 

51  which  are  Included  in  net  income  under  the  provisions 

52  of  Title  II,  as  of  the  close  of  the  preceding  accounting 

53  period  used  by  such  company  for  purposes  of  making 
Foreign  Mutual  54  its  income  tax  return:     Provided,  That  in  the  case  of  a 

Insurance  55  foreign    mutual    insurance    company    the    tax    shall    be 

Company  56  equivalent  to  $1  for  each  $1,000  of  the  same  proportion 

57  of   the   sum  of  such   surplus  and   reserves,   which   the 

68  reserve    fund    upon    business    transacted    within     the 


Capital  Stock 
Tax 

Domestic 
Corporation 


Foreign 

Corporation 


Insurance 
Companies 


Application  of 
Tax 


140 


United  States  is  of  the  total  reserve  upon  all  business  1 
transacted,  as  of  the  close  of  the  preceding  accounting  2 
period  used  by  such  company  for  purposes  of  making  its  3 
income  tax  return.  4 

(d)   Section  257  shall  apply  to  all  returns  filed  with    5  Returns 
the  Commissioner  for  purposes  of  the  tax  imposed  by    6 
this  section.  7 

8 

SECTION  1001.  That  on  and  after  January  1,  1919,  9 
there  shall  be  levied,  collected,  and  paid  annually  the  10 
following   special   taxes —  11 

(1)  Brokers  shall  pay  $50.     Every  person  whose  busi-  12  Tax  on  Brokers 
ness   it   is   to   negotiate  purchases   or   sales   of   stocks,  13 

bonds,  exchange,  bullion,  coined  money,  bank  notes,  14 
promissory  •  notes,  other  securities,  produce  or  mer- 15 
chandise,  for  others,  shall  be  regarded  as  a  broker.  If  16 
a  broker  is  a  member  of  a  stock  exchange,  or  if  he  is  17 
a  member  of  any  produce  exchange,  board  of  trade,  IG 
or  similar  organization,  where  produce  or  merchandise  19 
is  sold,  he  shall  pay  an  additional  amount  as  follows:  20 
if  the  average  value,  during  the  preceding  year  ending  21 
June  30,  of  a  seat  or  membership  in  such  exchange  22 
or  organization  was  $2,000  or  more  but  not  more  than  23 
$5,000,  $100;  if  such  value  was  more  than  $5,000,  $150.24 

(2)  Pawnbrokers     shall     pay     $100.       Every     person  25  Pawnbrokers 
whose  business  or  occupation  it  is  to  take  or  receive,  26 

by  way  of  pledge,  pawn,  or  exchange,  any  goods,  wares,  27 
or  merchandise,  or  any  kind  of  personal  property  what-  28 
ever,  as  security  for  the  repa  /nient  of  money  loaned  29 
thereon,  shall  be  regarded  as  a,  pawnbroker.  30 

(3)  Ship  brokers  shall  pay  $50.     Every  person  whose  31  Ship   Brokers 
business    it   is   as   a   broker    to    negotiate    freights   and  32 

other  business  for  the  owners  of  vessels,  or  for  the  33 
shippers  or  consignors  or  consignees  of  freight  carried  34 
by  vessels,  shall  be  regarded  as  a  ship  broker.  35 

(i)  Customhouse  brokers  shall  pay  $50.     Every  per- 36  Customhouse 
son  whose  occupation  it  is,  as  the  agent  of  others,   to  37       Brokers 
arrange  entries  and  other  customhouse  papers,  or  trans-  38 
act  business  at  any  port  of  entry  relating  to   the  im-  39 
portation   or  exportation  of  goods,   wares,   or  merchan-  40 
dise,  shall  be  regarded  as  a  customhouse  broker.  41 

(5)  Proprietors  of  theaters,  museums,  and  concert  42  Proprietors  of 
halls,  where  a  charge  for  admission  is  made,  having  a  43  Places  of 
seating  capacity  of  not  more  than  two  hundred  and  44  Amusement 
fifty,  shall  pay  $50;  having  a  seating  capacity  of  more  45 
than  two  hundred  and  fifty  and  not  exceeding  five  hun-  46 
dred,  shall  pay  $100;  having  a  seating  capacity  ex- 47 
ceeding  five  hundred  and  not  exceeding  eight  hundred,  48 
shall  pay  $150;  having  a  seating  capacity  of  more  than  49 
eight  hundred,  shall  pay  $200.  Every  edifice  used  for  50 
the  purpose  of  dramatic  or  operatic  or  other  repre-  51 
eentations,  plays,  or  performances,  for  admission  to  52 
which  entrance  money  is  received,  not  including  halls  53 
or  armories  rented  or  used  occasionally  for  concerts  or  54 
theatrical  representations,  and  not  including  edifices  55 
/)wned  by  religious,  educational  or  charitable  institu-  56 
tions,  societies  or  organizations  where  all  the  proceeds  57 
from  admissions  inure  exclusively  to  the  benefit  of  such  58 

141 


Circuses 


Public 
Exhibitions 


Bowling  Alleys, 
Billiard 
Rooms 


Shooting 
Galleries 


Riding 
Academies 


Public 
Conveyance 
by  Motor 


1  institutions,  societies  or  organizations  or  exclusively 
8  to  the  benefit  of  persons  in  the  military  or  naval  forces 
8  of  the  United  States,  shall  be  regarded  as  a  theater: 
4  Provided,  That  in  cities,  towns,  or  villages  of  five 
6  thousand  inhabitants  or  less  the  amount  of  such  pay- 
6  ment  shall  be  one-half  of  that  above  stated:  Pro- 
T  vided  further.  That  whenever  any  such  edifice  is  under 

•  lease  at  the  time  the  tax  is  due,  the  tax  shall  be  paid 

•  by  the  lessee,  unless  otherwise  stipulated  between  the 

10  parties  to  the  lease. 

11  (6)  The   proprietor   or   proprietors   of   circuses   shall 

12  pay  $100.     Every  building,  space,  tent,  or  area,  where 

13  feats  of  horsemanship  or  acrobatic  sports  or  theatrical 

14  performances   not   otherwise   provided   for   in    this    sec- 
16  tion  are  exhibited  shall  be  regarded  as  a  circus:     Pro- 

16  vided.  That  no  special  tax  paid  in  one  State,  Territory, 

17  or   the   District  of   Columbia   shall   exempt   exhibitions 

18  from  the  tax  in  another  State,  Territory,   or  the  Dis- 

19  trict   of   Columbia,    and   but   one    special   tax    shall    be 
80  imposed   for   exhibitions  within   any   one   State,    Terri- 

21  tory,  or  District. 

22  (7)  Proprietors  or  agents  of  all  other  public  exhibi- 

23  tions  or  shows  for  money  not  enumerated  ii\  this  sec- 

24  tion  shall  pay  $15:     Provided,  That  a  special  tax  paid 

25  in   one   State,    Territory,    or   the   District   of   Columbia 

26  shall  not  exempt  exhibitions  from  the  tax  in  another 

27  State,  Territory,  or  the  District  of  Columbia,  and  but 

28  one  special  tax  shall  be  required  for  exhibitions  within 

29  any  one  State,  Territory,  or  the  District  of  Columbia: 

30  Provided  further.  That  this  paragraph  shall  not  apply 

31  to  Chautauquas,  lecture  lyceums,  agricultural  or  indus- 

32  trial  fairs,   or  exhibitions   held  under  the   auspices   of 

33  religious  or  charitable  associations:     Provided  further, 

34  That    an    aggregation    of    entertainments,    known    as    a 

35  street  fair,  shall  not  pay  a  larger  tax  than  $100  in  any 

36  State,  Territory,  or  in  the  District  of  Columbia. 

37  (8)  Proprietors  of  bowling  alleys  and  billiard  rooms 

38  shall  pay  $10  for  each  alley  or  table.    Every  building  or 

39  place  where  bowls  are  thrown  or  where  games  of  bil- 

40  liards    or    pool   are    played,    except    in    private    homes, 

41  shall  be  regarded  as  a  bowling  alley  or  a  billiard  room, 

42  respectively. 

43  (9)  Proprietors  of   shooting  galleries  shall   pay   $20. 

44  Every  building,  space,  tent,  or  area,  where  a  charge  is 

45  made  for  the  discharge  of  firearms  at  any  form  of  tar- 
43  get  shall  be  regarded  as  a  shooting  gallery. 

47  (10)  Proprietors  of  riding  academies  shall  pay  $100. 

48  Every  building,  space,  tent,  or  area,  where  a  charge  is 

49  made  for  instruction   in  horsemanship  or  for  facilities 

50  for  the  practice  of  horsemanship  shall  be  regarded  as 
5X  a  riding  academy. 

52      (11)  Persons   carrying   on   the   business   of   operating 
63  or    renting    passenger   automobiles    for    hire    shall    pay 

54  $10  for  each  such  automobile  having  a  seating  capacity 

55  of   more  than   two  and   not   more   than   seven,   and   $20 

56  for  each  such  automobile  having  a  seating  capacity  of 
67  more   than   seven. 


142 


(12)  Every    person    carrying   on    the    business    of    a  I  Liquor 
brewer,  distiller,  wholesale  liquor  dealer,  retail  liquor    2       Manufac- 
dealer,  wholesale  dealer  in  malt  liquor^,  retail  dealer  in    3       turers  and 
malt   liquor,   or   manufacturer   of   stills,    as   defined    In    4       Dealers 
section  3244  as  amended  and   section   3247   of  the  Re-    6 
vised  Statutes,  in  any  State,  Territory,   or  District  of    6 
the    United    States,    contrary    to    the    laws    of    such    7 
State,    Territory,   or   District,    or   in   any   place   therein    8 
in    which    carrying    on   such    business    is    prohibited    9 
by    local   or   municipal   law,    shall   pay,    in    addition    to  10 
all  other  taxes,  special  or  otherwise,  imposed  by  exist-  11 
ing  law  or  by  this  Act,  |1,000.  12 

The  payment  of  the  tax  Imposed  by  this  subdivision  13 
shall  not  be  held  to  exempt  any  person  from  any  pen-  14 
alty  or  punishment  provided  for  by  the  laws  of  any  15 
State,  Territory,  or  District  for  carrying  on  such  busi-  16 
ness  in  such  State,  Territory,  or  District,  or  in  any  17 
manner  to  authorize  the  commencement  or  continuance  18 
of  such  business  contrary  to  the  laws  of  such  State,  19 
Territory,  or  District,  or  in  places  prohibited  by  local  20 
or  municipal  law.  21 

The  taxes  Imposed  by  this  section  shall,  in  the  case  22 
of  persons  upon  whom  a  corresponding  tax  Is  imposed  23 
by  section  407  of  the  Revenue  Act  of  1916,  be  In  lieu  24 
of  such  tax.  25 

SECTION  1002.     That  on  and  after  January  1,  1919,  26  Manufactures 
there  shall  be  levied,  collected,  and  paid  annually,   in  27       of  Tobacco, 
lieu  of  the  taxes  Imposed  by  section  408  of  the  Revenue  28       Cigars  and 
Act  of  1916,  the  following  special  taxes,  the  amount  of  29       Cigarettes 
such  taxes  to  be  computed  on  the  basis  of  the  sales  for  30 
the  preceding  year  ending  June  30 —  31 

Manufacturers  of  tobacco  whose  annual  sales  do  not  32 
exceed  fifty  thousand  pounds  shall  each  pay  $6;  33 

Manufacturers  of  tobacco  whose  annual  sales  exceed  34 
fifty  thousand  and  do  not  exceed  one  hundred  thousand  35 
pounds  shall  each  pay  $12;  36 

Manufacturers  of  tobacco  whose  annual  sales  exceed  37 
one  hundred  thousand  and  do  not  exceed  two  hundred  38 
thousand  pounds  shall  each  pay  $24;  39 

Manufacturers  of  tobacco  whose  annual  sales  exceed  40 
two  hundred  thousand  pounds  shall  each  pay  $24,  and  41 
at  the  rate  of  16  cents  per  thousand  pounds,  or  fraction  42 
thereof,  in  respect  to  the  excess  over  two  hundred  48 
thousand  pounds;  44 

Manufacturers  of  cigars  whose  annual  sales  do  not  45 
exceed  fifty  thousand  cigars  shall  each  pay  $4;  48 

Manufacturers  of  cigars  whose  annual  sales  exceed  47 
fifty  thousand  and  do  not  exceed  one  hundred  thou-  48 
sand  cigars  shall  each  pay  $6;  49 

Manufacturers  of  cigars  whose  annual  sales  exceed  60 
one  hundred  thousand  and  do  not  exceed  two  hundred  61 
thousand  cigars  shall  each  pay  $12;  68 

Manufacturers  of  cigars  whose  annual  sales  exceed  53 
two  hundred  thousand  and  do  not  exceed  four  hundred  64 
thousand  cigars  shall  each  pay  $24;  65 

Manufacturers  of  cigars  whose  annual  sales  exceed  66 
four  hundred  thousand  cigars  shall  each  pay  $24,  and  67 
at  the  rate  of  10  cents  per  thousand  cigars,  or  fraction  58 


148 


1  thereof,    In    respect    to    the    excess    over    four   hundred 

2  thousand  cigars; 

3  Manufacturers   of  cigarettes,   including  small   cigars 

4  weighing  not  more  than  three  pounds  per  thousand  shall 

5  each  pay  at  the  rate  of  6  cents  for  every  ten  thousand 

6  cigarettes,  or  fraction  thereof. 

7  In  arriving  at  the  amount  of  special  tax  to  be  paid 

8  under  this   section,   and   in   the   levy   and   collection   of 

9  such  tax,   each  person   engaged  in   the  manufacture  of 

10  more   than   one  of  the   classes   of  articles   specified   in 

11  this  section  shall  be  considered  and  deemed  a  manu- 

12  facturer  of  each  class  separately. 
13 

Pleasure  Craft    14      SECTION   1003.     That   sixty   days   after   the   passage 

15  of  this  Act,  and  thereafter  on  July  1  in  each  year,  and 

16  also   at    the    time    of    the    original    purchase    of   a    new 

17  boat  by  a  user,  if  on  any  other  date  than  July  1,  there 

18  shall  be  levied,  assessed,  collected,  and  paid  in  lieu  oi 

19  the  tax  imposed  by  section  603  of  the  Revenue  Act  of 
20 1917,    upon    the    use    of   yachts,    pleasure    boats,    power 

21  boats,    and    sailing    boats,    of    over    five    net    tons,    and 

22  motor  boats  with  fixed   engines,   not   used   exclusively 

23  for  trade,  fishing  or  national  defense,   or  not  built  ac- 

24  cording    to    plans    and    specifications    approved    by    the 

25  Navy  Department,  a  special  excise  tax  to  be  based  on 

26  each  yacht  or  boat,  at  rates  as  follows:     Yachts,  pleas- 

27  ure  boats,  power  boats,  motor  boats  with  fixed  engines, 
^       28  and    sailing    boats,    of    over    five    net    tons,    length    not 

29  over  fifty  feet,  $1  for  each  foot;  length  over  fifty  feet 

30  and  not  over  one  hundred  feet,  $2  for  each  foot;  length 

31  over  one  hundred   feet,   $4   for  each   foot;   motor  boats 

32  of  not  over  five  net  tons  with  fixed  engines,  |10. 

33  In   determining   the   length   of   such  yachts,    pleasure 

34  boats,  power  boats,  motor  boats  with  fixed  engines,  and 

35  sailing  boats,  the  measurement  of  over-all  length  shall 

36  govern. 

37  In    the   case   of   a   tax   imposed   at    the    time    of   the 

38  original  purchase  of  a  new  boat  on  any  other  date  than 

39  July  1,  and  in  the  case  of  the  tax  taking  effect  sixty 

40  days  after  the  passage  of  this  Act,  the  amount  to  be 

41  paid    shall    be    the    same    number    of    twelfths    of    the 

42  amount  of  the  tax  as  the  number  of  calendar  months 

43  (Including  the  month  of  sale,  or  the  month  in  which 

44  Is    included    the    sixty-first    day   after    the    passage    of 

45  this  Act,  as  the  case  may  be)   remaining  prior  to  the 

46  following  July   1. 

47  If   the   tax  imposed   by   section    603   of   the   Revenue 

48  Act  of  1917,   for  the  fiscal  year  ending  June   30,   1919, 

49  has  been  paid  in  respect  to  the  use  of  any  boat,   the 

60  amount    so    paid    shall    under   such    regulations   as    the 

61  Commissioner,  with  the  approval  of  the  Secretary,  may 
52  prescribe,  be  credited  upon  the  first  tax  due  under 
63  this  section  In  respect  to  the  use  of  such  boat,  or  be 
54  refunded   to   the   person   paying   the   first   tax   Imposed 

Where  Taxes       55  by  this  section  In  respect  to  th«  use  of  such  boat. 
Have   Been       56 

Paid  Under       57      SECTION  1004.     That  if  the  tax  Imposed  by  section 
Act  of  1916      58  407  or  408   of  the  Revenue  Act  of  1916,   for  the  fiscal 

144 


year  ending  June  30,  1919,  has  been  paid  by  any  person  1 
subject  to  the  corresponding  tax  imposed  by  this  title,  2 
collectors  may  issue  a  receipt  in  lieu  of  special  tax  3 
stamp  for  the  amount  by  which  the  tax  under  this  title  4 
is  in  excess  of  that  paid  or  payable  ao4  evidenced  by  6 
stamp  under  the  Revenue  Act  of  1916,  Such  receipt  6 
shall  be  posted  as  in  the  case  of  the  special  tax  stamp,  7 
as  provided  by  law,  and  with  it,  within  the  place  of  8 
business   of   the  taxpayer.  9 

If  the  corresponding  tax  imposed  by  section  407  of  10 
the  Revenue  Act  of  1916  was  not  payable  by  stamp,  the  11 
amount  paid  under  such  section  for  any  period  for  12 
which  a  tax  is  also  imposed  by  this  title  may  be  cred-  13 
ited  against  the  tax  imposed  by  this  title.  14 

15 

SECTION  1005.  That  any  person  who  carries  on  any  16  Penalties 
business  or  occupation  for  which  a  special  tax  is  im-  17 
posed  by  sections  1000,  1001,  or  1002,  without  having  18 
paid  the  special  tax  therein  provided,  shall,  besides  19 
being  liable  for  the  payment  of  such  special  tax,  be  20 
subject  to  a  penalty  of  not  more  than  $1,000  or  to  21 
imprisonment  for  not  more  than  one  year,  or  both.  22 

23 

SECTION  1006.     That  section   1  of  the  Act  of  Con-  24  Manufacturers 
gress  approved  December  17,   1914,  is  hereby  amended  25       and 
to  read  as  follows:  26       Importers  of 

"Section   1.     That  on  or  before  July  1   of  each  year  27       and  Dealers 
every    person    who    imports,    manufactures,    produces,  28       in  Opium  or 
compounds,    sells,    deals   in,    dispenses,    or    gives   away  29       Coca  Leaves 
opium  or  coca  leaves,   or  any  compound   manufacture,  30 
salt,   derivative,   or  preparation   thereof,   shall   register  31 
with  the  collector  of   internal   revenue  of   the  district  32 
his    name    or    style,    place    of    business    and    place    or  33 
places   where   such   business   is   to   be   carried   on,    and  34 
pay  the   special   taxes  hereinafter  provided;  35 

"Every  person  who  on  January  1,  1919,  is  engaged  36 
in  any  of  the  activities  above  enumerated,  or  who  be-  37 
tween  such  date  and  the  passage  of  this  Act  first  en-  38 
gages  in  any  of  such  activities,  shall  within  30  days  39 
after  the  passage  of  this  Act  make  like  registration,  40 
and  shall  pay  the  proportionate  part  of  the  tax  for  4i 
the  perio<i  ending  June  30,  1919;  and  42 

"Every  person  who  first  engages  in  any  of  sucii  activ-  43  Tax  on 
ities  after  the  passage  of  this  Act  shall  immediately  44      Registrations 
make  like  registration  and  pay  the  proportionate  part  of  43 
the  tax  for  the  period  ending  on  the  following  June  30;  46 

"Importers,  manufacturers,  producers,  or  compound-  47 
crs,  $24  per  annum;  wholesale  dealers,  $12  per  annum;  48 
retail  dealers,  $6  per  annum;  physicians,  dentists,  vet- 49 
erinary  surgeons,  and  other  practitioners  lawfully  en-  50 
titled  to  distribute,  dispense,  give  away,  or  administer  51 
any  of  the  aforesaid  drugs  to  patients  upon  whom  they  52 
in  the  course  of  their  professional  practice  are  in  at-  53 
tendance,  shall  pay  $3  per  annum.  54 

"Every  person  who  Imports,  manufactures,  com-  55 
pounds,  or  otherwise  produces  for  sale  or  distribution  56 
any  of  the  aforesaid  drugs  shall  be  deemed  to  be  an  57 
importer,  manufacturer,  or  producer.  68 

145 


Unlawful  to 
Purchase 
Except  as 
Provided  by 
Law 


1  "Every   person   who   sells   or   offers   for   sale   any   of 

2  said  drugs  in  the  original  stamped  packages,  as  here- 

3  inaf  ter  provided,  shall  be  deemed  a  wholesale  dealer. 

4  "Every  person  who  sells  or  dispenses  from  original 
6  stamped  packages,  as  hereinafter  provided,  shall  be 
e  deemed  a  retail  dealer:  Provided,  That  the  office,  or 
7,  if  none,  the  residence,  of  any  person  shall  be  con- 
Sjsidered  for  the  purpose  of  this  Act  his  place  of  busi- 
•^ess;   but  no   employee  of  any  person  who  has  regls- 

10  tered  and   paid  special  tax  as   herein   required,   actlnir 

11  within  the  scope  of  his  employment,  shall  be  required 

12  to  register  and  pay  special  tax  provided  by  this  section: 

13  Provided  further,   That  officials  of   the  United   Statea, 

14  Territorial,  District  of  Columbia,  or  Insular  possession*, 

15  State  or  municipal  governments,  who  In  the  exercise 
1§  of  their  official  duties  engage  in  any  of  the  business 

17  herein  described,  shall  not  be  required  to  register,  nor 

18  pay  special  tax,  nor  stamp  the  aforesaid  drugs  as 
1^  hereinafter  prescribed,   but  their  right  to  this  exemp- 

20  tlon   shall  be   evidenced   in   such   manner  as   the  Com- 

21  missloner   of   Internal   Revenue,   with   the   approval   of 

22  the    Secretary    of    the    Treasury,    may    by    regulations 

23  prescribe. 

24  "It  shall  be  unlawful  for  any  person  required  to 
2^  register  under  the  provisions  of  this  Act  to  Import, 
20  manufacture,  produce,  compound,  sell,  deal  in,  dispense, 

27  distribute,  administer,  or  give  away  any  of  the  afore- 

28  said  drugs  without  having  registered  and  paid  the 
28  special  tax  as  Imposed  by  this   section. 

30  "That  the  word  'person'  as  used  in  this  Act  shall  be 

31  construed  to  mean  and  Include  a  partnership,  assocla- 

32  tion,    company,    or   corporation,    as    well    as   a   natural 

33  person;  and  all  provisions  of  existing  law  relating  to 

34  special  taxes,  as  far  as  necessary,  are  hereby  extended 
38, and  made  applicable  to  this  section. 

36  "That  there  shall  be  levied,  assessed,  collected,  and 
37fpaid  upon  opium,  coca  leaves,  any  compound,  salt,  de- 
38,rivative,    or    preparation    thereof,    produced    in    or    im- 

39  ported  into  the  United  States,  and  sold,  or  removed  for 

40  consumption    or    sale,    an    internal-revenue    tax    at    the 

41  rate  of  1  cent  per  ounce,  and  any  fraction  of  an  ounce 

42  in  a  package  shall  be  taxed  as  an  ounce,  such  tax  to 

43  be    paid    by    the   importer,    manufacturer,    producer,    or 

44  compounder  thereof,   and  to  be  represented  by  appro- 

45  priate  stamps,  to  be  provided  by  the  Commissioner  of 
40  Internal  Revenue,  with  the  approval  of  the  Secretary 

47  of  the  Treasury;  and  the  stamps  herein  provided  shall 

48  be   so   affixed   to   the  bottle   or   other   container  as   to 

49  securely  seal  the  stopper,  covering,  or  wrapper  thereof. 
60      "The     tax     imposed     by     this     section     shall     be     in 

51  addition  to  any  Import  duty  imposed  on  the  aforesaid 

52  drugs. 

53  "It   shall   be   unlawful    for   any   person    to   purchase, 

54  sell,  dispense,  or  distribute  any  of  the  aforesaid  drugs 

55  except   in    the   original   stamped   package   or   from   the 

56  original   stamped   package;   and  the  absence  of  appro- 

57  priate  tax-paid  stamps  from  any  of  the  aforesaid  drugs 

58  shall  be  prima  facie  evidence  of  a  violation  of  this  sec- 


146 


tlon  by  the  person  in  whose  possession  same  may  be  1 
found;  and  the  possession  of  any  original  stamped  2 
package  containing  any  of  the  aforesaid  drugs  by  any  3 
person  who  has  not  registered  and  paid  special  taxes  4 
as  required  by  this  section  shall  be  prima  facie  evi-  5 
dence  of  liability  to  such  special  tax:  Provided,  That  6 
the  provisions  of  this  paragraph  shall  not  apply  to  7 
any  person  having  in  his  or  her  possession  any  of  the  8 
aforesaid  drugs  which  have  been  obtained  from  a  reg-  9 
istered  dealer  in  pursuance  of  a  prescription,  written  10 
for  legitimate  medical  uses,  issued  by  a  physician,  den-  11 
tist,  veterinary  surgeon,  or  other  practitioner  registered  12 
under  this  Act;  and  where  the  bottle  or  other  container  13 
in  which  such  drug  may  be  put  up  by  the  dealer  upon  14 
,  said  prescription  bears  the  name  and  registry  number  15 
of  the  druggist,  serial  number  of  prescription,  name  16 
and  address  of  the  patient,  and  name,  address,  and  17 
registry  number  of  the  person  writing  said  prescrip-  18 
tion;  or  to  the  dispensing,  or  administration,  or  giving  19 
away  of  any  of  the  aforesaid  drugs  to  a  patient  by  a  20 
registered  physician,  dentist,  veterinary  surgeon,  or  21 
other  practitioner  in  the  course  of  his  professional  22 
practice,  and  where  said  drugs  are  dispensed  or  ad-  23 
ministered  to  the  patient  for  legitimate  medical  pur-  24 
poses,  and  the  record  kept  as  required  by  this  Act  25 
of  the  drugs  so  dispensed,  administered,  distributed,  or  as 
given  away.  27 

"And  all  the  provisions  of  existing  laws  relating  to  28 
the  engraving,  issuance,  sale,  accountability,  cancella-  29 
tion,  and  destruction  of  tax-paid  stamps  provided  for  30 
in  the  internal-revenue  laws  are,  in  so  far  as  necessary,  31 
hereby  extended  and  made  to  apply  to  stamps  provided  32 
by  this  section.  33 

"That  all  unstamped  packages  of  the  aforesaid  drugs  34 
found  in  the  possession  of  any  person,  except  as  herein  35 
provided,  shall  be  subject  to  seizure  and  forfeiture,  36 
and  all  the  provisions  of  existing  internal-revenue  laws  37 
i-elating  to  searches,  seizures,  and  forfeitures  of  un- 38 
stamped  articles  are  hereby  extended  to  and  made  to  39 
apply  to  the  articles  taxed  under  this  Act  and  the  40 
persons  upon  whom  these  taxes  are  imposed.  41  ** 

"Importers,  manufacturers,  and  wholesale  dealers  42 
shall  keep  such  books  and  records  and  render  such  43 
monthly  returns  in  x^elation  to  the  transactions  in  the  44 
aforesaid  drugs  as  the  Commissioner  of  Internal  Rev- 45 
enue,  with  the  approval  of  the  Secretary  of  the  Treas-  46 
ury,  may  by  regulations  require.  47 

"The  Commissioner  of  Internal  Revenue,  with  the  43 
approval  of  the  Secretary  of  the  Treasury,  shall  make  49 
all  needful  rules  and  regulations  for  carrying  the  pro-  eo 
visions  of  this  Act  into  efCect."  .  51 

62 

SECTION  1007.     That   section   6   of  such  Act  of  De-  55  Drugs    and 
cember  17,  1914,  is  hereby  amended  to  read  as  follows:      56       Remedies 

"Section    6.     That   the    provisions    of    this   Act    shall  57       Containing 
not  be  construed  to  apply  to  the  manufacture,  sale,  dis-  58       Small 
tribution,    giving    away,    dispensing,    or    possession    of  59       Percentage 
preparations  and  remedies  which  do  not  contain   more  60       of  Narcotics 

147 


1  than  two  grains  of  opium,  or  more  than  one-fourth  of 

2  a  grain  of  morphine,  or  more  than  one-eighth  of  a  grain 

3  of  heroin,  or  more  than   one  grain  of  codeine,  or  any 

4  salt  or  derivative  of  any  of  them  in  one  fluid  ounce,  or, 
B  if  a  solid  or  semisolid  preparation,  in  one  avoirdupois 

6  ounce;  or  to  liniments,  ointments,  or  other  preparations 

7  which  are  prepared   for  extenal  use  only,   except  llni- 

8  ments,  ointments,  and  other  preparations  which  contain 

9  cocaine  or  any  of  Its   salts   or  alpha   or  beta   cucaine 

10  or  any  of  their  salts  or  any   synthetic  substitute  for 

11  them:     Provided,  That  such  remedies  and  preparations 

12  are   manufactured,    sold,    distributed,    given   away,    dis- 

13  pensed,  or  possessed  as  medicines  and  not  for  the  pur- 

14  pose  of  evading  the  intentions  and   provisions  of  this 

15  Act:      Provided    further,    That   any   manufacturer,   pro- 

16  ducer,    compounder,    or    vendor    (including    dispensing 

17  physicians)  of  the  preparations  and  remedies  mentioned 

18  in   this    section    shall  keep   a   record   of   all   sales,    ex- 

19  changes,  or  gifts  of  such  preparations  and  remedies  in 

20  such  manner  as  the  Commissioner  of  Internal  Revenue, 

21  with   the  approval   of   the   Secretary   of   the   Treasury, 

22  shall    direct.      Such    record    shall    be    preserved    for    a 

23  period  of  two  years   in   such  a  way   as  to  be  readily 

24  accessible   to   inspection   by  any   officer,   agent,   or  em- 

25  ployee  of  the  Treasury  Department  duly  authorized  for 

26  that     purpose,     and     the     State,     Territorial,     District, 

27  municipal,   and   insular   officers   named   in   section   5   of 

28  this  Act,  and  every  such  person  so  possessing  or  dis- 

29  posing  of  such  preparations  and  remedies  shall  register 

30  as  required  in  section  1  of  this  Act  and,   if  he  is  not 

31  paying  a   tax  under   this  Act,   he   shall   pay   a   special 

32  tax  of  $1  for  each  year,  or  fractional  part  thereof,  in 

33  which   he    is    engaged   in    such   occupation,    to    the   col- 

34  lector  of   internal  revenue  of  the  district  in  which  he 

35  carries  on  such  occupation  as  provided  in  this  Act.     The 

36  provisions  of  this  Act  as  amended  shall  not  apply  to 

37  decocainized   coca   leaves   or   preparations    made   there- 

38  from,  or  to  other  preparations  of  coca  leaves  which  do 

39  not  contain  cocaine." 
40 

41  SECTION    1008.     That   all   opiunri.    its    salts,    deriva- 

42  tives,   and   compounds,   and   coca   leaves,    salts,   deriva- 

43  tives,  and  compounds  thereof,  which  may  now  be  under 

44  seizure  or  which  may  hereafter  be  seized  by  the  United 

45  States  Government  from  any  person  or  persons  charged 

46  with  any  violation  of  the  Act  of  October   1,    1890,   as 

47  amended   by   the   Acts   of   March   3,    1897,   February   9. 

48  1909,  and  January  17,  1914,  or  the  Act  of  December  17, 

49  1914,   shall  upon   conviction   of   the   person    or   persons 

50  from  whom  seized   be  confiscated   by   and   forfeited   to 

51  the  United  States;  and  the  Secretary  is  hereby  author- 

52  izcd  to  deliver  for  medical  or  scientific  purposes  to  any 

53  department,    bureau,    or    other    agency    of    the    United 

54  States    Government,    upon    proper    application    therefor 

55  under   such    regulation    as    may    be    prescribed    by    the 

56  Commissioner,  with  the  approval  of  the  Secretary,  any 

57  of  the  drugs  so  seized,  confiscated,  and  forfeited  to  the 
68  United   States. 

148 


The  provisions  of  this  section  shall  also  apply  to  1 
any  of  the  aforesaid  drugs  seized  or  coming  into  the  2 
possession  of  the  United  States  in  the  enforcement  of:  3 
any  of  the  above-mentioned  Acts  where  the  owner  or  4 
owners  thereof  are  unknown.  None  of  the  aforesaid  6 
drugs  coming  into  possession  of  the  United  States  un-  6 
der  the  operation  of  said  Acts,  or  the  provisions  of  this  7 
section,  shall  be  destroyed  without  certification  by  a  8 
committee  appointed  by  the  Commissioner,  with  the  9 
approval  of  the  Secretary,  that  they  are  of  no  value  for  10 
medical  or  scientific  purposes.  11 

12 

SECTION  1009.  That  the  Act  approved  October  22,  IS 
1914,  entitled  "An  Act  to  increase  the  internal  rev- 14 
enue,  and  for  other  purposes,"  and  the  joint  resolution  15 
approved  December  17,  1915,  entitled  "Joint  resolution  IG 
extending  the  provisions  of  the  Act  entitled  'An  Act  to  17 
increase  the  internal  revenue,  and  for  other  purposes,*  18 
approved  October  twenty-second,  nineteen  hundred  and  19 
fourteen,  to  December  thirty -first,  nineteen  hundred  20 
and  sixteen,"  are  hereby  repealed,  except  that  the  pro-  21 
visions  of  such  Act  shall  remain  in  force  for  the  assess-  22 
ment  and  collection  of  all  special  taxes  imposed  by  23 
sections  3  and  4  thereof,  or  by  such  sections  as  ex-  24 
tended  by  such  joint  resolution,  for  any  year  or  part  25 
thereof  ending  prior  to  January  1,  1917,  and  of  all  other  26 
taxes  imposed  by  such  Act,  or  by  such  Act  as  so  ex-  27 
tended,  accrued  prior  to  September  8,  1916,  and  for  28 
the  imposition  and  collection  of  all  penalties  or  for-  29 
feitures  which  have  accrued  or  may  accrue  in  relation  30 
to  any  of  such  taxes.  31 

88 
88 
TITLE  XI.— STAMP  TAXES.  34  Stamp  Taxes 

35 

SECTION  1100.  That  on  and  after  April  1,  1919,36 
there  shall  be  levied,  collected,  and  paid,  for  and  in  37 
respect  of  the  several  bonds,  debentures,  or  certificates  38 
of  stock  and  of  indebtedness,  and  other  documents,  in-  89 
struments,  matters,  and  things  mentioned  and  de-  40 
scribed  in  Schedule  A  of  this  title,  or  for  or  in  respect  41 
of  the  vellum,  parchment,  or  paper  upon  which  such  in-  42 
struments,  matters,  or  things,  or  any  of  them,  are  43 
written  or  printed,  by  any  person  who  makes,  signs,  44 
issues,  sells,  removes,  consigns,  or  ships  the  same,  or  45 
for  whose  use  or  benefit  the  same  are  made,  signed,  46 
issued,  sold,  removed,  consigned,  or  shipped,  the  sev-47 
eral  taxes  specified  in  such  schedule.  The  taxes  im-  48 
posed  by  this  section  shall,  in  the  case  of  any  article  49 
upon  which  a  corresponding  stamp  tax  is  now  imposed  50 
by  law,  be  in  lieu  of  such  tax.  51 

52 

SECTION  1101.  That  there  shall  not  be  taxed  under  53  Exemptions 
this  title  any  bond,  note,  or  other  instrument,  issued  54 
by  the  United  States,  or  by  any  foreign  Government,  55 
or  by  any  State,  Territory,  or  the  District  of  Columbia,  56 
or  local  subdivision  thereof,  or  municipal  or  other  cor-  57 
poration  exercising  the  taxing  power;  or  any  bond  of  58 

149 


1  indemnity  required  to  be  filed  by  any  person  to  secure 

2  payment   of   any    pension,    allowance,    allotment,    relief, 

•  or  insurance  by  the  United  States;  or  stocks  and  bonds 

4  Issued    by    cooperative    building    and    loan    associations 

•  which  are  organized  and   operated   exclusively   for  the 

6  benefit  of  their  members  and  make  loans  only  to  their 

7  shareholders,    or    by    mutual    ditch    or   irrlgatlngr   com- 

5  panles. 
8 

10      SECTION  1102.  That  whoever— 
Penalties  11      (a)  Makes,  signs,  issues,  or  accepts,  or  causes  to  be 

12  made,  signed,  issued,  or  accepted,  any  instrument,  docu- 

13  ment,   or  paper  of  any  kind  or  description   whatsoever 

14  without    the    full    amount    of    tax    thereon    being    duly 

15  paid; 

16  (b)  Consigns  or  ships,  or  causes  to  be  consigned  or 

17  shipped,  by  parcel  post  any  parcel,  package,  or  article 

18  without  the  full  amount  of  tax  being  duly  paid; 

19  (c)  Manufactures  or  imports  and  sells,  or  offers  for 

20  sale,    or   causes   to   be   manufactured   or   imported   and 

21  sold,   or  offered   for   sale,   any   playing  cards,   package, 

22  or  other  article  without  the  full  amount  of  tax  being 

23  duly  paid; 

24  (d)  Makes  use  of  any  adhesive  stamp  to  denote  any 

26  tax  imposed  by  this  title  without  canceling  or  obliter- 
26ating  such  stamp  as  prescribed  in  section  1104; 

27  Is    guilty    of    a    misdemeanor    and    upon    conviction 

28  thereof  shall  pay  a  fine  of  not  more  than  $100  for  each 

29  offense. 
30 

31      SECTION  1103.     That  whoever— 

32^     (a)  Fraudulently   cuts,    tears,   or   removes   from   any 

33  vellum,  parchment,  paper,  instrument,  writing,  package, 

34  or  article,  upon  which  any  tax  is  imposed  by  this  title, 
36  any  adhesive  stamp  or  the  impression  of  any  stamp, 
36  die,  plate,  or  other  article  provided,  made,  or  used  In 
37 pursuance  of  this  title; 

38  (b)  Fraudulently  uses,  joins,  fixes,  or  places  to,  with, 
89  or    upon    any    vellum,    parchment,    paper,    instrument, 

40  writing,  package,  or  article,  upon  which  any  tax  Is  Im- 

41  posed  by  this  title,   (1)  any  adhesive  stamp,  or  the  im- 

42  pression  of  any  stamp,  die,  plate,  or  other  article,  which 

43  has  been  cut,  torn,  or  removed  from  any  other  vellum, 

44  parchment,  paper,  instrument,  writing,  package,  or  ar- 
46  tide,   upon  which  any  tax  is  imposed  by  this  title;  or 

46  (2)  any  adhesive  stamp  or  the  impression  of  any  stamp, 

47  die,  plate,  or  other  article  of  insufficient  value;  or  (3^ 

48  any  forged  or  counterfeit  stamp,  or  the  impression  of 

49  any  forged  or  counterfeited  stamp,  die,  plate,  or  other 

60  article; 

61  (c)   Willfully  removes,  or  alters  the  cancellation,   or 

62  defacing  marks  of,  or  otherwise  prepares,  any  adhesive 

63  stamp,  with  intent  to  use,  or  cause  the  same  to  be  used, 

64  after  It  has  been  already  used,  or  knowingly  or  willfully 

66  buys,  sells,  offers  for  sale,  or  gives  away,  any  such 
86  washed   or  restored   stamp   to  any   person    for  use,   or 

67  knowingly  uses  the  same; 

68  (d)  Knowingly  and  without  lawful  excuse  (the  bur- 

150 


den  of  proof  of  such  excuse  being  on  the  accused)  has  1 
in  possession  any  washed,  restored,  or  altered  stamp,  2 
which  has  been  removed  from  any  vellum,  parchment,  3 
paper,  Instrument,  writing,  package,  or  article;  4 

Is  guilty  of  a  misdemeanor,  and  upon  conviction  shall  6 
be  punished  by  a  fine  of  not  more  than  $1,000,  or  by  6 
imprisonment  for  not  more  than  Ave  years,  or  both,  and  7 
any  such  reused,  canceled,  or  counterfeit  stamp  and  the  8 
vellum,  parchment,  document,  paper,  package,  or  article  9 
upon  which  it  is  placed  or  impressed  shall  be  forfeited  10 
to  the  United  States.  11 

18 
13 
SECTION  1104.  That  whenever  an  adhesive  stamp  is  14  Use  of  Stamps 
used  for  denoting  any  tax  imposed  by  this  title,  except  16 
as  hereinafter  provided,  the  person  using  or  affixing  the  16 
same  shall  write  or  stamp  or  cause  to  be  written  or  17 
stamped  thereupon  the  initials  of  his  or  its  name  and  18 
the  date  upon  which  the  same  is  attached  or  used,  so  19 
that  the  same  may  not  again  be  used:  Provided,  That  20 
the  Commissioner  may  prescribe  such  other  method  for  21 
the  cancellation  of  such  stamps  as  he  may  deem  ex-  22 
pedient.  23 

24 
26 
SECTION  1105.  (a)  That  the  Commissioner  shall  86 
cause  to  be  prepared  and  distributed  for  the  payment  87 
of  the  taxes  prescribed  in  this  title  suitable  stamps  28 
denoting  the  tax  on  the  document,  articles,  or  thing  to  29 
which  the  same  may  be  affixed,  and  shall  prescribe  such  30 
method  for  the  affixing  of  said  stamps  in  substitution  31 
for  or  in  addition  to  the  method  provided  in  this  title,  32 
as  he  may  deem  expedient.  33 

(b)  The  Commissioner,  with  the  approval  of  the  Sec-  34 
retary,  is  authorized  to  procure  any  of  the  stamps  pro-  35 
vided  for  in  this  title  by  contract  whenever  such  stamps  36 
can  not  be  speedily  prepared  by  the  Bureau  of  Engrav-  37 
ing  and  Printing;  but  this  authority  shall  expire  on  38 
January  1,  1920,  except  as  to  Imprinted  stamps  fur- 39 
nished  under  contract,  authorized  by  the  Commissioner.  40 

(c)  All  internal-revenue  laws  relating  to  the  assess-  41 
ment  and  collection  of  taxes  are  hereby  extended  to  42 
and  made  a  part  of  this  title,  so  far  as  applicable,  for  43 
the  purpose  of  collecting  stamp  taxes  omitted  through  44 
mistake  or  fraud  from  any  instrument,  document,  paper,  45 
writing,  parcel,  package,  or  article  named  herein.  46 

47 
48 
SECTION  1106.  That  the  Commissioner  shall  furnish  49 
to  the  Postmaster  General  without  prepayment  a  suit-  50 
able  quantity  of  adhesive  stamps  to  be  distributed  to  51 
and  kept  on  sale  by  the  various  postmasters  in  the  52 
United  States.  The  Postmaster  General  may  requii'e  53 
each  such  postmaster  to  give  additional  or  increased  54 
bond  as  postmaster  for  the  value  of  the  stamps  so  fur-  55 
nished,  and  each  such  postmaster  shall  deposit  the  re-  66 
ceipts  from  the  sale  of  such  stamps  to  the  credit  of  57 
and  render  accounts  to  the  Postmaster  General  at  such  68 

151 


1  times  and  In  such  form  as  he  may  by  regulations  pre- 

2  scribe.      The   Postmaster    General    shall    at    least    once 

3  monthly  transfer  all  collections  from  this  source  to  the 

4  Treasury  as  internal-revenue  collections. 
5 

6  SECTION    1107.     That   the   collectors   of   the    several 

7  districts     shall    furnish    without    prepayment    to    any 

8  assistant    treasurer    or    designated    depositary    of    the 

9  United  States  located  in  their  respective  collection  dis- 

10  tricts  a  suitable  quantity  of  adhesive  stamps  for  sale. 

11  In  such  cases  the  collector  may  require  a  bond,  with 

12  sufficient  sureties,  to  an  amount  equal  to  the  value  of 

13  the  adhesive  stamps  so  furnished,  conditioned  for  the 

14  faithful  return,  whenever  so  required,  of  all  quantltie.s 
16  or  amounts  undisposed  of,  and  for  the  payment  monthly 

16  of  all  quantities  or  amounts  sold  or  not  remaining  on 

17  hand.     The  Secretary  may  from  time  to  time  make  such 

18  regulations  as  he  may  find  necessary  to  insure  the  safe- 

19  keeping  or  prevent  the  illegal  use  of  all  such  adhesive 

20  stamps. 
21 

22  SCHEDUI^E    A.— STAMP   TAXES. 

aa 

Bonds  of  24      1.     Bonds  of  indebtedness:     On  all  bonds,  debentures, 

Indebtedness    25  or  certificates  of  indebtedness  issued  by  any  person,  and 

26 all    instruments,    however    termed,    issued    by    any    cor- 

27poration   with    interest   coupons   or   in   registered   form, 

28  known   generally  as   corporate   securities,   on   each   $100 

29  of    face   value    or   fraction    thereof,    5    cents:    Provided, 

30  That  every  renewal  ot  the  foregoing  shall  be  taxed  as 
31a  new  issue:  Provided  further.  That  when  a  bond  con- 
32d!tloned    for    the    repayment    or    payment    of   money    Is 

33  j^iven  In  a  penal  sum  greater  than  the  debt  secured,  the 

34  tax  shall  be  based  upon  the  amount  secured. 

Bonds,  35      2.  Bonds,    indemnity   and    surety:    On    all   bonds   exe- 

Indemnity         36  cuted  for  indemnifying  any  person  who  shall  have  be- 
and    Surety      37  come   bound    or   engaged    as    surety,    and   on    all    bonds 

38  executed  for  the  due  execution  or  performance  of  any 

39  contract,    obligation    or    requirement,    or    the    duties    of 

40  any   oJYice   or   position,    and    to   account    for   money    re- 

41  celved  by  virtue  thereof,  and  on  all  policies  of  guaranty 
42 and  fidelity   insurance,    including  policies   guaranteeing 

43  titles   to   real   estate   and   mortgage   guarantee   policies, 

44  and  on  all  other  bonds  of  any  description,  made.  Issued, 

45  or  executed,  not  otherwise  provided  for  in  this  schedule, 

46  except   such   as   may   be   required   in   legal   proceedings, 

47  no  cents:     Provided,  That  where  a  premium  is  charged 

48  for  the  Issuance,  execution,   renewal  or  continuance  of 

49  such  bond  the  tax  shall  be  1  cent  on  each  dollar  or 
ao  fractional  part  thereof  of  the  premium  charged:  Pro- 
51vided  further.  That  policies  of  reinsurance  shall  be 
52  exempt  from  the  tax  imposed  by  this  subdivision. 

Capital  stock,       53      3.  Capital     stock,     issue:     On     each     original     Issue, 
Issue  54  whether   on    organization    or   reorganization,    of   certlfl- 

65  cates  of  stock,  or  of  profits,  or  ot  interest  in  property 
60  or  accumulations,  by  any  corporation,  on  each  $100  of 
57 face  value  or  fraction  thereof,  5  cents:  Provided,  That 
58  where  a  certificate  is  issued  without  face  value,  the  tax 


152 


shall  be  5  cents  per  share,  unless  the  actual  value  is  1 
in  excess  of  $100  per  share,  in  which  case  the  tax  shall  2 
be  5  cents  on  each  $100  of  actual  value  or  fraction  3 
thereof.  ^  4 

The  stamps  representing  the  tax  imposed  by  this  sub-  B 
division  shall  be  attached  to  the  stock  books  and  not  to  6 
the  certificates  issued.  7 

4.  Capital  stock,  sales  or  transfers:  On  all  sales,  or  8  Capital  Stock, 
agreements  to  sell,  or  memoranda  of  sales  or  deliveries  9  Sales  or 
of,  or  transfers  of  legal  title  to  shares  or  certificates  oi  10  Transfers 
stock  or  of  profits  or  of  interest  in  property  or  accu-  11 
mulations  in  any  corporation,  or  to  rights  to  subscribe  12 
for  or  to  receive  such  shares  or  certificates,  whether  13 
made  upon  or  shown  by  the  books  of  the  corporation,  14 
or  by  any  assignment  in  blank,  or  by  any  delivery,  or  15 
by  any  paper  or  agreement  or  memorandum  or  other  16 
evidence  of  transfer  or  sale,  whether  entitling  the  hold-  17 
er  in  any  manner  to  the  benefit  of  such  stock,  interest,  18 
or  rights,  or  not,  on  each  $100  of  face  value  or  fraction  19 
thereof,  2  cents,  and  where  such  shares  are  without  par  20 
or  face  value,  the  tax  shall  be  2  cents  on  the  transfer  21 
or  sale  or  agreement  to  sell  on  each  share,  unless  thel22 
actual  value  thereof  is  in  excess  of  $100  per  share,  in  23 
which  case  the  tax  shall  be  2  cents  on  each  $100  ol  24 
actual  value  or  fraction  thereof:  Provided,  That  it  is  25 
not  intended  by  this  title  to  impose  a  tax  upon  an  26 
agreement  evidencing  a  deposit  of  certificates  as  coi-  27 
lateral  security  for  money  loaned  thereon,  which  cer-  28 
tificates  are  not  actually  sold,  nor  upon  the  delivery  29 
or  transfer  for  such  purpose  of  certificates  so  deposited:  30 
Provided  further,  That  the  tax  shall  not  be  imposed  81 
upon  deliveries  or  transfers  to  a  broker  for  sale,  nor  32 
upon  deliveries  or  transfers  by  a  broker  to  a  customer  33 
for  whom  and  upon  whose  order  he  has  purchased  same,  34 
but  such  deliveries  or  transfers  shall  be  accompanied  by  35 
a  certificate  setting  forth  the  facts:  Provided  further,  36 
That  in  case  of  sale  where  the  evidence  of  transfer  is  37 
shown  only  by  the  books  of  the  corporation  the  stamp  38 
shall  be  placed  upon  such  books;  and  where  the  change  39 
of  ownership  is  by  transfer  of  the  certificate  the  stamp  40 
shall  be  placed  upon  the  certificate;  and  in  cases  of  anfll 
agreement  to  sell  or  where  the  transfer  is  by  delivery  oi  48 
the  certificate  assigned  in  blank  there  shall  be  made  and  43 
delivered  by  the  seller  to  the  buyer  a  bill  or  memoran- 44 
dum  of  such  sale,  to  which  the  stamp  shall  be  affixed;  45 
and  every  bill  or  memorandum  of  sale  or  agreement  46 
to  sell  before  mentioned  shall  show  the  date  thereof,  47 
the  name  of  the  seller,  the  amount  of  the  sale,  and  48 
the  matter  or  thing  to  which  it  refers.  Any  person  49 
liable  to  pay  the  tax  as  herein  provided,  or  anyone  who  50 
acts  in  the  matter  as  agent  or  broker  for  such  person,  51 
who  makes  any  such  sale,  or  who  in  pursuance  of  any  62 
such  sale  delivers  any  certificate  or  evidence  of  the  sale  53 
of  any  stock,  interest  or  right,  or  bill  or  memorandum  54 
thereof,  as  herein  required,  without  having  the  proper  55 
stamps  affixed  thereto  with  intent  to  evade  the  fore-  56 
going  provisions,  shall  be  deemed  guilty  of  a  mlsde-  57 
meaner,   and   upon  conviction   thereof  shall  pay   a  fine  58 

153 


1  of  not  exceeding  $1,000,  or  be  imprisoned  not  more  than 

2  six  months,  or  both. 

Produce,  3      5.  Produce,    sales   of,    on    exchange:    Upon    each    sale, 

Sales  of  4  agreement  of  sale,  ar  agreement  to  sell   (not  including 

5  so-called  transferred  or  scratch  sales),  any  products  or 

6  merchandise   at,   or   under   the  rules  or  usages   of,   any 

7  exchange,  or  board  of  trade,  or  other  similar  place,  for 
S  future  delivery,  for  each  $100  in  value  of  the  mer- 
9  chundise  covered  by  said  sale  or  agreement  of  sale  or 

lu  agreement  to  sell,  2  cents,  and  for  each  additional  $100 

11  or   fractional   part    thereof   in   excess   of   $100,    2   cents: 

12  Provided,   That  on   every   sale  or  agreement  of  sale  or 

13  agreement  to  sell  as  aforesaid  there  shall  be  made  and 

14  delivered  by  the  seller  to  the  buyer  a  bill,  memorandum, 

15  agreement,  or  other  evidence  of  such  sale,  agreement  of 

16  sale,    or    agreement    to    sell,    to    which    there    shall    be 

17  affixed  a  lawful  stamp  or  stamps  in  value  equal  to  the 

18  amount  of  the  tax  on  such  sale:  Provided  further,  That 

19  sellers    of    commodities    described    herein,    having    paid 

20  the  tax  provided  by  tliis  subdivision,  may  transfer  such 

21  contracts  to  a  clearing-house  corporation  or  association, 

22  and  such  transfer  shall  not  be  deemed  to  be  a  sale,  or 

23  agreement  of  sale,   or  an  agreement  to  sell  within  the 

24  provisions  of  this  Act,  provided  that  such  transfer  shall 

25  not  vest  any   beneficial  interest  in   such  clearing-house 

26  association  but  shall  be  made  for  the  sole  purpose  of 

27  enabling   such  clearing-house  association  to  adjust  and 

28  balance  the  accounts  of  the  members  of  such  clearing- 

29  house    association    on    their    several    contracts.      Every 

30  such   bill,    memorandum,   or  other   evidence   of   sale   or 

31  agreement  to  sell  shall  show  the  date  thereof,  the  name 

32  of  the  seller,  the  amount  of  the  sale,  and   the  matter 

33  or  thing  to   which  it  refers;   and   any   person   liable  to 

34  pay  the  tax  as  herein  provided,  or  anyone  who  acts  in 
36  the   matter  as   agent   or  broker   for   such   person,    who 

36  makes  any  such  sale  or  agreement  of  sale,  or  agreement 

37  to  sell,  or  who,  In  pursuance  of  any  such  sale,  agree- 

38  ment    of     sale,     or     agreement     to     sell,     delivers    au> 

39  such  products  or  merchandise  without  a  bill,  memoran- 
i                      40  dum,   or  other   evidence   thereof   as   herein    required,   or 

41  who  delivers  such  bill,  memorandum,  or  other  evidence 

42  of  sale,  or  agreement  to  sell,  without  having  the  proper 

43  st;nnp3   alfixed   thereto,   with   intent   to  evade  the  fore- 

44  going   provisions,    shall   be   deemed    guilty   of   a   misde- 

45  meaner,   and   upon   conviction   thereof   shall   pay   a   fine 

46  of  not  exceeding  $1,000  or  be  imprisoned  not  more  than 

47  six  months,  or  both. 

48  No  bill,  memorandum,  agreement,  or  other  evidence 
48  of  such  sale,  or  agreement  of  sale,  or  agreement  to  sell, 

50  in   case  of  cash   sales   of   products   or   merchandise   for 

51  immediate  or  prompt  delivery  which  in  good  faith  are 

52  actually  intended  to  be  delivered  shall  be  subject  to  this 
58  tax. 

Drafts,  Checks     54      6.  Drafts  or  checks  (payable  otherwise  than  at  sight 

55  or  on  demand)  upon  their  acceptance  or  delivery  within 

56  the  United  States  Avhichever  is  prior,  promissory  notes, 
5T  except  bank  notes  issued  for  circulation,  and  for  each 
5f  renewal  of  the  same,  for  a  sum  not  exceeding  $100,   2 

154 


cents;  and  for  each  additional  $100  or  fractional  part  1 
thereof,   2  cents.  8 

This  subdivision  shall  not  apply  to  a  promissory  note  3 
secured  by  the  pledge  of  bonds  or  obligations  of  the  4 
United  States  issued  after  April  24,  1917,  or  secured  by  6 
the  pledge  of  a  promissory  note  which  itself  is  secured  6 
by  the  pledge  of  such  bonds  or  obligations:  Provided,  7 
That  in  either  case  the  par  value  of  such  bonds  or  8 
obligations  shall  be  not  less  than  the  amount  of  such  9 
note.  10 

7.  Conveyances:  Deed,  instrument,  or  writing,  where-  11  Conveyances 
by  any  lands,  tenements,  or  other  realty  sold  shall  be  12 

granted,  assigned,  transferred,  or  otherwise  conveyed  13 
to,  or  vested  in,  the  purchaser  or  purchasers,  or  any  14 
other  person  or  persons,  by  his,  her,  or  their  direction,  15 
when  the  consideration  or  value  of  the  interest  or  prop-  16 
erty  conveyed,  exclusive  of  the  value  of  any  lien  or  17 
encumbrance  remaining  thereon  at  the  time  of  sale,  18 
exceeds  ?100  and  does  not  exceed  $500,  50  cents;  and  19 
for  each  additional  $500  or  fractional  part  thereof,  50  20 
cents.  This  subdivision  shall  not  apply  to  any  instru-  21 
ment  or  writing  given  to  secure  a  debt.  22 

8.  Entry  of  any  goods,  wares  or  merchandise  at  any  23  Entry  of  Goods 
custom  house,  either  for  consumption  or  warehousing,  24 

not  exceeding  $100  in  value,  25  cents;  exceeding  $100  25 
and  not  exceeding  $500  in  value,  50  cents;  exceeding  26 
$500  in  value,  $1.  27 

9.  Entry  for  the  withdrawal  of  any  goods  or  mer-  28 
chandise  from  customs  bonded  warehouse,  50  cents.        29 

10.  Passage  ticket,  one  way  or  round  trip,  for  each  30  Passage  ticket 
passenger,  sold  or  issued  in  the  United  States  for  pas- 31 

sage  by, any  vessel  to  a  port  or  place  not  in  the  United  32 
States,  Canada,  or  Mexico,  if  costing  not  exceeding  $30,83 
$1;  costing  more  than  $30  and  not  exceeding  $60,  $3;  34 
costing  more  than  $60,  $5.  This  subdivision  shall  not  35 
apply  to  passage  tickets  costing  $10  or  less.  36 

11.  Proxy  for  voting  at  any  election  for  officers,  or  37  Proxy 
meeting     for     the     transaction     of     business,     of     any  38 
corporation,    except    religious,    educational,    charitable,  39 
fraternal,    or    literary    societies,    or    public    cemeteries,  40 

10   cents.  41 

12.  Power  of  attorney  granting  authority  to  do  or  per-  42  Power  of 
form  some  act  for  or  in  behalf  of  the  grantor,  which  43      Attorney 
authority    is   not   otherwise    vested    in    the    grantee,    25  44 

cents.  This  subdivision  shall  not  apply  to  any  papers  45 
necessary  to  be  used  for  the  collection  of  claims  from  46 
the  United  States  or  from  any  State  for  pensions,  47 
back  pay,  bounty,  or  for  property  lost  in  the  military  48 
or  naval  service,  or  to  powers  of  attorney  required  in  49 
bankruptcy   cases.  61 

13.  Playing  cards:  Upon  every  pack  of  playing  cards  50  Playing   Cards 
containing    not    more    than    fifty-four    cards,    manufac-  52 

tured  or  imported,  and  sold,  or  removed  for  consumption  53 
or  sale,  a  tax  of  8  cents  per  pack.  54 

14.  Parcel-post  packages:  Upon  every  parcel  or  pack-  65  Parcel  Post 
age  transported  from  one  point  In  the  United  States  to  66  Packaf es 
another  by  parcel  post  on  which  the  postage  amounts  57 

to  25  cents  or  more,  a  tax  of  1  cent  for  each  25  cents  58 

155 


1  or  fractional  part  thereof  charged  for  such  transporta- 

2  tlon,  to  be  paid  by  the  consignor. 

8  No  such  parcel  or  package  shall  be  transported  until 
4  a  stamp  or  stamps  representing  the  tax  due  shall  have 
6  been  affixed  thereto. 

Insurance  6      15.  On  each  policy  of  insurance,  or  certificate,  binder, 

Policies,  7  covering  note,  memorandum,  cablegram,  letter,  or  other 

Binders,    etc.      8  instrument   by   whatever   name   called    whereby    insur- 

9  an<;e    is    made    or    renewed    upon    property    within    the 

10  United  States  (including  rents  and  profits)  against  peril 

11  by  sea  or  on  inland  waters  or  in  transit  on  land    (In- 

12  eluding  transshipments  and  storage  at  termini  or  way 

13  points)  or  by  fire,  lightning,  tornado,  wind-storm,  bom» 

14  bardment,  invasion,  insurrection  or  riot,  Issued  to  or  for 
16  or  in  the  name  of  a  domestic  corporation  or  partnership 
16  or  an  individual  resident  of  the  United  States  by  any 
IT  foreign   corporation    or    partnership   or   any    individual 

18  not  a  resident  of  the  United  States,  when  such  policy 

19  or  other  instrument  is  not  signed  or  countersigned  by 

20  an  officer  or  agent  of  the  insurer  in  a  State,  Territory, 

21  or  district  of  the  United  States  within  which  such  In- 

22  surer  is  authorized  to  do  business,  a  tax  of  3  cents  on 

23  each  dollar,  or  fractional  part  thereof  of  the  premium 

24  charged:   Provided,   That  policies  of  re-insurance  shall 

25  be  exempt  from  the  tax  imposed  by  this  subdivision. 

aft      Any  person   to  or  for  whom  or  in  whose  name  any 

27  such  policy  or  other  instrument  is  issued,  or  any  solici- 

28  tor  or  broker  acting  for  or  on  behalf  of  such  person  in 

29  the  procurement  of  any  suca  policy  or  other  instru- 
aO  ment,    shal   affix  the   proper   stamps   to   such   policy   or 

31  other  instrument,  and  for  failure  to  affix  such  stamps 

32  with  intent  to  evade  the  tax  shall,  in  addition  to  other 

33  penalties   provided   therefor,   pay   a  fine   of  double   the 

34  amount  of  the  tax. 


Child    Labor 


30 

31'     TITLE  XII.— TAX  ON  EMPLOYMENT  OF  CHILD 

88  LABOR. 

39 

40  SECTION    1200.     That    every    person    (other    than    a 

41  bona  fide  boys*  or  girls'  canning  club  recognized  by  the 

42  Agricultural  Department  of  a  State  and  of  the  United 

43  States)    operating    (a)    any   mine  or  quarry   situated   m 

44  the  United  States  in  which  children  under  the  age  of 

45  sixteen  years  have  been  employed  or  permitted  to  work 

46  during   any    portion    of    the    taxable   year;    or    (b)    any 

47  mill,  cannery,  workshop,  factory,  or  manufacturing  es- 

48  tablishment  situated  in  the  United  States  in  which  chil- 

49  dren   under  the  age  of  fourteen  years  have  been   em- 

50  ployed  or  permitted  to  work,   or  children  between   the 

51  ages  of   fourteen   and   sixteen   have   been   employed   or 

52  permitted  to  work   more   than   eight  hours   in   any   day 

53  or  more  than  six  days  in  any  week,  or  after  the  hour 

54  of  seven  o'clock  post  meridian,  or  before  the  hour  of  six 

65  o'clock  ante  meridian,  during  any  portion  of  the  taxable 

66  year,  shall  pay  for  each  taxable  year,  in  addition  to  all 

67  other  taxes  imposed  by  law,  an  excise  tax  equivalent  to 
88  10  per  centum  of  the  entire  net  profits  received  or  ac- 

156 


crued  for  such  year  from  the  sale  or  disposition  of  the  1 
product  of  such  mine,  quarry,  mill,  cannery,  workshop,  2 
factory,  or  manufacturing  establishment.  3 

4 
SECTION  1201.     That  in  computing  net  profits  under    5  Net  Profits — 
the  provisions  of  this  title,  for  the  purpose  of  the  tax    6       How 
there   shall  be   allowed   as   deductions  from   the   gross    7      Computed 
amount  received  or  accrued  for  the  taxable  year  from    8 
the  sale  or  disposition  of  such  products  manufactured    9 
within  the  United  States  the  following  items:  10 

(a)  The  cost  of  raw  materials  entering  into  the  pro-  11 
duction ;  12 

(b)  Running  expenses,  including  rentals,  cost  of  re-  18 
pairs,  and  maintenance,  heat,  power,  insurance,  man- 14 
agement,  and  a  reasonable  allowance  for  salaries  or  15 
other  compensations  for  personal  services  actually  ren-  16 
dered,  and  for  depreciation;  17 

(c)  Interest  paid  within  the  taxable  year  on  debts  18 
or  loans  contracted  to  meet  the  needs  of  the  business,  19 
and  the  proceeds  of  which  have  been  actually  used  to  20 
meet  such  needs;  21 

(d)  Taxes  of  all  kinds  paid  during  the  taxable  year  22 
with  respect  to  the  business  or  property  relating  to  the  23 
production;  and  24 

(e)  Losses  actually  sustained  within  the  taxable  25 
year  in  connection  with  the  business  of  producing  26 
such  products,  including  losses  from  fire,  flood,  storm,  27 
or  other  casualties,  and  not  compensated  for  by  insur-  28 
ance  or  otherwise.  29 

30 
SECTION  1202.  That  if  any  such  person  during  any  31  Sales  at  Less 
taxable  year  or  part  thereof,  whether  under  any  agree-  32  Than  Pair 
ment,  arrangement,  or  understanding  or  otherwise,  sells  33  Market  Price 
or  disposes  of  any  product  of  such  mine,  quarry,  mill,  34 
cannery,  workshop,  factory,  or  manufacturing  estab-  36 
lishment  at  less  than  the  fair  market  price  obtainable  36 
therefor  either  (a)  in  such  manner  as  directly  or  indl-  37 
rectly  to  benefit  such  person  or  any  person  directly  or  38 
indirectly  interested  in  the  business  of  such  person;  or 39 
(b)  with  intent  to  cause  such  benefit;  the  gross  amount  40 
received  or  accrued  for  such  year  or  part  thereof  from  41 
the  sale  or  disposition  of  such  product  shall  be  taken  42 
to  be  the  amount  which  would  have  been  received  or  48 
accrued  from  the  sale  or  disposition  of  such  product  if  44 
sold  at  the  fair  market  price.  45 

46 
SECTION  1203.  (a)  That  no  person  subject  to  the  47  Exceptions 
provisions  of  this  title  shall  be  liable  for  the  tax  here-  48 
in  imposed  if  the  only  employment  or  permission  to  49 
work  which  but  for  this  section  would  subject  him  to  60 
the  tax,  has  been  of  a  child  as  to  whom  such  person  51 
has  in  good  faith  procured  at  the  time  of  employing  62 
such  child  or  permitting  him  to  work,  and  has  since  in  53 
good  faith  relied  upon  and  kept  on  file  a  certificate,  54 
issued  in  such  form,  under  such  conditions  and  by  such  55 
persons  as  may  be  prescribed  by  a  board  consisting  of  56 
the  Secretary,  the  Commissioner,  and  the  Secretary  of  57 
Labor,  showing  the  child  to  be  of  such  age  as  not  to  68 


157 


1  subject  such  person   to   the  tax  imposed  by  this  title. 

2  Any  person  who  knowingly  makes  a  false  statement  or 

3  presents  false  evidence  In   or   in  relation   to  any  such 

4  certificate  or  application  therefor  shall  be  punished  by 
B  a  fin©  of  not  less  than  $100,  nor  more  than  $1,000,  or 

6  by  imprisonment  for  not  more  than   three  months,  or 

7  by  both  such  fine  and  imprisonment,  in  the  discretion 

8  of  the  court. 

9  In  any   State  designated  by  such  board   an  employ- 

10  ment  certificate  or  other  similar  paper  as  to  the  age  of 

11  the  child,  issued  under  the  laws  of  that  State,  and  not 
13  inconsistent  with  the  provisions  of  this  title,  shall  have 

13  the  same  force  and  effect  as  a  certificate  herein   pro- 

14  vlded  for. 

15  (b)   The   tax  imposed  by  this  title  shall  not  be   im- 

16  posed  in  the  case  of  any  person  who  proves  to  the  satis- 

17  faction  of  the  Secretary  that  the  only  employment  or 

18  permission   to  work  which  but  for  this  section   would 

19  subject  him  to  the  tax,  has  been  of  a  child  employed 

20  or  permitted  to  work  under  a  mistake  of  fact  as  to  the 

21  age  of  such  child,  and  without  intention  to  evade  the 

22  tax. 
23 

Return    of  24      SECTION  1204.     That  on  or  before  the  first  day  of 

Income  25  the   third   month   following   the   close   of   each   taxable 

26  year,   a  true  and  accurate  return   under  oath  shall  be 

27  made  by  each  person  subject  to  the  provisions  of  this 

28  title  to  the  collector  for  the  district  In  which  such  per- 

29  son  has  his  principal  ofEice  or  place  of  business,  in  such 

30  form   as   the   Commissioner,   with   the  approval   of  the 

31  Secretary,  shall  prescribe,  setting  forth  specifically  the 

32  gross  amount  of  income  received  or  accrued  during  such 

33  year  from  the  sale  or  disposition  of  the  product  of  any 

34  mine,  quarry,  mill,  cannery,  workship,  factory,  or  manu- 

35  facturing  establishment,   in   which   children   have   been 

36  employed   subjecting   him   to   the   tax   imposed   by   this 

37  title,  and  from  the  total  thereof  deducting  the  aggre- 

38  gate  items  of  allowance  authorized  by  this   title,   and 
30  such    other   particulars    as    to    the    gross    receipts   and 

40  items  of  allowance  as  the  Commissioner,  with  the  ap- 

41  proval  of  the  Secretary  may  require. 
42 

43  SECTION  1205.     That  all  such  returns  shall  be  trans- 

44  mitted  forthwith  by  the  collector  to  the  Commissioner, 

45  who  shall,  as  soon  as  practicable,  assess  the  tax  founa 

46  due  and  notify  the  person  making  such  return  of  the 

47  amount  of  the  tax  for  which  such  person  is  liable,  and 

48  such  person   shall  pay   the  tax  to  the  collector  on   or 

49  before  thirty  days  from  the  date  of  such  notice. 
60 

Commissioner      51      SECTION  1206.     That  for  the   purposes  of  this  Act 
Has  62  the  Commissioner,  or  any  other  person  duly  authorized 

Authority  to    53  by   him,   shall  have  authority   to  enter  and  inspect  at 
Inspect  54  any   time   any    mine,    quarry,    mill,    cannery,    workshop, 

Premises  55  factory,   or   manufacturing   establishment.     The   Secre- 

66  tary  of  Labor,  or  any  person  duly  authorized  by  him, 

67  shall,  for  the  purpose  of  complying  with  a  request  of 
08  the  Commissioner  to  make  such  an  inspection,  have  like 


158 


authority,  and  shall  make  report  to  the  Commissioner  1 
of  inspections  made  under  such  authority  in  such  form  2 
as  may  be  prescribed  by  the  Commissioner  with  the  3 
approval  of  the  Secretary  of  the  Treasury,  4 

Any  person  who  refuses  or  obstructs  entry  or  inspec-  6 
tion  authorized  by  this  section  shall  be  punished  by  a  6 
fine  of  not  more  than  $1,000,  or  by  imprisonment  for  7 
not  more  than  one  year,  or  both  such  fine  and  imprison-  8 
ment.  9 

10 

SECTION  1207.  That  as  used  in  this  title  the  term  11 
"taxable  year"  shall  have  the  same  meaning  as  pro-  12 
vided  for  the  purposes  of  income  tax  in  section  200.  13 
The  first  taxable  year  for  the  purposes  of  this  title  14 
shall  be  tTie  period  between  sixty  days  after  the  pas-  15 
sage  of  this  Act  and  December  31,  1919,  both  inclusive,  16 
or  such  portion  of  such  period  as  is  included  within  17 
the  fiscal  year  (as  defined  in  section  200)  of  the  tax-  18 
payer.  19 

80 

TITLE  XIII.— GENERAL  ADMINISTRATIVE  22 

PROVISIONS.  23 

24 

SECTION  1300.  That  hereafter  the  salary  of  the  25  Salary  of 
Commissioner  shall  be  $10,000  a  year.  The  difference  26  Commissioner 
between  the  amount  appropriated  under  existing  law  27 
and  the  salary  herein  established  shall,  for  the  period  28 
between  the  passage  of  this  Act  and  July  1,  1919,  be  29 
paid  out  of  the  appropriations  for  collecting  internal  30 
revenue.  31 

32 

SECTION  1301.  (a)  That  hereafter  there  may  be  33  DfM)Uty 
employed  in  the  Bureau  of  Internal  Revenue,  in  lieu  34  Commissioner 
of  the  deputy  commis.sioners  who.se  salaries  are  now  35 
fixed  by  law,  five  deputy  commissioners  and  an  assistant  36 
to  the  Commissioner,  who  shall  each  receive  a  salary  37 
of  $5,000  a  year,  payable  monthly.  The  assistant  to  38 
the  Commissioner  may  be  authorized  by  the  Commis-  39 
sioner  to  perform  any  duties  which  the  deputy  com-  40 
missioners  may  perform  under  existing  law.  41 

(b)  The  salaries  of  collectors  may  be  readjusted  and  42 
Increased  under  such  regulations  as  may  be  prescribed  43 
by  the  Commissioner,  subject  to  the  approval  of  the  44 
Secretary,  but  no  collector  shall  receive  a  salary  in  45 
excess  of  $6,000  a  year.  46 

(c)  There  is  hereby  appropriated,  out  of  any  money  47  Appropriation 
in    the    Treasury    not   otherwise   appropriated,    for    the  48       for 

fiscal  year  ending  June  30,   1919,  the  sum  of  $7,500,000  49       Assessment 

for  the  expenses  of  assessing  and  collecting  the  inter-  50       and 

nal-revenue  taxes  as  provided  in  this  Act,  including  the  61       Collection 

employment   of   necessary    officers,    attorneys,    experts,  52 

agents,    inspectors,    deputy    collectors,    clerks,    janitors,  53 

and   messengers,   in    the   District   of   Columbia   and    the  54 

several  collection  districts,  to  be  appointed  as  provided  55 

by  law,  telegraph  and  telephone  service,  rental  and  re-  56 

pair  of  quarters,  postage,  and  the  purchase  of  such  sup-  57 

plies,   equipment,   furniture,   mechanical  devices,   print- 58 

159 


Advisory- 
Tax  Board 


I  Ing,  stationery,  law  books  and  books  of  reference,  not 
a  to  exceed  $500  for  street  car  fares  in  tlie  District  of 
3\:olumbia,  and  sucli  other  articles  as  may  be  necessary 
4''for  use  in  the  District  of  Columbia  and  the  several  col- 
5!  lection  districts:  Provided,  That  not  more  than  $2,750,- 
ejooo  of  the  total  amount  appropriated  by  this  section  may 
be  expended  in  the  Bureau  of  Internal  Revenue,  in  the 
District  of  Columbia. 

(d)  (1)  There  is  hereby  created  a  board  to  be  known 
__  as  the  "Advisory  Tax  Board,"  hereinafter  called  the 
llJBoard,  and  to  be  composed  of  not  to  exceed  six  mem- 

12  bers  to  be  appointed  by  the  Commissioner  with  the  ap- 

13  proval  of  the  Secretary.     The  Board  shall  cease  to  exist 

14  at  the  expiration  of  two  years  after  the  passage  of  this 

15  Act,  or  at  such  earlier  time  as  the  Commissioner  with 
leithe  approval  of  the  Secretary  may  designate. 

Vacancies   in  the  membership  of  the  Board  shall  be 

18  filled  in  the  same  manner  as  an  original  appointment. 

19  Any  member  shall  be  subject  to  removal  by  the  Com- 

20  missioner  with   the   approval   of   the   Secretary.        The 
21 
22 


Commissioner  with  the  approval  of  the  Secretary  shall 

designate   the   chairman   of   the    Board.      Each   member 

shall     receive    an     annual     salary     of     $9,000,     payable 

24l  monthly,  together  with  actual  necessary  expenses  when 

26  absent  from  the  District  of  Columbia   on  official  busi- 

26  ness. 

Interpretation      27;!      (2)   The    Commissioner   may,    and   on    the   request  of 
of  Tax  Act       28  any   taxpayer   directly   interested   shall,   submit   to   the 

29  Board    any    question    relating   to    the    interpretation    or 

30  administration    of    the    income,    war-proflts    or    excess- 

31  profits  tax  laws,  and  the  Board  shall  report  its  findings 

32  and  recommendations  to  the  Commissioner. 

33  (3)   The  Board  shall  have  its  office  in  the  Bureau  o' 

34  Internal  Revenue  in  the  District  of  Columbia.     The  ex 
36  penses  and  salaries  of  members  of  the  Board  shall  be 

86  audited,    allowed,    and    paid    out    of    appropriations    for 

87  collecting  internal  revenue,  in  the  same  manner  as  ex- 

88  penses    and    salaries    of    employees    of    the    Bureau    of 
39  Internal  Revenue  are  audited,  allowed,  and  paid. 

Broad  Powers     40      (4)  The  Board  shall  have  the  power  to  summon  wit- 

of  Board  41  nesses,  take  testimony,  administer  oaths  and  to  require 

48  imy  person  to  produce  books,  papers,  documents  or  other 

43  data  relating  to  any  matter  under  investigation  by  the 

44  Board.     Any  member  of  the  Board  may  sign  subpoenas 
46  and  members  and  employees  of  the  Bureau  of  Internal 

46  Revenue  designated  to  assist  the  Board,  when  author- 

47  Ized  by  the  Board,  may  administer  oaths,  examine  wlt- 

48  nesses,  take  testimony  and  receive  evidence. 
48 

Leave  of  50      SECTION     1302.     That    all     Internal-revenue     agents 

Absence   for     61  and  inspectors  shall  be   granted  leave  of  absence  with 
Aarents  52  pay,  which  shall  not  be  cumulative,  not  to  exceed  thirty 

63  days   in   any   calendar  year,   under  such  regulations  as 

64  the  Commissioner,  with  the  approval  of  the  Secretary, 

65  may  prescribe. 
Legislative           66 

Drafting  57      SECTION  1303.      (a)   That  there  is  hereby  created  a 

Service  58  Legislative  Drafting  Service  under  the  direction  of  two 


160 


draftsmen,  one  of  whom  shall  be  appointed  by  the  Presl-    1 

dent  of  the  Senate,  and  one  by  the  Speaker  of  the  House    2 

of  Representatives,  without  reference  to  political  afCilia-    3 

tions  and   solely   on   the   ground  of  fitness   to  perform    4 

the  duties  of  the  office.     Each  draftsman  shall  receive    6 

a  salary  of  $5,000  a  year,  payable  monthly.     The  drafts-    6 

men  shall,  subject  to  the  approval  of  the  President  of    7  - 

the    Senate   and    the    Speaker   of   the    House   of    Repre-    8 

sentatives,    employ   and   fix   the   compensation   of   such    9 

assistant  draftsmen,   clerks,  and  other  employees,   and  10 

purchase  such  furniture,   office  equipment,  books,   sta-  11 

tionery,   and   other   supplies,   as   may   be   necessary   for  12 

the    proper    performance    of    the   duties    of    the    service  13 

and  as  may  be  appropriated  for  by  Congress.  14 

(b)  The  Drafting  Service  shall  aid  in  drafting  public  16 
bills  and  resolutions  or  amendments  thereto  on  the  16 
rquest  of  any  committee  of  either  House  of  Congress,  17 
but  the  Library  Committee  of  the  Senate  and  the  Lib-  18 
rary  Committee  of  the  House  of  Representatives,  re-  19 
spectively,  may  determine  the  preference,  if  any,  to  be  20 
given  to  such  requests  of  the  committees  of  either  21 
House,  respectively.  The  draftsmen  shall,  from  time  22 
to  time,  prescribe  rules  and  regulations  for  the  conduct  23 
of  the  work  of  the  service  for  the  committees  of  each  24 
House,  subject  to  the  approval  of  the  Library  Commit-  25 
tee  of  each  House,  respectively.  26 

(c)  For  the  remainder  of  the  current  fiscal  year  there  27 
is  hereby  appropriated,  out  of  any  money  in  the  Treas-  28 
ury  not  otherwise  appropriated,  the  sum  of  $25,000,  or  29 
so  much  thereof  as  may  be  necessary,  for  the  purpose  30 
of  defraying  the  expenses  of  the  establishment  and  31 
maintenan'ce  of  the  service,  including  the  payment  of  32 
salaries  herein  authorized.  One-half  of  all  appropria-  33 
tions  for  the  service  shall  be  disbursed  by  the  Secretary  34 
of  the  Senate  and  one-half  by  the  Clerk  of  the  House  36 
of  Representatives.  86 

37 
SECTION  1304.     That  there  shall  be  levied,  collected,  38  Tax  on 
and  paid  in  the  United  States,  upon  articles  coming  into  39       Importation 
the  United  States  from  the  Virgin  Islands,  a  tax  equal  40       of  Articles 
to  the  internal-revenue  tax  imposed  in  the  United  States  41       from  Virgin 
upon   like  articles   of  domestic   manufacture;    such  ar-  42       Islands 
tides  shipped  from   such  islands   to  the  United   States  43 
shall  be  exempt  from  the  payment  of  any  tax  imposea  44 
by  the  internal-revenue  laws  of  such  islands:  Provided,  45 
That  there  shall  be  levied,  collected,  and  paid  In  such  46 
islands,  upon  articles  imported  from  the  United  States,  47 
a  tax  equal  to  the  internal-revenue  tax  imposed  in  such  48 
islands  upon  like  articles  there  manufactured;  and  such  49 
articles  going  into  such  islands  from  the  United  States  50 
shall  be  exempt  from  payment  of  any  tax  imposed  by  51 
the  internal-revenue  laws  of  the  United  States.  52 

53 
SECTION  1305.  That  all  administrative,  special,  or  54 
stamp  provisions  of  law,  including  the  law  relating  to  55 
the  assessment  of  taxes,  so  far  as  applicable,  are  here-  56 
by  extended  to  and  made  a  part  of  this  Act,  and  every  67 
person   liable  to  any  tax  imposed  by   this  Act,   or  for  58 

161 


1  the  collection  thereof,  shall  keep  such  records  and  ren- 
2der,  under  oath,  such  statements  and  returns,  and  shall 
8  comply  with  such  regulations  as  the  Commissioner, 
4  with  the  approval  of  the  Secretary,  may  from  time  to 
6  time  prescribe, 
rowers  of  6     Whenever  in  the  judgment  of  the  Commissioner  nec- 

Commi»«ioner    7  essary  he  may  require  any  person,  by  notice  served  upon 

8  him,  to  make  a  return  or  such  statements  as  he  deems 

9  sufficient  to  show  whether  or  not  such  person  is  liable 

10  to  tax. 

11  The   Commissioner,    for   the   purpose   of   ascertaining 
18  the  correctness   of   any    return   or   for   the   purpose   of 

13  making  a  return  where  none  has  been  made,  is  hereby 

14  authorized,    by   any   revenue  agent  or   inspector   desig- 
IB  nated  by  him  for  that  purpose,  to  examine  any  books, 

16  papers,   records  or  memoranda  bearing  upon   the  mat- 

17  ters   required   to   be   included   in    the   return,   and    may 

18  require  the  attendance  of  the  person  rendering  the  re- 

19  tui^n  or  of  any  officer  or  employee  of  such  person,  or 

20  the  attendance  of  any  other  person  having  knowledge 

21  in    the    premises,    and    make    take    his    testimony    with 

22  reference  to  the  matter  required  by  law  to  be  included 

23  in  such  return,  with  power  to  administer  oaths  to  such 

24  person  or  persons. 


Floor  Taxes —     26      SECTION  1306,     That  where  floor  taxes  are  imposed 
Return  Under  27  by   this  Act  in  respect  to  articles  or  commodities,   in 


Oath 


28  respect  to  which  the  tax  imposed  by  existing  law  haa 

29  been  paid,  the  person  required  by  this  Act  to  pay  the 

30  tax  shall,   within   thirty  days  after  its   passage,   make 

31  return  under  oath  in  such  form  and  under  such  regula- 

32  tions  as   the   Commissioner,   with   the  approval   of  the 

33  Secretary,  shall  prescribe.     Payment  of  the  tax  shown 

34  to  be  due  may  be  extended  to  a  date  not  exceeding  seven 

35  months  from  the  passage  of  this  Act,  upon  the  filing  of 

36  a  bond  for  payment  in  such  form  and  amount  and  with 

37  such  sureties  as  the  Commissioner,  with  the  approval 

38  of  the  Secretary,  may  prescribe. 


40  SECTION  1307.     That  in  all  cases  where  the  method 

41  of  collecting  the  tax  imposed  by  this  Act  is  not  specifl- 

42  cally  provided  in  this  Act,  the  tax  shall  be  collected  In 

43  such  manner  as  the  Commissioner,  with  the  approval  of 

44  the  Secretary,   may   prescribe.     All  administrative  and 

45  penalty  provisions  of  Title  XI  of  this  Act,  in  so  far  as 

46  applicable,    shall    apply    to    the    collection    of    any    tax 

47  which  the  Commissioner  determines  or  prescribes  shall 

48  be  paid  by  stamp. 
49 

Penalties  60      SECTION  1308.     (a)  That  any  person  required  under 

61  Titles  V,  VI,  VII,  VIII,  IX,  X,  or  XII,  to  pay,  or  to 
52  collect,  account  for  and  pay  over  any  tax,  or  required  by 
63  law    or    regulations    made    under   authority    thereof    to 

54  make  a  return  or  supply  any  information  for  the  pur- 

55  pcses  of  the  computation,  assessment  or  collection  of 

56  any  such  tax,  who  fails  to  pay,  collect,  or  truly  account 

57  for  and  pay  over  any  such  tax,  make  any  such  return 

58  or  supply  any  such  information  at  the  time  or  times 


162 


required  by  law  or  regulation  shall  in  addition  to  other  1 
penalties  provided  by  law  be  subject  to  a  penalty  of  not  S 
more  than  $1,000.  .,  8 

(b)  Any  person  who  willfully  refuses  to  pay,  collect,  4 
or  truly  account  for  and  pay  over  any  such  tax,  make  • 
such  return  or  supply  such  information  at  the  time  or  6 
times  required  by  law  or  regulation,  or  who  willfully  7 
attempts  in  any  manner  to  evade  such  tax  shall  be  8 
guilty  of  a  misdemeanor  and  in  addition  to  other  penal-  9 
ties  provided  by  law  shall  be  fined  not  more  than  10 
$10,000  or  imprisoned  for  not  more  than  one  year,  or  11 
both,  together  with  the  costs  of  prosecution.  12 

(c)  Any  person  who  willfully  refuses  to  pay,  collect  13 
or  truly  account  for  and  pay  over  any  such  tax  shall  in  14 
addition  to  other  penalties  provided  by  law  be  liable  15 
to  a  penalty  of  the  amount  of  the  tax  evaded,  or  not  16 
paid,  collected,  or  accounted  for  and  paid  over,  to  be  17 
assessed  and  collected  in  the  same  manner  as  taxes  are  18 
assessed  and  collected:  Provided,  however.  That  no  pen-  19 
alty  shall  be  assessed  under  this  subdivision  for  any  20 
offense  for  which  a  penalty  may  be  assessed  under  au-  81 
thority  of  section  3176  of  the  Revised  Statutes,  as  22 
amended,  or  of  section  605  or  620  of  this  Act,  or  for  23 
any  offense  for  which  a  penalty  has  been  recovered  24 
under  section  3256  of  the  Revised  Statutes.  25 

(d)  The  term  "person"  as  used  in  this  section  in-  26 
eludes  an  ofRcer  or  employee  of  a  corporation  or  a  27 
member  or  employee  of  a  partnership,  who  as  such  off  i-  28 
cer,  employee,  or  member  is  under  a  duty  to  perform  29 
the  act  in  respect  of  which  the  violation  occurs.  30 

31 

SECTION  1309.  That  the  Commissioner,  with  the  38 
approval  of  the  Secretary,  is  hereby  authorized  to  make  33 
all  needful  rules  and  regulations  for  the  enforcement  34 
of  the  provisions  of  this  Act.  36 

The  Commissioner  with  such  approval  may  by  regula-36 
tion,  provide  that  any  return  required  by  Titles  V,  VI,  37 
VII,  VIII,  IX  or  X  to  be  under  oath  may,  if  the  38 
amount  of  the  tax  covered  thereby  is  not  in  excess  of  39 
$10,  be  signed  or  acknowledged  before  two  witnesses  40 
Instead  of  under  oath.  41 

42 

SECTION  1310.  (a)  That  in  the  case  of  any  over- 43  Over-payment 
payment  or  overcollection  of  any  tax  imposed  by  sec-  44  of  Tax 
tion  628  or  630  or  by  Title  V,  Title  VIII,  or  Title  IX,  46 
the  person  making  such  overpayment  or  overcollection  46 
may  take  credit  therefor  against  taxes  due  upon  any  47 
monthly  return,  and  shall  make  refund  of  any  excessiv©48 
amount  collected  by  him  upon  proper  application  by  49 
the   person   entitled   thereto.  60 

(b)  Wherever   in    this   Act   a   tax   is    required    to   be  51  Payment   of 
paid  by  the  purchaser  to  the  vendor  at  the  time  of  a  62       Tax  by 
sale,  and  such  sale  is  made  on  credit,  then,  under  regu-  63       Vendor 
lations  prescribed  by   the  Commissioner,  with  the  ap-  64 
proval  of  the  Secretary,  the  tax  may,  at  the  option  of  66 
the  vendor,  be  returned  and  paid  by  him  to  the  United  66 
States  as  if  paid  to  him  by  the  purchaser  at  the  time  67 
of   the   sale,   and  In   such   case   the  vendor   shall   have  68 

163 


1  a  right  of  action   In  any  court  of  competent  jurUdlc- 

2  tion  against  the  purchaser  for  the  amount  of  the  tax 

3  so  returned  and  paid  to  the  United  States. 

Tax  on  Articles  4  (c)  Under  such  rules  and  regulations  as  the  Com- 
for  Export  5  missloner  with  the  appi'oval  of  the  Secretary  may  pre- 
Except  when  6  scribe,  the  taxes  Imposed  under  the  provisions  of  Titles 
Approved  by  7  VI,  VII  or  IX  shall  not  apply  in  respect  to  articles  sold 
Secretary  8  or    leased   for   export   and   in    due   course   so   exported. 

8  Under   such   rules   and   regulations   the   amount   of   any 

10  internal-revenue   tax   erroneously   or   illegally   collected 

11  in  respect  to  exported  articles  may  be  refunded  to  the 

12  exporter  of  the  article,  instead  of  to  the  manufacturer, 

13  if  the  manufacturer  waives  any  claim  for  the  amount 

14  so  to  be  refunded. 
15 

Old   Stamps  16      SECTION  1311.     That  where  the  rate  of  tax  imposed 

May  Be  17  by   this   Act,    payable   by   stamps,   is   an   increase   over 

Used — ^When     18  previously  existing  rates,   stamps  on   hand   in  the  col- 

19  lectors'  offices  and  in  the  Bureau  of  Internal  Revenue 

20  may  continue   to  be   used   until  the  supply  on   hand   is 

21  exhausted,  but  shall  be  sold  and  accounted  for  at  the 

22  rates    provided    by    this   Act,    and   assessment    shall   be 

23  made  against  manufacturers  and  other  taxpayers  hav- 

24  ing   such   stamps   on   hand   on   the   day   this   Act   takes 

25  effect  for  the  difference  between  the  amount  paid  for 

26  such  stamps  and  the  tax  due  at  the  rates  provided  by 

27  this  Act. 
28 

Bona-fide  29      SECTION  1312.     (1)  That  (a)  if  any  person  has  prior 

Contracts  30  to  May  9,  1917,  made  a  bona  fide  contract  with  a  dealer 

Made  Before  31  for  the  sale  or  lease,  after  the  tax  takes  effect,  of  any 
Passage  of  32  article  In  respect  to  which  a  tax  is  imposed  under  Title 
Act  33  VI,  VII,  or  IX,  or  under  subdivision  13  of  Schedule  A 

34  of  Title  XI,  or  under  this  subdivision,  and   (b)   if  such 

35  contract   does   not   permit   the  adding  of   the   whole   of 

36  such  tax  to  the  amount  to  be  paid  under  such  contract, 

37  then  the  vendee  or  lessee  shall,  in  lieu  of  the  vendor 

38  or  lessor,  pay  so  much  of  such  tax  as  is  not  so  per- 

39  mltted  to  be  added  to  the  contract  price.     If  a  contract 

40  of  the  character  above  described  was  made  with  any 

41  person  other  than  a  dealer,  the  tax  collected  under  this 

42  Act  shall  be  the  tax  in  force  on  May  9,  1917. 

43  (2)  If  (a)  any  person  has  prior  to  September  3,  1918, 

44  made  a  bona  fide  contract  with  a  dealer  for  the  sale 
43  or  lease,  after  the  tax  takes  effect,   of  any  article   in 

46  respect  to  which  a  tax  is  imposed  under  Title  VI,  VII, 

47  or  IX,  or  under  subdivision  13  of  Schedule  A  of  Title 

48  XI,  or  under  this  subdivision,  and  in  respect  to  which 

49  no  corresponding  tax  was  imposed  by  the  Revenue  Act 

50  of   1917,    and    (b)    such   contract   does   not   permit    the 

61  adding,  to  the  amount  to  be  paid  under  such  contract, 

62  of  the  whole  of  the  tax  Imposed  by  this  Act,  then  the 

53  vendee  or  lessee  shall,  in  lieu  of  the  vendor  or  lessor, 

54  pay  so  much  of  the  tax  Imposed  by  this  Act  as  is  not 

55  so   permitted   to  be  added  to  the   contract  price.      If  a 

56  contract   of   the   character   above    described   was    made 

57  with  any  person  other  than  a  dealer,  no  tax  shall  be 
B9  collected  under  this  Act. 


164 


(3)  If  (a)  any  person  has  prior  to  September  3,  1918,  1 
made  a  bona  fide  contract  with  a  dealer  for  the  sale  2 
or  lease,  after  the  tax  takes  effect,  of  any  article  in  3 
respect  to  which  a  tax  Is  imposed  und.er  Title  VI,  VII,  4 
or  IX,  or  under  subdivision  13  of  Schedule  A  of  Title  5 
XI,  or  under  this  subdivision,  and  in  respect  to  which  a  6 
corresponding  tax  was  imposed  by  the  Revenue  Act  of  7 
1917,  and  (b)  such  contract  does  not  permit  the  add-  8 
ing-,  to  the  amount  to  be  paid  under  such  contract,  of  9 
the  whole  of  the  difference  between  such  tax  and  tne  10 
corresponding  tax  imposed  by  the  Revenue  Act  of  1917,  11 
then  the  vendee  or  lessee  shall,  in  lieu  of  the  vendor  12 
or  lessor,  pay  so  much  of  such  difference  as  is  not  so  13 
permitted  to  be  added  to  the  contract  price.  If  a  con-  14 
tract  of  the  character  above  described  was  made  with  15 
any  person  other  than  a  dealer,  the  tax  collected  under  16 
this  Act  shall  be  the  tax  in  force  on  September  3,  1918.  17 

(4)  The  taxes  payable  by  the  vendee  or  lessee  under  18 
this  section  shall  be  paid  to  the  vendor  or  lessor  at  the  19 
time  the  sale  or  lease  is  consummated,  and  collected,  re-  20 
turned,  and  paid  to  the  United  States  by  such  vendor  or  21 
lessor  in  the  same  manner  as  provided  in   section   502.  22 

(5)  The  term  "dealer"  as  used  in  this  section  in- 23 
eludes  a  vendee  who  purchases  any  article  with  intent  24 
to  use  it  in  the  manufacture  or  production  of  another  25 
article  intended  for  sale.  26 

(6)  This  section  shall  not  apply  to  any  tax  imposed  27 
by  section  906.  28 

29 

SECTION  1313.     That  in  the  payment  of  any  tax  un-30  Fractional 
der  this  Act  not  payable  by  stamp  a  fractional  part  of  31       Parts  of  a 
a  cent  shall  be  disregarded  unless   it  amounts  to  one-  32       a  Cent 
half  cent  or  more,  in  which  case  it  shall  be  increased  to  33 
1  cent.  34 

35 

SECTION  1314.     That  collectors  may  receive,  at  par  36  Payment  by 
with  an  adjustment  for  accrued  interest,  certificates  of  37       Uncertified 
indebtedness  issued  by  the  United  States  and  uncerti-  38       Check  or 
fled    checks    in    payment    of    income,    war-profits    and  39       with  U.  S. 
excess-profits  taxes  and  any  other  taxes  payable  other  40       Ctfs.  of 
than  by  stamp,  during  such  time  and  under  such  regu-41       Indebtedness 
lations  as  the  Commissioner,  with  the  approval  of  the  42 
Secretary,    shall   prescribe;   but  if  a  check   so   received  43 
Is  not  paid  by  the  bank  on  which  it  is  drawn  the  per-  44 
son   by   whom   such  check  has  been   tendered   shall   re-  45 
main  liable  for  the  payment  of  the  tax  and  for  all  legal  46 
penalties  and  additions  the  same  as  if  such  check  had  47 
not  been  tendered.  48 

49 

SECTION  1315.  That  section  3315  of  the  Revised  50 
Statutes,  as  amended,  is  hereby  amended  to  read  af»  51 
follows:  52 

53 

"Section  3315.  The  Commissioner  of  Internal  Rev-  54 
enue  may,  under  regulations  prescribed  by  him  with  55 
the  approval  of  the  Secretary  of  the  Treasury,  issue  56 
stamps  for  restamping  packages  of  distilled  spirits.  57 
tobacco,  cigars,  snuff,  cigarettes,  fermented  liquors,  and  58 

165 


X  wines  which  have  been  duly  stamped  but  from  which 

2  the   stamps   have  been   lost  or  destroyed   by   unavoid- 

3  able  accident." 
4 

5      SECTION    1316.      (a)   That    section    3220    of    the    Re- 

•  vised   Statutes  is  hereby  amended  to  read  as  follows: 
7 

8      "Section   3220.      The   Commissioner   of   Internal   Rev- 

•  enue,  subject  to  regulations  prescribed  by  the  Secretary 

10  of  the  Treasury,  is  authorized  to  remit,  refund,  and  pay 

11  back  all  taxes  erroneously  or  illegally  assessed  or  col- 

12  lected,  all  penalties  collected  without  authority,  and  all 
18  taxes  that  appear  to  be  unjustly  assessed  or  excessive 

14  in  amount,  or  in  any  manner  wrongfully  collected;  also 

15  to  repay   to   any  collector  or  deputy  collector   the   full 

16  amount  of  such  sums  of  money  as  may  be  recovered 

17  against  him  in  any  court,  for  any  internal  revenue  taxes 

18  collected  by  him,  with  the  cost  and  expenses  of  suit; 
18  also  all  damages  and  costs  recovered  against  any  asses- 
20  sor,  assistant  assessor,  collector,  deputy  collector, 
ISA  agent,  or  inspector,  in  any  suit  brought  against  him  by 

22  reason  of  anything  done  in  the  due  performance  of  his 

23  official  duty,  and  shall  make  report  to  Congress  at  the 

24  beginning  of   each  regular  session   of   Congress  of  all 

26  transactions  under  this  section," 
26 

27  (b)  Section    3225    of    the    Revised    Statutes    of    the 

28  United  States  is  hereby  amended  to  read  as  follows: 
28 

80  "Section  3225.  When  a  second  assessment  is  made 
31  in  case  of  any  list,  statement,  or  return,  which  in  the 
38  opinion  of  the  collector  or  deputy  collector  was  false 
38  or  fraudulent,  or  contained  any  understatement  or  un- 

84  dervaluation,    such   assessment    shall    not   be   remitted, 

85  nor  shall  taxes  collected  under  such  assessment  be  re- 

36  funded,  or  paid  back,  or  recovered  by  any  suit,  unless  it 

37  is  proved  that  such  list,  statement,  or  return  was  not 

38  willfully   false   or  fraudulent  and   did  not  contain   any 

39  willful  understatement  or  undervaluation." 
40 

41  (c)  That  the  paragraph  of  section  3689  of  the  Re- 
48  vised  Statutes,  as  amended,  reading  as  follows: 

43  "Refunding    taxes    illegally    collected    (internal    rev- 

44  enue) :  To  refund  and  pay  back  duties  erroneously  or 
46  illegally   assessed   or   collected    under   the    internal-rev- 

46  enue  laws,"  is  repealed  from  and  after  June  30,  1920; 

47  and  the  Secretary  of  the  Treasury  shall  submit  for  the 

48  fiscal  year  1921,  and  annually  thereafter,  an  estimate  of 
48  appropriations  to  refund  and  pay  back  duties  or  taxes 
60  erroneously  or  illegally  assessed  or  collected  under  the 
51  internal-revenue  laws,  and  to  pay  judgments,  including 
68  interest  and  costs,  rendered  for  taxes  or  penalties  er- 
63  roneously  or  illegally  assessed  or  collected  under  the 
54  internal-revenue  laws. 

•6 

•6  SECTION  1317.  That  section*  3164,  3165.  3167,  3172. 
57  8173.  and  3176  of  the  Revised  Statutes  as  amended  are 
68  hereby  amended  to  read  as  follows: 

166 


"Section  3164.  It  shall  be  the  duty  of  every  col-  1 
lector  of  internal  x-evenue  having  knowledge  of  any  will-  2 
ful  violation  of  any  law  of  the  United  States  relating  3 
to  the  revenue,  within  thirty  days  after  coming  into  4 
possession  of  such  knowledge,  to  file  with  the  district  6 
attorney  of  the  district  in  which  any  fine,  penalty,  or  6 
forfeiture  may  be  incurred,  a  statement  of  all  the  facts  7 
and  circumstances  of  the  case  within  his  knowledge,  8 
together  with  the  names  of  the  witnesses,  setting  forth  9 
the  provisions  of  law  believed  to  be  so  violated  on  10 
which  reliance  may  be  had  for  condemnation  or  con-  11 
viction.  IS 

"Section  3165.  Every  collector,  deputy  collector,  13 
internal-revenue  agent,  and  internal-revenue  officer  as-  14 
signed  to  duty  under  an  internal-revenue  agent,  %  au-  16 
thorized  to  administer  oaths  and  to  take  evidence  16 
touching  any  part  of  the  administration  of  the  internal-  17 
revenue  laws  with  which  he  is  chai-ged,  or  where  such  18 
oaths  and  evidence  are  authorized  by  law  or  regula-  19 
tion  authorized  by  law  to  be  taken.  SO 

81 

•'Section  3167.  It  shall  be  unlawful  for  any  col- 22  Secrecy  of 
lector,  deputy  collector,  agent,  clerk,  or  other  officer  or  23  Information 
employee  of  the  United  States  to  divulge  or  to  make  24  Obtained  by 
known  in  any  manner  whatever  not  provided  by  law  to  25  Collectors 
any  person  the  operations,  style  of  work,  or  apparatus  26 
of  any  manufacturer  or  producer  visited  by  him  in  the  27 
discharge  of  his  official  duties,  or  the  amount  or  source  28 
of  income,  profits,  losses,  expenditures,  or  any  partic-  S9 
ular  thereof,  set  forth  or  disclosed  in  any  income  re-  30 
turn,  or  to  permit  any  income  return  or  copy  thereof  31 
or  any  book  containing  any  abstract  or  particulars  38 
thereof  to  be  seen  or  examined  by  any  person  except  33 
as  provided  by  law;  and  it  shall  be  unlawful  for  any  34 
person  to  print  or  publish  in  any  manner  whatever  not  35 
provided  by  law  any  income  return,  or  any  part  thereof  36 
or  source  of  income,  profits,  losses,  or  expenditures  ap-  37 
pearing  in  any  income  return;  and  any  offense  against  38 
the  foregoing  provision  shall  be  a  misdemeanor  and  39 
be  punished  by  a  fine  not  exceeding  $1,000  or  by  im-40 
prisonment  not  exceeding  one  year,  or  both,  at  the  dis-  41 
cretion  of  the  court;  and  if  the  offender  be  an  officer  42 
or  employee  of  the  United  States  he  shall  be  dismissed  43 
from  office  or  discharged  from  employment.  44 

45 
"Section    3172.      Every   collector   shall,    from   time    to;46  Canvass  of 
time,  cause  his  deputies  to  pi-oceed  through  every  part  47      Collection 
of    his    district    and    inquire    after    and    concerning    all  48       District 
persons    therein    who   are    liable    to    pay    any    internal 
revenue  tax,  and  all  persons  owning  or  having  the  care||50 
and  management  of  any  objects  liable  to  pay  any  tax 
and    to    make    a    list    of    such    persons    and    enumerate 
said   objects. 


Bl 
52 
63 

|64 
55 
56 


"Section   3173.      It  shall   be   the  duty   of  any   person, 
partnership,     firm,    association,    or    corporation,    made 
liable  to  any  duty,  specal  tax,  or  other  tax  Imposed  by|57 
law,  when  not  otherwise  provided  for,   (1)  in  case  of  a{|58 


List   Return 
by  Person, 
Corporation, 
Partnership 


X67 


1  special  tax,  on  or  before  the  thirty-first  day  of  July  in 

2  each  year,  and    (2)    In   other  cases  before  the   day   on 

3  which  the  taxes  accrue,  to  make  a  list  or  return,  veri- 

4  fled  by  oath,  to  the  collector  or  a  deputy  collector  of 
6  the  district  where  located,  of  the  articles  or  objects,  in- 
6  eluding  the  quantity  of  goods,  wares,  and  merchandise, 
^made  or  sold  and  charged  with  a  tax,  the  several  rates 

8  and    aggregate    amount,    according    to    the    forms    and 

9  regulations  to  be  prescribed  by  the  Commissioner  of  In- 

10  ternal  Revenue,  with  the  approval  of  the  Secretary  of 

11  ihe  Treasury,  for  which  such  person,  partnership,  firm, 

12  association,  or  corporation  is   liable:   Provided,   That  If 

13  any   person   liable   to  pay  any  duty  or  tax,   or  owning, 

14  possessing,  or  having  the  care  or  management  of  prop- 

15  erty,  goods,  wares,  and  merchandise,  article  or  objects 
IS  liable   to   pay   any   duty,    tax,    or   license,    shall   fail   to 

17  make  and  exhibit  a  list  or  return  required  by  law,  but 

18  shall    consent    to    disclose    the    particulars    of    any    and 

19  all    the    property,    goods,    wares,    and    merchandise,    ar- 

20  tides,   and   objects   liable   to   pay   any   duty    or   tax,    oi 

21  any   business   or   occupation    liable   to   pay   any    tax   as 

22  aforesaid,  then,  and  in  that  case,  it  shall  be   the  duty 

23  of  the  collector  or  deputy  collector  to  make  such  list  or 

24  return,  which,  being  distinctly   read,  consented  to,  and 

25  signed  and   verified  by   oath  by   the   person   so  owning, 

26  possessing,  or  having  the  care  and  management  as 
27 aforesaid,  may  be  received  as  the  list  of  such  person: 

28  Provided  further.  That  In  case  no  annual  list  or  return 

29  has  been  rendered  by  such  person  to  the  collector  or 

30  deputy    collector    as    required    by    law,    and    the    person 

31  shall  be  absent  from  his  or  her  residence  or  place  of 

33  business  at  the  time  the  collector  or  a  deputy  collector 
3^  shall  call  for  the  annual  list  or  return,  it  shall  be  the 

34  duty  of  such  collector  or  deputy  collector  to  leave  at 
36  such  place  of  residence  or  business,  with  some  one  of 
36  suitable  age  and  discretion,  if  such  be  present,  other- 
87  wise   to   deposit   in    the   nearest   post   office,    a   note   or 

38  memorandum   addressed  to  such  person,   requiring  him 

39  or  her  to  render  to  such  collector  or  deputy  collector  the 

40  list  or  return  required  by  law  within  ten  days  from  the 

41  date    of    such   note    or   memorandum,    verified    by    oath. 

42  And    if    any    person,    on    being    notified    or    required   as 

43  aforesaid,  shall  refuse  or  neglect  to  render  such  list  or 
4^ return  within  the  time  required  as  aforesaid,  or  when- 
4S*-ever  any  person  who  is  required   to  deliver  a   monthly 

46  or  other  return  of  objects  subject  to  tax  fails  to  do  so 

47  at  the  time  required,  or  delivers  any  return  which,  in 

48  the    opinion    of    the    collector,    is    erroneous,    false,    or 

49  fraudulent,    or   contains   any    undervaluation    or   under- 

50  statement,    or   refuses    to   allow   any    regularly    author- 

51  ized  Government  officer  to  examine  the  books  of  such 

52  person,  firm,  or  corporation,  it  shall  be  lawful  for 
63  the  collector  to  summon  such  person,  or  any  other 
54  person  having  possession,  custody,  or  care  of  books 
Sn  of  account  containing  entries  relating  to  the  business 
80  of  such  person  or  any  other  person  he  may  deem 
57  proper,  to  appear  before  him  and  produce  such  books 
68  at  a   time   and   place   named    in   the   summons,   and   to 

1G8 


give  testimony  or  answer  interrogatories,  under  oath,  1 
respecting-  any  objects  or  income  liable  to  tax  or  the  2 
returns  thereof.  The  collector  may  summon  any  per-  3 
son  residing  or  found  within  the  State  or  Territory  4 
In  which  his  district  lies;  and  when  the  person  in-  5 
tended  to  be  summoned  does  not  reside  and  can  not  6 
be  found  within  such  State  or  Territory,  he  may  enter  7 
any  collection  district  where  such  person  may  be  found  8 
and  there  make  the  examination  herein  authorized.  9 
And  to  this  end  he  may  there  exercise  all  the  authority  10 
which  he  might  lawfully  exercise  in  the  district  for  11 
which  he  was  commissioned:  Provided,  That  'person,'  12 
as  used  in  this  section,  shall  be  construed  to  include  13 
any  corporation,  joint-stock  company  or  association,  14 
or  insurance  company  when  such  construction  is  neces-  IS 
sary   to   carry   out   its  provisions.  16 

"Section  3176.  If  any  person,  corporation,  company,  17  Penalty 
or  association  fails  to  make  and  file  a  return  or  list  18  Failure  to 
at  the  time  prescribed  by  law  or  by  regulation  made  19  File  Return 
under  authority  of  law,  or  makes,  willfully  or  other-  20 
wise,  a  false  or  fraudulent  return  or  list,  the  col-  21 
lector  or  deputy  collector  shall  make  the  return  or  22 
list  from  his  own  knowledge  and  from  such  informa-  23 
tion  as  he  can  obtain  through  testimony  or  otherwise.  24 
In  any  such  case  the  Commissioner  may,  from  his  25 
own  knowledge  and  from  such  information  as  he  can  26 
obtain  through  testimony  or  otherwise,  make  a  return  27 
or  amend  any  return  made  by  a  collector  or  deputy  28 
collector.  Any  return  or  list  so  made  and  subscribed  29 
by  the  Commissioner,  or  by  a  collector  or  deputy  col-  30 
lector  and  approved  by  the  Commissioner,  shall  be  31 
prima  facie  good  and  sufficient  for  all  legal  purposes.  32 

"If  the  failure  to  file  a  return  or  list  is  due  to  33 
sickness  or  absence,  the  collector  may  allow  such  34 
further  time,  not  exceeding  thirty  days,  for  making  35 
and    filing   the   return   or  list   as   he   deems   proper.  36 

"The  Commissioner  of  Internal  Revenue  shall  de-  37 
termine  and  assess  all  taxes,  other  than  stamp  taxes,  38 
as  to  which  returns  or  lists  are  so  made  under  tn«  89 
provisions  of  this  section.  In  case  of  any  failure  to  40 
make  and  file  a  return  or  list  within  the  time  pre-  41 
scribed  by  law,  or  prescribed  by  the  Commissioner  of  42 
Internal  Revenue  or  the  collector  in  pursuance  of  law,  43 
the  Commissioner  of  Internal  Revenue  shall  add  to  44 
the  tax  25  per  centum  of  its  amount,  except  that  45 
when  a  return  is  filed  after  such  time  and  it  is  shown  46 
that  the  failure  to  file  it  was  due  to  a  reasonable  cause  47 
and  not  to  willful  neglect,  no  such  addition  shall  be  48 
made  to  the  tax.  In  case  a  false  or  fraudulent  re-  49 
turn  or  list  is  willfully  made,  the  Commissioner  of  50 
Internal  Revenue  shall  add  to  the  tax  50  per  centum  81 
of  its  amount.  52 

"The  amount  so  added  to  any  tax  shall  be  collected  53 
at  the  same  time  and  in  the  same  manner  and  as  part  64 
of  the  tax  unless  the  tax  has  been  paid  before  the  55 
discovery  of  the  neglect,  falsity,  or  fraud,  in  which  56 
case  the  amount  so  added  shall  be  collected  in  the  57 
same    manner   as   the    tax."  68 

169 


Summons  1      SECTION    1318.     That    if    any    person    is    summoned 

Jurisdiction        2  under    this    Act    to    appear,    to    testify,    or    to    produce 

3  books,   papers  or   other   data,    the   district  court  of   the 

4  United   States   for    the   district   in    which   such    person 
6  resides   shall   have  jurisdiction  by  appropriate  process 

6  to  compel  such  attendance,  testimony,  or  production  of 

7  books,   papers,   or  other  data. 

8  The   district   courts   of   the   United   States   at   the   in- 

9  stance  of  the  United  States  are  hereby  invested  with 

10  such  jurisdiction  to  make  and  issue,  both  in  actions  at 

11  law  and  suits  in  equity,  writs  and  orders  of  injunction, 

12  and  of  ne  exeat  republica,  orders  appointing  receivers, 

13  and  such  other  orders  and  process,  and  to  render  such 

14  judgments  and   decrees,   granting  in  proper  cases  both 

15  legal  and  equitable  relief  together,  as  may  be  necessary 

16  or  appropriate  for  the  enforcement  of  the  provisions  of 

17  this  Act.     The  remedies   hereby   provided  are   in  addi- 

18  tion  to  and  not  exclusive  of  any  and  all  other  remedies 

19  of  the  United  States  in  such  courts  or  otherwise  to  en- 

20  force  such  provisions. 
21 

False  22      SECTION    1319.     That    whoever    in    connection    with 

Statements —   23  the   sale   or   lease,    or   offer   for    sale   or   lease,    of   any 

Penalties  24  article,    or    for    the    purpose    of    making    such    sale    or 

26  lease,    makes    any    statement,    written    or   oral,    (1)    in- 

26  tended  or  calculated  to  lead  any  person  to  believe  that 

27  any  part  of  the  price  at  which  such  article  is  sold  or 

28  leased,    or  offered   for   sale   or   lease,   consists   of   a   tax 

29  imposed   under   the   authority   of   the  United   States,   or 

30  (2)   ascribing  a  particular  part  of  such  price  to  a  tax 

31  imposed    under    the    authority    of    the    United    States, 

32  knowing   that  such  statement  is  false  or  that   the  tax 

33  Is   not  so   great  as   the   portion   of   such   price  ascribed 

34  to  such  tax,  shall  be  guilty  of  a  misdemeanor  and  upon 
35^conviction  thereof  shall  be  punished  by  a  fine  of  not 
36  more  than  $1,000  or  by  imprisonment  not  exceeding  one 
37Vear,  or  both. 


Sureties  39      SECTION   1320.     That   wherever   by   the  laws  of  th« 

Required  40  United    States    or    regulations    made    pursuant    thereto, 

41  nny    person    is    required    to    furnish    any    recognisance, 

42  Stipulation,  bond,  guarantee,  or  undertaking,  hereinafter 
48  called  "penal  bond,"  with  surety  or  sureties,  such 
44 'person  may,  in  lieu  of  such  surety  or  sureties,  deposit 
45ias    .security    with   the    official    having   authority    to   ap- 

46  prove    such    penal    bond.    United    States    Liberty    bonds 

47  or   other   bonds   of   the   United    States    in   a   sum   equal 

48  at   their   par   value   to   the  amount  of  such   penal  bond 

49  required  to  be  furnished,  together  with  an  agreement 
80, authorizing  such  official  to  collect  or  sell  such  bonds 
51  so  deposited  in  case  of  any  default  in  the  perform- 
82  fince  of  any  of  the  conditions  or  stipulations  of  such 
53, penal  bond.  The  acceptance  of  such  United  States 
64  bonds  in  lieu  of  surety  or  sureties  required  by  law 
66  shall   have   the   same  force  and   effect  as   individual   or 

66  corporate    suretie.s,    or    certified    checks,    bank    drafts, 

67  post-office   money   orders,   or  cash,    for  the   penalty   or 

68  amount    of    such    penal    bond.      The    bonds    deposited 

170 


hereunder,  and  such  other  United  States  bonds  as  may  1 
be  substituted  therefor  from  time  to  time  as  such  2 
security,  may  be  deposited  with  the  Treasurer,  or  an  8 
Assistant  Treasurer  of  the  United  States,  a  Govern-  4 
ment  depository.  Federal  Reserve  bank,  or  member  5 
bank,  which  shall  issue  receipt  therefor,  describing-  • 
such  bonds  so  deposited.  As  soon  as  security  for  7 
the  performance  of  such  penal  bond  is  no  longer  nee-  8 
essary,  such  bonds  so  deposited,  shall  be  returned  to  9 
the  depositor:  Provided,  That  in  case  a  person  or  10 
persons  supplying  a  contractor  with  labor  or  material  11 
as  provided  by  the  Act  of  Congress,  approved  Feb-  IS 
ruary  24,  1905  (33  Stat,  811),  entitled  "An  Act  to  13 
amend  an  Act  approved  August  thirteenth,  eighteen  14 
hundred  and  ninety-four,  entitled  'An  Act  for  the  15 
protection  of  persons  furnishing  materials  and  labor  16 
for  the  construction  of  public  works,'  "  shall  file  with  17 
the  obligee,  at  any  time  after  a  default  in  the  per-  18 
formance  of  any  contract  subject  to  said  Acts,  the  ap-  19 
plication  and  affidavit  therein  provided,  the  obligee  20 
shall  not  deliver  to  the  obligor  the  deposited  bonds  21 
nor  any  surplus  proceeds  thereof  until  the  expiration  22 
of  the  time  limited  by  said  Acts  for  the  institution  23 
of  suit  by  such  person  or  persons,  and,  in  case  suit  24 
shall  be  instituted  within  such  time,  shall  hold  said  26 
bonds  or  proceeds  subject  to  the  order  of  the  court  26 
having  jurisdiction  thereof:  Provided  further.  That  27 
nothing  herein  contained  shall  affect  or  impair  the  28 
priority  of  the  claim  of  the  United  States  against  the  29 
bonds  deposited  or  any  right  or  remedy  granted  by  30 
said  Acts  or  by  this  section  to  the  United  States  for  31 
default  upon  any  obligation  of  said  penal  bond:  Pro- 32 
vided  further.  That  all  laws  inconsistent  with  this  33 
section  are  hereby  so  modified  as  to  conform  to  the  34 
provisions  hereof:  And  provided  further,  That  nothing 35 
contained  herein  shall  affect  the  authority  of  courts  36 
over  the  security,  where  such  bonds  are  taken  as  37 
security  in  judicial  proceedings,  or  the  authority  of  38 
any  administrative  officer  of  the  United  States  to  39 
receive  United  States  bonds  for  security  in  cases  au-40 
thorized  by  existing  laws.  The  Secretary  may  prescribe  41 
rules  and  regulations  necessary  and  proper  for  carry-  42 
Ing  this  section   into  effect.  48 

44 

45 

TITLE  XIV.— GENERAL  PROVISIONS.  46 

47 

SECTION    1400.      (a)   That    the    following    parts    of  48 

Acts    are    hereby    repealed,    subject    to    the   limitations  49 

provided  in  subdivision   (b):  60 

(1)  The  following  titles  of  the  Revenue  Act  of  1916:61 
Title  I  (called  "Income  Tax");  62 
Title  II  (called  "Estate  Tax");  63 
Title  III    (called    "Munitions    Manufacturers'    Tax"),  64 

as  amended;  56 

Title  IV    (called   "Miscellaneous  Taxes").  66 

(2)  The  following  parts  of  the  Act  entitled  "An  Act  67 
to    provide    increased    revenue   to   defray   the   expenses  68 

171 


1  of  the  Increased  appropriations  for  the  Army  and  Navy 

2  and  the  extensions  of  fortifications,  and  for  other  pur- 

3  poses,"  approved  March  3,  1917: 

4  Title  III   (called  "Estate  Tax"); 

6      Section  402   (called  "Returns  of  Dividends"). 

6  (3)  The  following  titles  of  the  Revenue  Act  of  1917: 

7  Title  I    (called    "War    Income    Tax"); 

8  Title  II  (called  "War  Excess-Profits  Tax"); 

9  Title  III    (called  "War  Tax  on   Beverages"); 

10  Title  IV   (called   "War  Tax  on  Cigars,  Tobacco,  and 

11  Manufactures  Thereof"); 

12  Title  V  (called  "War  Tax  on  Facilities  Furnished  by 

13  TMiblic  Utilities,  and  Insurance"); 

14  Title  VI  (called  "War  Excise  Taxes"); 

15  Title  VII     (called     "War    Tax    on    Admissions    and 

16  Ones"); 

17  Title  VIII    (called   "War  Stamp  Taxes"); 

18  Title  IX  (called  "War  Estate  Tax"); 

19  Title  X   (called  "Administrative  Provisions"); 

20  Title  XII   (called   "Income-Tax  Amendments"). 

21  (b)  Such    parts    of   Acts    shall    remain    in    force    for 

22  tlie  assessment  and  collection  of  all  taxes  which  have 

23  accrued    thereunder,    and    for    the    imposition    and    col- 

24  lection   of   all   penalties   or   forfeitures   which   have   ac- 

25  ciued  and   may   accrue   in   relation   to  any   such   taxes, 

26  and    except    that    the    unexpended    balance    of    any    ap- 

27  propriation    heretofore    made    and    now    available    for 

28  the   administration    of   any    such   part   of  an   Act   shall 

29  be  available  for  the  administration  of  this  Act  or  the 

30  corresponding    provision    thereof:      Provided,    That,    ex- 

31  cept  as  otherwise  provided  in  this  Act,  no  taxes  shall 

32  be  collected  under  Title  I  of  the  Revenue  Act  of  1916 

33  as  amended  by  the  Revenue  Act  of  1917,  or  Title  I  or 

34  II  of  the  Revenue  Act  of  1917,  in  respect  to  any  period 

35  after   December   31,    1917:      Provided   further,   That   the 

36  assessment  and  collection  of  all  estate  taxes,  and  the 

37  imposition  and  collection  of  all  penalties  or  forfeitures, 

38  which    have    accrued    under    Title    II    of    the    Revenue 

39  Act   of  1916   as  amended   by   the  Act   entitled   "An   Act 

40  to    provide   increased    revenue    to   defray    the   expenses 

41  of  the  increased  appropriations  for  the  Army  and  Navy 

42  and    the    extensions    of    fortifications,    and    for    other 

43  purposes,"  approved  March  3,   1917,  or  Title  IX  of  the 

44  Revenue  Act  ol  1917,   shall  be  according  to  the  provl- 

45  Rions   of   Title   IV  of   this  Act.        In   the  case   of  any 

46  tax  imposed  by  any  part  of  an  Act  herein  repealed,  if 

47  there  is  a  tax  imposed  by  this  Act  in  lieu  thereof,  the 

48  provision    Imposing    such    tax    shall    remain    in    force 

49  until   the  corresponding   tax   under   this  Act   takes   ef- 

50  feet  under  the  provisions  of  this  Act. 

51  Title  I  of  the  Revenue  Act  of  1916  as  amended  by 

52  the    Revenue    Act    of    1917    shall    remain    in    force    for 

53  the    assessment    and    collection    of    the    income    tax    in 

54  Porto  Rico  and  the  Philippine  Islands,  except  as  may 

55  be  otherwise  provided  by  their  respective  legislatures. 
56 

57      SECTION    1401.     That   section    1100   of   the   Revenue 
6b  Act  of  1917  is  hereby  repealed,  to  take  efCect  on  July  1, 

172 


1919,  and  thereafter  the  rate  of  postage  on  all  mall  1 
matter  of  the  first  class  shall  be  the  same  as  the  rate  1 
In  force  on  October  2,  1917:  Provided,  That  letters  8 
written  and  mailed  by  soldiers,  sailors,  and  marines  4 
assigned  to  duty  in  a  foreign  country  engaged  in  the  6 
present  war  may  be  mailed  free  of  postage,  subject  to  6 
such  rules  smrZ  regulations  as  may  be  prescribed  by  7 
the  Postmaster  General.  8 

Section  1107  of  such  Act  is  hereby  repealed,  to  take  9 
effect  July  11,  1919.  10 

11 

SECTION  1402.  That  if  any  clause,  sentence,  para-  13 
graph,  or  part  of  this  Act  shall  for  any  reason  be  13 
adjudged  by  any  court  of  competent  jurisdiction  to  be  14 
Invalid,  such  judgment  shall  not  affect,  impair,  or  in-  15 
validate  the  remainder  of  this  Act,  but  shall  be  con-  16 
fined  in  its  operation  to  the  clause,  sentence,  para-  17 
graph,  or  part  thereof  directly  involved  in  the  con-  18 
troversy  in  which  such  judgment  has  been  rendered.      19 

20 

SECTION    1403.     That   the    Revenue   Act   of    1916    is  2 
hereby  amended  by  adding  at  the  end  thereof  a  section  22 
to  read  as  follows:  23 

"Section  903.  That  this  Act  may  be  cited  as  the  24 
'Revenue  Act  of  1916.*"  25 

26 

SECTION  1404.  That  the  Revenue  Act  of  1917  is  27 
hereby  amended  by  adding  at  the  end  thereof  a  sec-  28 
tion  to  read  as  follows:  29 

"Section  1303.  That  this  Act  may  be  cited  as  the  30 
'Revenue  Act  of   1917.*  "  31 

32 

SECTION  1405.  That  this  Act  may  be  cited  as  the  33 
"Revenue  Act  of  1918."  34 

35 

SECTION    1406.     That    all    persons    serving    In    the  36  Payment   of 
military  or  naval  forces  of  the   United   States  durmg  37       $60  to  Soldier 
the  present  war  who  have,  since  April  6,  1917,  resigned  33       and  Sailor 
or  been   discharged  under  honorable  conditions    (or,   in  39       Upon 
the  case  of  reservists,  been  placed  on   Inactive  duty),  40       Honorable 
or  who  at  any  time  hereafter   (but  not  later  than  the  41       Discharge 
termination  of  the  current  enlistment  or  term  of  serv-  43 
ice   in   the   case   of   the  enlisted   personnel   and   female  43 
nurses,  or  within  one  year  after  the  termination  of  the  44 
present  war  in  the  case  of  officers,  may  resign  or  be  45 
discharged  under  honorable  conditions   (or,  in  the  case  46 
of  reservists,  be  placed  on  inactive  duty),  shall  be  paid,  47 
in   addition   to  all   other  amounts  due  them   in   pursu-  48 
ance  of  law,  $60  each.  49 

This  amount  shall  not  be  paid  (1)  to  any  person  who  50 
though  appointed  or  inducted  into  the  military  or  naval  51 
forces  on  or  prior  to  November  11,  1918,  had  not  re-  52 
ported  for  duty  at  his  station  on  or  prior  to  such  date;  53 
or  (2)  to  any  person  who  has  already  received  oneJ64 
month's  pay  under  the  provisions  of  section  9  of  thei55 
Act  entitled  "An  Act  to  authorize  the  President  to  in-J56 
crease  temporarily  the  military  establishment  of  thef57 
United  States,"  approved  May  18,  1917;  or   (3)   to  any^58 

173 


1  person   who  is  entitled   to  retired   pay;    or    (4)    to   the 

2  heirs   or   legal   representatives   of   any    person    entitled 

3  to  any  payment  under  this  section  who  has  died  or  may 

4  die  before  receiving  such  payment.     In  the  case  of  any 
6  person  who  subsequent  to  separation  from  the  service 

6  as  above  specified  has  been  appointed  or  inducted  into 

7  the  military  or  naval  forces  of  the  United  States  and 

8  has  been  or  is  again  separated  from  the  service  as  above 

9  specified,  only  one  payment  of  $60  shall  be  made. 

10  The   above   amount,   in   the   case   of   separation   from 

11  the  service  on  or  prior  to  the  passage  of  this  Act,  shall 

12  be  paid  as  soon  as  practicable  after  the  passage  of  this 

13  Act,   and    in    the   case   of   separation    from    the   service 

14  after  the  passage  of  this  Act  shall  be  paid  at  the  time 

15  of  such  separation. 

16  The  amounts  herein  provided  for  shall  be  paid  out  of 

17  the  appropriations  for  "Pay  of  the  Army"  and  "Pay  of 

18  the  Navy,"  respectively,  by  such  disbursing  officers  as 

19  may  be  designated  by   the   Secretary  of  War  and   the 
80  Secretary  of  the  Navy. 

21  The  Secretary  of  War  and  the  Secretary  of  the  Navy 

22  respectively   shall   make   all   regulations   necessary   for 
83  the  enforcement  of  the  provisions  of  this  section. 

84 
District  of  25      SECTION  1407.     That  the  provisions  of  section  5  of 

Columbia  26  the    Act    entitled    "An    Act    making    appropriations    for 

87  the  service  of  the  Post  OfCice  Department  for  the  fiscal 

88  year    ending    June    30,    1918,    and    for    other    purposes," 

89  approved  March  3,  1917,  relating  to  intoxicating  liquors 

30  in    interstate    commerce,    as    amended    by    section    1110 

31  of  an   Act  entitled   "An  Act  to  provide   revenue  to  de- 

32  fray  war  expenses,   and  for  other  purposes,"  approved 

33  October    3,    1917,    be,    and    the    same   are    hereby,    made 

34  applicable    to   the   District   of   Columbia. 
35 

Persons  Having  36      SECTION  1408.     That  ever/  person   who  on   or  after 
Contracts  37  April    6,    1917,    has    entered    Into    any    contract,    undw- 

with  38  taking,   or  agreement   with   the   United   States,    or  with 

Government  39  any  department,  bureau,  officer,  commission,  board, 
to  File  Copy  40  or  agency  under  the  United  States  or  acting  in  its  be- 
Upon  41  half,    or  with   any   other   person    having   contract   rela- 

Request  42  tions   with   the  United   States,   for  the   performance   of 

43  any  work  or  the  supplying  of  any  materials  or  prop- 

44  erty  for   the  use  of  or  for  the  account  of  the   United 

45  States,  shall,  within  thirty  days  after  a  request  of  the 

46  Commissioner   therefor,    file   with   the   Commissioner   a 

47  true  and   correct   copy  of  every   such   contract,   under- 

48  taking,  or  agreement. 

49  Whoever   fails   to   comply   with   such   request   of   the 

60  Commissioner    shall    be    guilty    of    a    misdemeanor    and 

61  shall  be  punished  by  a  fine  of  not  more  than  $1,000,  or 
68  by  imprisonment  for  not  more  than  one  year,  or  both. 

63  The   Commissioner   shall    (when   not  violative   of   the 

64  technical  military  or  naval  secrets  of  the  Government) 

65  have    access    to   all    information    and    data   relating    to 
60  any   such   contract,    undertaking,   or   agreement,   In   the 

67  possession,     control     or     custody    of    any    department, 

68  bureaii,    board,    agency,    officer    or    commission    of    the 

174 


United  States  and  may  call  upon  any  such  department,  1 
bureau,  board,  agency,  officer  or  commission  for  a  2 
full  statement  and  description  of  any  allowance  for  3 
amortization,  obsolescence,  depreciation  or  loss,  or  of  4 
any  valuation,  appraisal,  adjustment  or  final  settlement,  5 
made  in  pursuance  of  any  such  contract,  undertaking,  6 
or  agreement.  7 

8 

SECTION    1409.     That   unless   otherwise   herein    spe-    9 

cially  provided,  this  Act  shall  take  effect  on   the  day  10 

following   its   passage.  11 


175 


GENERAL  INDEX 


Index 
Page 

Individuals    3 

Corporations  25 

War  Profits  and  Excess  Profits  Tax 49 

Estate  Tax 55 

Transportation  and  Other  Facilities  and 
Insurance 57 

Treasury  Decisions 59 


Individuals. 


Reference   is   made   to   Paragraph  Numbers 
and  NOT  to  pages. 

Paragraph 
No. 
Abatement — 

Claims    for 287 

Liability   for   tax : 287 

Absence — 

Agent  may  make  return  for  taxpayer  in  case  of 243 

Accident — 

Reimbursement  for  expenses   incident   to :.     94' 

Accident   Insurance — 

Compensation  for  personal  injuries 86(6) 

Additional  Tax — 

Calculation   of — how   made 8-9 

Contingent  on  undistributed   profits 11 

Dividends  subject  to  additional  tax  only : 30 

On  individuals 7-S* 

Schedule   of   rates 7 

Stock   Dividends — 

Schedules  of  rates   for  previous  years   for   guidance 
in    allocating    tax    on    stock    dividends    and    for 

other  purposes See  page     1371 

Administrator — 

See   "Fiduciary." 

Advertising*    Expense 109 

Ag'ent — 

Acting  under  power  of  attorney 383,  423,  424 

Commissions — See   "Commissions." 

Of  taxpayer  to  make  return  when .'.......... * 243 

Alaska — 

Government  officers  and  employees  subject  to  tax 15,  15(a) 

Alien   (Resident) — 

See  "Resident  Alien." 
Aliens   (Non-resident) — 

See  "Non-resident  Aliens." 
Alimony — 

A   personal    expense,    not   deductible    and   not   income   to 

recipient    113 

Amortization — 

Bonds — Deduction  for  not  allowable 204 

Of  loss  on  buildings,   machinery  and  equipment  erected 

or  installed  for  war  purposes 197 

Annnity — 

Taxable  status  of  income  from 97 

Architect — 

Expense  for  services  of  a  capital  investment 124 

Army — 

See  also  "Army  Officers." 

Persons  in  service — Verification  of  returns 273 

Army  Officers — 

See    also    "Army." 

Expenditure  from   allowances 117 

Retired  pay  subject  to  tax 76(a) 

INDEX  PAGE  3: 


INDIVIDUALS— Continued. 

Paragraph 
No. 
Assessment  of  Tax — 

Five-year    limitation 277 

Assessments — 

On  securities 122,  173 

On  shareholder  of  irrigation  company 173 

Bad  Debts — 

Definition    of 178 

Amount  accepted  as  compromise 177 

Arising  from  unpaid  wages,  salaries,  rents,  etc 179 

Bankruptcy    180 

Default  on  installment  payments 45 

Due  and  charged  off  within  the  taxable  year 176 

Due  prior  to  March  1,  1913 182 

Foreclosure  sale  on  mortgage 181 

Income  if  collected 183 

Banks- 
Deposits: 

Of  foreign   governments — interest  on   exempt 86(5) 

Private  bank  partnership 370 

State  tax  on  capital  stock  paid  in  behalf  of  stockholder....     37 
Tax  to  be  wi-thheld  on  interest  paid  on  bank  deposits  to 

non-resident    alien 347 

Bank  Deposits — 
See  "Banks." 
Banker — 

Substitute  certificates  of  ownership  of  bonds 322 

Bankruptcy — 

Status  of  bad  debt  arising  from 180 

Beneficiary — 

Of  estate — To  make  return 261 

Time  of  receipt  of  income 17 

Bequest — 

See   "Legacy." 
Bills  of  Bzchang-e— 
See  also   "License." 

Collection  of,  license  required 354  to  361 

Bondholder — 

Rentals  paid  directly  to 31 

Bonds  (Securities) — 

Tax-free — Special     distinction,      for      income      tax     pur- 
poses,    between     bonds     which     contain     a     tax-free 
covenant   and   those   which   do   not.      Read   carefully 
309-310. 
Tax  Free — 

Status  of  interest  under  income  tax See  page  1375 

Amortization    of : .". 204 

Certificates  of  Ownership — 

See  "Certificates  of  Ownership." 

Certificates  of  ownership  to  be  filed 297 

County     Bonds — Exempt 314 

Coupon  Bonds — 

See  "Certificate  of  Ownership." 
Coupons  due  in  tax  year  but  not  collected  until  following 

year 17 

Coupons — Foreign — License     required     to     collect.       See 

"License." 
Depreciation   or  loss   written   off   at   direction   of   Comp- 
troller of  Currency 170 

District   Irrigation   Bonds — Losses   on 172 

INDEX  PAGE  4 


INDIVIDUALS— Continued. 

Paragraph 
No. 
Bonds    (Securities) — Continued. 
Exempt   Corporations — 

Owner  must  file  certificates  of  ownership 313 

Fidelity- 
Premium  on  allowable  deduction 137 

Foreign  corporation — 

How  treated  for  income  tax  purposes 321 

Foreign   Bonds — 

Collection     of     coupons     and     other     foreign     items 

requires   a   license 354 

Collection  of  tax  on 359 

License — Penalty  for  failure  to  obtain 354-361 

See  also  "License." 
Interest    from: — 

Bonds   purchased   between   interest   dates v..     48 

Municipal    Bonds — Exempt 315 

Municipality — Public  utility  acquired   by 316 

Notes — Promissory  note  of  corporation 311 

Public  Utility — Acquired  by  municipality 316 

Purchased    between    interest    dates 48 

Registered  Bonds — 

Retired  within   interest  period 319 

See  "Certificate  of  Ownership," 

Scrip  (dividend) — Not  obligation  similar  to  bonds M2 

State    Bonds — Exempt    314 

Status  of  bonds  under  income  tax... See  page     1375 

Status  of  interest  under  income  tax — See  page     1375 

Tax  Exempt — Income  from,  exempt 314 

War   Finance   Corporation — See    "War   Finance    Corpora- 
tion." 
Withholding    provisions    as    to    tax    on    interest    from— 
See  "Withholding  at  the  Source." 
Bonds — United  States — 

Information   at   the   source   not   required 350 

Income    from,    exempt 314 

Interest    from,    exempt 86(4),  90 

Liberty  Bonds — 

Dividends   paid    in 27 

Interest   on    indebtedness    incurred    to    purchase    not 

deductible,  when  146 

Taxable  status  of 89,  90 

No  certificates  of  ownership  required 314,  350 

Owners  of  must  make  statement  of  ownership 86(4) 

Status  of  bonds  under  income  tax Page     1375 

Brokers — 

To   make   return   of  profits  of  customers   when   required 

(see  page   86,   line   51) 352 

Bonus — 

Bonus  paid  in  common  stock 51 

Book    Values — 

Shrinkage   in   203,  205 

Building-  and  I^oan  Association — 

Income  from  shares — how  treated 50 

Businesses — 

Income  from  taxable 15,  15  (a) 

Business  Insurance — 

Premiums  paid  in  advance  on 118 

Campaign    Expense 121 


INDIVIDUALS— Continued. 

Paragraph 
No. 
Capital  Assets — 

Stock  dividend  declared  from  revaluation  of 99 

Certificates  of  Ownership- 
Use  of  in  connection  with  coupons  and  interest  orders, 

309(f)   to  309    (j) 
Bonds: 

Coupons: 

Substitute     certificates     to     bank    or     collecting 

a,gency   322,  339 

Registered  Bonds: 

Certificates    of    ownership    not    required    to    ac- 
company  orders    or    checks    in    payment    of 

interest    320,  329,  340 

Containing  tax-free   covenant — exemption  claimed.-309(h) 

Containing  tax-free  covenant 309(f) 

:  Containing  tax-free  covenant — exemption  waived....309(.1) 

Foreign   Corporation — How  treated 321 

Forms  to  be  filed 309(h),  309 (j) 

Identity  of  persons  presented  required  of 343 

Not  tax-free 309 ( j) 

Read  also   1[   298   and   299. 

Of  exempt  organizations — Certificates  to  be  filed 313 

Of    exempt    corporations 313 

Private  corporation  may  print  for  own  use 299 

Sinking   fund   and   similar   bonds   retired   within   in- 
terest period   319 

':  Tax-free  but  not  containing  a  tax-free  covenant.... 309 (j) 

State,  Government,  Municipal  and  similar  bonds: 

No  certificate  of  ownership  required 314,  350 

Corporations — Certificates  of 331 

Foreign  Partnership  composed  of  non-resident  aliens  and 

citizens  of  U.  S 333 

May  be  signed  by  duly  authorized  agents 330 

Non-resident   aliens — Certificates   of 332 

Registered    Bonds — Certificates    not    required    to    accom- 
pany   interest    orders 329 

Substitute  certificates  of  banks  and  collecting  agency......  322 

Checks- 
Foreign  checks — License  required  for  collection 354-361 

Christmas  Gifts — 
:         See  "Gifts." 
Citizenship — 

Ruling     on 4 

American  woman   marrying   foreigner 242 

Naturalized  citizens  residing  abroad 4 

.Pity- 
See  "Municipality." 

Warrants  of — Face  value  to  be  accounted  as  income     78 
Clerg-ymen — 

Voluntary  offerings,  fees,  etc 84 

Collection  Districts — 

Complete  list  with  names  and  addresses  of  collectors. 

See  page     1365 
Commis  sion  s — 

See  also  'Compensation,"  "Salary." 
Deduction: 

Paid  to  real  estate  agent 119 

Paid  to  salesmen 120 

INDEX  PAGE  6 


INDIVIDUALS— Continued. 

Paragraph 
No, 

Commissions — Continued. 
Income  from: 

On  renewal  premium  for  insurance..... — 52 

Retained  by  agent  on  his  own  life  insurance -     53 

Paid  for  purchase  and  sale  of  securities 125 

Receipt   basis 18 

Compen  sation — 

See  also   "Salary,"   "Commissions." 

For   personal    service _     15 

For  service  on  annual,  monthly  or  weekly  basis 54 

Not  paid  in  money 55,  68, 142 

Payer  must  make  return  of  information 350 

Stockholders  of  close  corporation 38 

Contract — 

Loss  through  payment  of  rebates 168 

Contributions — 

To    religious,    charitable,    scientific    or    educational    cor- 
porations      '.'. 212 

Copyrigfhts — 

Amount  expended  for  an  investment  of  capital 134 

County — 

See  also  "State  or  Political  Subdivision." 

Coupons — 

See  also  "Bonds." 

Due  in  tax  year  but  not  collected  until  following  year 17 

Credits — 

Individuals 104 

Partnerships    377 

Damagres — 

From   injuries 86(6) 

Death- 
Deceased  husband — specific  exemption 239 

"When  either  husband  or  wife  dies  during  year. 238 

Debts — 

See  "Bad  Debts." 

Deceased  Person — 
See  also   "Death." 

Executor  or  administrator  to  make  return 262 

Income  received  by  estate  of 46 

No  penalty  in  delay  in  payment  of  tax  for 418 

Penalties  enforcible  and  not  enforcible  against  estate  of..  269 
Personal  representative  to  make  return  in  case  of 420 

Deductions,  Exemptions  and  Credits  Allowed — 

See      "Credits,"      "Personal      Exemption,"      "Expenses,"^ 
"Taxes,"    "Losses,"    "Interest,"    "Depreciation." 

Deed   of   Trust 413 

Default  on  Installment  Payments 45 

Deposits — Bank — See  "Bank." 

Depreciation — 

Definition  188  to  196 

Depletion: 

Mines — See  "Mines," 

Oil  and  Gas  Wells — See  "Oil  and  Gas  Wells." 

Timber — See  "Timber." 

Dividends  paid  out  of  depreciation  reserve 28 

Estimated  life  of  buildings 186 

Fundamental  principles  to  be  observed 188  to  196 

Land — Depreciation  of  value  cannot  be  claimed 191,  209 

Livestock  purchased  for  breeding  purposes  only _  208 

INDEX  PAGE  7 


INDIVIDUALS— Continued. 

ParagraiA 
No. 
Depreciation — Continued. 
Obsolescence: 

Machinery — An    important    distinction 192 

Of  Assets — Book   values 203,  205 

Patents — How    treated 206 

Property : 

Building — Condemned    by    municipality 19ft 

Buildings — Estimated    life    of 185 

Buildings — Loss    due    to    voluntary    removal    or    de- 
struction  of 195 

Buildings,   machinery  and  equipment  erected   or   in- 
stalled for  war  purposes — amortization  of 197 

Farm  buildings,  machinery,  etc 208 

Land — Depreciation  of  value  cannot  be  claimed 191 

Real  estate  209, 19 

Valuation  fixed  by  cost 193 

Where  owner  has  claimed  full  cost  as  depreciation....  193 

Rate  at  which  depreciation  may  be  claimed 185,  186 

Repairs — Cost    of — how    treated 187 

Stage   costumes 207 

District   Irrig-ation   Bonds — Losses   on 172 

Dividends    19,  30 

Definition    IS 

Cash  dividends  20 

Declared  in  one  tax  year  and  paid  in  another 17 

Stock  Dividend: 

Court  decisions  on  taxable  status  of 21 

Definition    of   22 

Taxable  at  what  rates 24 

Value    of — How    computed 23 

To  be  included  in  return 10-19,  29 

Close    Corporation — Division    of    profits   by    stockholders 

considered    a    dividend 38 

Declared   from   special   surplus 9d 

Federal  Reserve  Bank — Dividends  on  stock  exempt 91 

Dividends  from  stock  of  member  banks  not  exempt....     98 
Foreign  corporation  which  derives  its  entire  income  from 

business   within   U.    S 295 

From  leased  line  or  stock  trust  certificates 32 

Non-resident  Alien — Tax  on  not  to  be  withheld 294 

Paid  on  life  insurance  policies  390 

Paid  with  securities 26 

Paid   in    Liberty   Bonds '. 27 

Paid  out  of  depreciation  reserve 28 

Paid   by   foreign   corporations..... ; 33 

From  earnings  wholly  within  United  States 34 

Received  by  record  owner  where  another  is  actual  owner     35 

Scrip  dividends 36,  312 

Stock  Dividends: 

Received    by    fiduciary 395 

Subject  to  additional  tax 30 

Taxable   status   of 80 

Taxes  paid  on  capital  stock  of  banks  taxable  to  stock- 
holder   as    dividends 37,  214 

District  of  Colombia — 

Income  derived  from  public  utility 86(7) 

Obligations  of — Interest  from  exempt &6(4) 

Drainasre^ 

Taxes  Issued  for  purposes  of 157, 158 

INDEX  PAGE  8 


XX^A^X  V  1.U  «J  n.Xj\3 V/UlitlllUCU. 

Paragraph 
No. 
Duties — 

See  "Customs  Duties," 
Excess  Profits  Tax — 

Amount  paid  as   not   deductible 148 

For  digest  of  law  and  regulations  relating  to,  see  Index 
Page   49. 
Executor — 

See  "Fiduciary." 
Exemption — 

See   "Personal  Exemption." 
Exempt  Org-anizations — 

Bonds  of — Certificates  of  ownership  to  be  filed 313 

Exempt  Securities — 
See  "Securities." 
Expense — 

Advertising    109 

Allowable  deductions  from  income  as 107  to  146 

Allowances  to  minor  children 116 

Architect's  services — A  capital  investment 124 

Army   officers 117 

Assessments   on    securities 122 

Campaign  expenses  121 

Commissions — See  "Comrnissions." 

Copyrights,    plates,    etc. — Amount    expended    for    invest- 
ment  of   capital — not   deductible   134 

Entertainment  (customers')  expense 127 

Fees — Earned  but   not   paid 132 

Expenses  in  earning  income  subject  to  tax  and  not  sub- 
ject to  tax 123,  126 

Farmer — See   "Farm." 

Farm  Expenses — See   "Farm." 

Gifts  or  contributions  to  religious,  charitable,   scientific 

or  educational  corporations 212 

Lobbying  expense   121 

Insurance: 

Business  insurance  premiums 118 

•Life  and  fire  insurance  premiums 138 

Merchant,   necessary 109 

Personal  Expenses: 

Alimony  a  personal  expense 113 

Not  allowable  deduction 112 

Physician 110 

Reimbursement  of  expense  incident  to  accident 94 

Rents — See    "Rentals." 

Special   compensation   to    employees 38,  144 

Titles  to   property — Cost  of  defending  a  capital   invest- 
ment    135 

Travelling  expenses — per  diem  allowances 73 

Estate- 
Expenses    of    administering 115 

Income  from  46 

Income   from   trust , 47 

Returns: 

Beneficiary   to   make 261 

Farm — 

Definition   of    57 

Deductions    59 

Compensation  of  employes 129 

Cost  of  farm'  machinery  and  tools 130 

INDEX  PAGE  9 


EHDIVIDUALS— Continued. 

Paragraph 
No. 
Vann — ^Dednctions — Continued. 

Cost  of  stock,  how  treated 128 

Crop  destroyed  by  storm,  flood  or  fire 128(c) 

Depreciation    of    farm    buildings,    machinery,    stock 

raised  for  breeding  purposes 208 

Expenses 59 

Expense — allowable  deduction  as 106,  108,  111,  112 

Loss    of    livestock 131 

Orchards   and   ranches 114 

Rehabilitation  or  restoration  of  farm 128(b) 

Repair  expense  on  rental  basis 130(a) 

Value  of  Land — depreciation  cannot  be  claimed 191 

Farm  for  recreation  or  pleasure 128(a) 

Parmer — Taxable   status  of 128(a) 

Income  from: 

Accounting  basis  61 

Accounting  methods  60,  61 

Crop  shares  59 

From   sale  of  livestock 131 

How   treated   56,  58 

Merchandise     exchanged     for     farm     products — how 

valued    63 

Price  placed  by  merchant  upon  goods  exchanged  for 

farm    produce 63 

Product  consumed  by  farmer  and  family 62 

Rents  received  as  crop  shares 59 

Rents  received  in  crop  shares 59 

Taxable  income  defined 58 

Value    of   product   not   taxable    until    converted    into 

cash 60 

Parxoer — 

See  "Farm." 
Farm  Products — 

See  "Farm." 
Pcderal  Farm  :Loan  Act — 

Securities  issued  under,  exempt 86(4),  92 

Ped«ral  Beserve  Bank — 

Dividends  from  capital  stock  of  exempt 91 

Dividends  from  stock  of  member  banks  not  exempt 91 

Pms— 

Earned  but  not  paid 132 

Pia-nciary — 

Definition 382 

Administrator,    ancillary 412 

Agent : 

Acting  under  power  of  attorney 383 

Acts  for  his  principal,  not  for  beneficiary  of  estate....  415 

Definition    424,  425 

Agent  acting  under  power  of  attorney 383 

Beneficiary — tax   liability    419 

Deed  of  trust 413 

Depreciation : 

Deduction  in  return  of 102,414,210 

Estates   and    trusts 388,  401 

Estates — during  period  of  administration 406 

Executors  and  administrators 391 

Expense: 

Estate — Expense  of  administering 115 

.         Of  administration  of  estates  not  deductible 410,115 

INDEX  PAGE  10 


INDIVIDUALS— Continued. 

Paragiapb 
No. 
Fiduciary — Continued. 

Guardians,  trustees,  executors  as  fiduciary  agents  to  file 

returns 425 

Income: 

From  vested  interest  taxable  to 16 

Held  for  future  distribution 396,  402 

Income    accumulated    for    unborn    or    unascertained 

persons    40 

Of  estate  of   deceased   person   during-   period   of 

administration     401 

Proceeds  of  life  insurance  policies 392 

Stock   dividends   395 

Insane  person  394,  407 

Minor    394 

Of  non-resident  alien — return  of 47f» 

Payment  of  Tax: 

Exector  or  administrator — liability  for 421,  422 

No  penalty  for  delay,  in  case  of  insane,  deceased  and 

insolvent    persons    418 

Personal  Exemption: 

Gardian — Allowance  for  each  ward  or  cestui  trust 

220,  417 

Trustee — Allowance  for  each  cestui   trust 22 Q 

Returns  of  information  at  the  source  required 431 

Returns     384,  385,  380 

Administrator  or   exector 41J 

Amended    return   not   required    when    found    subject 

to  further  tax 308 

Annual  return  to  show  what 416 

Beneficiary  right  to  inspection 41?> 

Beneficiary   to   make 261 

Deceased   person   262,  420 

Executors    and    administrators ,...  392 

Failure    to    file — guardian 263 

For   non-resident   alien   beneficiary 387 

Joint  fiduciaries  403 

Trustee    386 

What    to    include 408 

Tax: 

To  be  assessed  against  fiduciary  direct 399 

When  not  paid  by  fiduciary 400 

Trust   estates 398,  399,  405 

Two    estates    393 

Unborn   persons   390 

Withholding  at  the  source  by 404 

Estate 46 

Of  deceased  person 46 

Received  in  one  tax  year  and  paid  in  another 17 

Trustee: 

Income  from  estate  held  by 47 

Fiscal  Year — 
Individuals: 

Change  of: 

From  fiscal  to  calendar  year  247 

From  calendar  year  to  fiscal  year  248 

From  one  fiscal  year  to  another 249 

First  return  on  fiscal  year  basis 250 

INDEX  PAGE  11 


IMDIVIDUALS— Continued. 

raragraph 
No. 

PoreclOBure — 

Difference  between  purchase  price  and  debt  not  deduct- 
ible as  bad  debt 181 

Poreig-n  Coupons,  Checks,  Bills  of  Ezchangre 354,  361 

Pire  Insurcmce — 

Premiums    paid    on 138 

Poreig"!!  Governments — 

Income  from  investments  in  U.   S 86(5) 

Taxes   paid  to  deductible  from  total  amount  of  income 

tax    149(a) 

Gas  Wells — 

See  "Oil  and  Gas  Wells." 

Gift- 
See  also   "Bonus." 

Christmas  gifts  not  income 93 

Property  acquired  by 15,  15(d),  86(3) 

Sale  of  stock  acquired  by 75 

To      religious,      charitable,      scientific      and      educational 

corporations     212 

To    religious,    charitable,    scientific    or    educational    cor- 
porations by  individuals..... 212 

Guardian — 

See  "Fiduciary." 

Good  Will — 

Increase  or  decrease  in  value  not  allowed 174 

Hawaii — 

Government  officers  and  employes  subject  to  tax 15,  15  (a) 

Head  of  a  Pamily — 

Defined    219 

Dependents — allowance    for    217 

Personal    exemption    216 

Husband  and  Wife^ 

Living  apart   228 

Living   together   229 

Exemption    232 

Returns  of  227.  234 

Separate    estates    233 

Separate  returns,  when 231 

Separated   and   living   apart 230 

Single  or  married  status,  when  determined 241 

Taxable  status  226 

Wife — Income   from    special   articles    (magazine)    240 

Wife — separate  estate   managed  by  herself 235 

When  either  dies  during  year 238 

When  either  has  income  of  $1,000  or  over 236 

When  income  of  both  in  ercess  of  $2,000 237 

Wife — American    women    marrying    foreigner    takes    na- 
tionality of  husband — Cannot  claim  exemption 242 

Income — 

See  also  "Compensation,"  "Salary." 

Gross  Income — definition  15 

What  it  includes  15 

Inventory  to  determine,  when  necessary 175 

Net  Income: 

Definition    * 12 

How  computed   13,  14 

Allowance  for  expenses 73 

Bonus    80 

Exempt    from    tax 86 

INDEX  PAGE  12 


INDIVIDUALS-Continued. 

Paragraph 
No. 

Income — Continued. 

Fees   '.'. 8^ 

From  Life  Insurance — See  "Life  Insurance." 

From  sale  of  personal  property  on  instalment  plan 44,  45 

From  sale  of  property 43,  45 

From  sale  of  stock,  securities,  etc 72 

Interest — See   "Interest." 

Mileage -     69 

Payer   of   Income    to   another    must    make    return    of    in- 
formation       - 35*0 

Pensions    71 

Receipt    basis    ^ _ 18,  54 

Royalty     : 77 

Time    of    accrual 17 

Travelling   expenses 73 

Warrants  of  city  or  town 78 

Income  TaK — 

Additional  Tax — See  "Additional  Tax." 

Evasions  of  tax,  penalty 285 

Laws  of  other  countries 6 

Normal  Tax — See  "Normal  Tax." 

Not  deductible  from  taxable  income ...133,  14% 

Payment  of — "Payment  of  Tax." 
Payments  of — See  "Payment  of  Taxes." 

Who   and   what   taxable -  1-6 

Withholding    of    at    source — See    "Withholding    at    the 
Source." 

Inheritance — 

See    "Legacy." 

Information  at  the  Source — 

Broker.s — To   make  return  of  profits  of  customers  when 

required    (see   page   86,   line   51) 3512 

Dividends — Corporations    to    make    return    of    dividends 
paid  on  request  of  Commissioner    (see  page   86,   line 

41) 350(a) 

Individuals,    partnerships    and    corporations    required    to 

make  return  of  income  paid  to  another 350* 

Obligations  of  U.   S. — return  not   required 35,r9 

Where  person  receiving  payment  is  not  the  actual  owner 

of  income   345 

Illness — 

Agent  may  make  return  for  taxpayer  in  case  of 243 

Insane  Person  394^  418 

Insolvency — 

No  penalty  for  delay  in  payment  of  tax  for 418 

Installment  Payments — 

Income  from  sale  of  property  paid  by 44,  45 

Loss  from  default  of — how  computed   45 

Of  income  tax — See  "Payment  of  Tax."  ^: 

Insurance- 
Accident  Insurance — See  "Accident  Insurance." 
Business   Insurance — See   "Business   Insurance." 
Fire   Insurance — See   "Fire   Insurance." 
Health  Insurance — See  "Health  Insurance." 
Life   Insurance — See   "Life   Insurance.'^ 

Workmen's    Compensation     Insurance — See     "Workmen's 
Compensation  Insurance." 

Interest — 

Deductible    from    income 145 


INDIVIDUALS— Continued. 

Paragraph 
No. 
Interest — Continued. 

Income   from 15, 15  (a) 

Bonds — See  "Bonds,"  "Bonds — United  States." 

Obligations    of    State,    Territory,    County,    Municipality, 

etc 86(4) 

Return  of  information  at  source  required  of  payer 350 

Tax-free  Bonds — See  "Withholding  at  the  Source." 

Xnvestment  Certificates   310 

Inventories — 

Individual: 

To  be  taken  when  necessary  to  determine  income 175 

Dealer   in   securities 205 

Investment  Certificates — 

Status    of   32,  310 

Irrig'ation  District — 

See  also  "Irrigation  Corporations." 

Taxes  assessed  by I57 

Jndg-es — 

Of  Supreme  and  inferior  courts  subject  to  tax 15, 15(a) 

Knig-hts  of  Columbus — 

Contributions  to  212 

landlord —  - 

^         Permanent  improvements  made  by  tenant 42 

1         Taxes  paid  by  tenant 143 

lawyer — 

See   "Professional   Man,"    "Fees,"    "Physician." 
Ziease — 

Permanent  Improvements  made  under 42 

IJeased  Iiine  Certfiicates — 

Income  from  considered  to  be  dividends 32 

Legracy — 

Property  acquired  by i 16,  86(3) 

lessee  (Corporation) — 

Rentals  paid  directly  to  bondholder  or  stockholder 31 

Liberty  Bonds — 

See  "Bonds — United  States." 

License — 

Annual  list  return 358 

Application  for  355 

Branch   offices   — 35*6 

License  to  furnish  list 357(a) 

Licensee  to  keep  records 360 

Penalty  for  failure  to  obtain 356 

Required  for  collection  of  foreign  coupons,  checks,  bills 

of  exchange  354 

Life  Insurance- 
Amount  received  in  excess  of  premiums  taxable 64 

Business    insurance    premiums 118 

Dividends   from   policies 39,  65,  98 

Endowment    contract    97 

Endowments — Income  from  66 

Premiums    paid    on 138 

Premiums  paid  on  lives  of  officers  and  employes 372 

Proceeds  of  paid  on  death  of  Insured... 86(1) 

Proceeds  of  payable  to  estate  of  decedent 392 

Return  of  premiums  .....86(2) 


INDIVIDUALS— Continued.  , 

Pai 
No. 
Xdvestock — 

Cost  of — how  treated -  128 

Depreciation   in   value   of -  208 

Loss  of  through  death .' -  131 

Sales  of — Income   from —  131 

Xiving:  Quarters  Fnmished  in  Addition  to  Salary 55,68 

Uqnidation — 

Of   assets — how   valued _.     25 

laobbying*  EKpense  121 

Xiocal  Benefits — 

Defined    „  157 

Taxes  assessed  against  not  allowable  deductions 157, 158 

XK>sses — 

Individuals: 

Definition    * 163,168 

All    losses   deductible _  162 

Assessment   on   stock 173 

Bad  Debts — See  "Bad  Debts." 
Bankruptcy — See   "Bad  Debts." 

Default  on  installment  payments 44(4) 

Foreclosure — See  "Bad  Debts." 

Good     Will — Capable    neither    of    appreciation    nor 

depreciation   —  174 

Inventory: 

Losses  from  reduction  in  value  of „  166 

Not  to  be  confused  with  "depreciation" -  168 

Property: 

Loss  of  164 

Rebates: 

Losses  from  payment  of 166 

Mileagre— 

Amount  received  as,  how  treated ™     69 

Military  Forces — 

See  "Army." 
Mines — 

Depletion  and  depreciation  allowance  defined 198  to  202 

Minor  _  394 

Mortg-agre — 

Foreclosure — Difference  between  purchase  price  and  debt 

not  deductible  181 

Security — See  "Bonds." 
Municipality — 

See  also  "State  or  Political  Subdivision." 

Bonds  of — Certificates  of  ownership  not  required 315 

Bonds  of — Exempt  from  tax 315 

Bonds  of  Public  Utility  acquired  by „  816 

Bonds — Public    Utility    acquired    by — Income    from    not 

exempt    316 

Taxes   against   local   benefits — definition 158 

Warrants  of  city — ^Face  value  to  be  accounted  as  income    78 
Vatnral  Deposits — 

Depletion  allowance  defined 198  to  202 

Wavy — 

Verification  of  returns  of  persons  in  service 27S 

Von-resident  Aliens — 

Definition    432 

American   wife   of _  434 

Bonds  of — Tax  on   interest  to  be   withheld   and   paid  at 

source    318 


INDIVIDUALS— Continued. 

Paragraph 
No. 
Non-Resident  Aliens — Continued. 

Certificate  of  ownership  to  be  filed 333 

Deductions: 

Conditioned  on  filing  a  return 438,  454 

Contributions,    gifts    ■.  466 

Deductions  allowed  455 

Depreciation    46S ' 

Mines,  oil  and  gas  well  464,  467 

Expenses     456 

Interest  457 

Other  deductions 468,  469 

Losses 459,  460,  461 

Taxes 45« 

Fiduciary  of: 

To  render  return,  when 477 

Credits    470,  471 

Employed   by   domestic   corporation — Tax   on    salary   not 

subject  to  withholding 361 

Income: 

Compensation  for  services  rendered  abroad,  exempt..  439 

Dividends   .....442,  443 

Dividends: 

Foreign    corporations    444 

Record  owner  other  than  non-resident   alien   in- 
dividual  actual    owner,    and    is   non-resident 

alien 451 

Record  owner  non-resident  alien  corporation 452 

Record  owner  liable  for  tax 446 

Record  owner  to  mark  return  and  pay  tax 447 

Returns     of — Actual    owner    non-resident    alien 

corporation ,441? 

Actual     owner     a     non-resident    alien     indi- 
vidual       :44'P 

Actual  owner  non-resident  alien  partnership  450 

Exempt    income    47$ 

Income  subject  to  tax.. 437 

Royalties 440 

Salary,  rents  paid  to  by  domestic  corporations  or  res*     .: 

ident   individuals   : .,  480 

,  Sale    of    stocks 441 

Interest  on  bank  deposits — Tax  on  to  be  withheld 347 

Notes — Tax  on  interest  from  to  be  withheld 349 

Refund,  on  return 487 

Returns: 

Agents  or  representatives  to  make 472,  477,  478 

Conditions i.  438 

Dividends     i.  442 

Failure  to  file — Notice  to  be  sent  to  guardian 263 

Liability    to    make 473 

Return  in  behalf  of  by  commissioner 474 

Resident  Aliens — defined  for  tax  purposes ;43S 

Residence:  . 

Method   of   establishing   residence -  45j5 

Permanently  located  in  U  S.  but  with  domicile  out- 
side  U.   S m 

;  Temporary  residence  in  U.  S _.....i  433 

Stock — Certificate  to  disclose  ownership ^*  447 

Temporary  residence  in  U.   S „ :.  433 

Verification  of  return  required 271,  272 


INDIVIDUALS— Continued. 

Paragraph 
No. 
Non-Besident   Aliens — Continued. 

Withholding  provisions  of  law  as  applied  to  income, 

291(a),  291(b) 

Tax  on  dividends  exempt  from  withholding 294 

Withholding  tax  at  source  of  income 478 

When  all  tax  not  withheld 479 

Normal    Tax — 

How    calculated 8-9 

On  citizens  and  residents 1-2 

On  naturalized  citizens  residing  abroad 3 

On   non-resident   alien    individuals 1-3 

Upon    what    computed 12 

Notes — Promissory — 

See  'Promissory  Notes." 

Notes     311 

See  also  "Bonds." 
Oaths- 
Returns  to  be  made  under 271  to  273 

Obligfations  of  United  States — 
See    "Bonds — United    States." 

Of   State — See   "State   or   Political   Subdivision." 
Oil  and  Gas  Wells — 

Depletion  and  depreciation  allowed  as  deduction 198 

Orchards — 

See  "Farm." 
Partnerships — 

Credits  allowed  377 

Composed  of  non-resident  aliens  and  citizens  of  U.  S 333 

Deductions: 

Life    insurance    premiums    on    lives    of    officers    and 

employes — not  deductible   372 

Taxes  deductible  by  members  of 149(a) 

Fiscal    year    of 378 

Income  of  Member  of: 

How   computed   368,  376 

Identity  of  373 

Individual  profits  379 

Partnership  profits  to  be  included 369 

W^hen    accrued    371 

Limited   partnerships   40 

Members  of  liable  for  tax  in  individual  capacity 368 

Private   bank   partnerships 370 

Returns — of  information  of  all  payments  of  over  $1,000 

made  to  individuals,  fil'ms,  corporations 350 

Taxes: 

Foreign  taxes  — 146(a),  147  to  152 

Read  especially 149  to  153 

Paying*  Agfent-^ 

Bond   Interest — Corporations   may   appoint 335,  336 

Returns  of — See  "Withholding  at  Source." 
Payment  of  Tax — 

Abatement  of  taxes   (see  "Abatement) 287 

At  the  source — See  "Withholding  at  the  Source." 

Evasion   of   payment,   penalty 285 

Excess  payment  of  tax — how  treated 281 

Failure   to   pay ....:.....• 286 

Failure   to  Pay:  '. 

No  penalty  in  case  of  insane,  deceased  and  Insolvent 

persons ......-:....::......!..:  418 


INDIVIDUALS— Continued. 

Paragraph 
No. 

Payment  of  Tax — Continued. 

Instalment  payments  258 

Payment    optional    260 

Receipt  for  to  be  given  on  request 279 

Taxes  withheld  at  source 304 

When  extension  of  time  for  filing  return  is  granted 259 

Penalties — 

Death — Ad  valorem  penalties  to  be  enforced  regardless  of  269 

Death — Specific  penalties  unenforcible  in  case  of 269 

Evasion    of    tax 285 

False   returns    268,    284 

False  Return: 

F'raudulent  return — penalty  283 

Understatement  of  income 280,  284 

Failure  to  file  returns  ^ 267,  283 

Failure  to  pay  tax: 

None  in  case  of  insane,  deceased  or  Insolvent  persons  418 
Withholding  agent  for  divulging  information 307 

Pensions   71 

Personal  Exemption — 

Allowed  to  each  ward  or  cestui  trust 417 

Dependents — allowance    for   217 

Guardian 220 

Head  of  a  family 216 

Head  of  a  family — definition 219 

Husband   and   Wife — Taxable    status   of — See    "Husband 
and  Wife." 

Married    person    216 

Single    person 218 

Trustee     220 

Personal  Service  Corporations — 

Not  subject  to  tax  as  corporations 41 

To  make  returns  as  partnerships 41 

Philippine  Islands — 

Taxes  imposed  by — See   "Taxes." 

Obligations  of — Interest  on  exempt 86(4) 

Physician — 

Expense    deduction     110 

Plates    (Publishers) — 

Amount  expended  for  an  investment  of  capital 134 

Porto   Rico — 

Obligations  of — Interest  on  exempt 86(4) 

Taxes  imposed  by  authority  of — See  "Taxes." 

Power  of  Attorney — 

Fiduciary  relationship  cannot  be  created  thereby 424 

Premiums- 
Fidelity   bond   137 

Insurance — See  "Fire  Insurance,"  "Life  Insurance." 

Paid  on  life  Insurance  of  officers  or  employes 372 

Profession — 

See  also  "Fees,"  "Physician." 

Rent    Tor  residential  property 140 

Promissory  ITote  of  Corporation  311 

Property — 

See  also  "Real  Estate." 

Losses   in   connection   with — See   "Losses." 

Method  of  determining  value  of 45 

Income  from  sale  of 43-45 


INDIVIDUALS— Continued. 

Paragraph 
No. 
Property — Continued. 

Permanent    improvements    made    under    lease    or    rental 

contract    - *2 

Title  to — Cost  of  defending  a  capital  investment 135 

Private  Bank — 
See  "Bank." 
Profits — 

Undistributed,  tax  contingent  on 11 

President  of  United  States — 

Income  subject  to  tax 15(a) 

Promissory  Note  of  Corporation 311 

Public  TTtiUty— 

Bonds  of  acquired  by  municipality  not  exempt 316 

Income  from  accruing  to  State,  Territory,  political  sub- 
division and  District  of  Columbia..... 86(6) 

Ranches — 

See  "Farm." 

Seal  Estate — 

See  also   "Property." 

Depreciation    of — See    "Depreciation"    209 

Foreclosure  of  mortgage  on — See   "Bad  Debt." 
Installment    payment    on — See    "Installment    Payments." 
Permanent    improvements    made    under    lease    or    rental 
contract    42 

Rebates — 

Loss  from   payment  of  under  contract  166 

Red  Cross   (American) — 

Contributions    to    212 

Refund — of   tax   for    290(b) 

Reclamatior— 

Taxes  assessed  for  purposes  of 157 

Reimbursement— 

Of  expense  incident  to  accident 94 

Rentals — 

Amounts  expended  for  taxes  or  repairs  by  tenants....76,  143 
Paid   directly   to   bondholder   or   stockholder — Bad   debts 

arising    from    unpaid    179 

Permanent    improvements    made    under    lease    or    rental 

contract    42 

Room  and  board  furnished  employe  as  part  of  compen- 
sation      142 

Return  of  information  at  the  source  required  of  payer  350 

Residential    property    140,  141 

Sale  of  leasehold — deduction  139 

Taxes  paid  by  tenant  to  landlord  143 

Repairs — 

Cost  of — How  treated  in  computing  "depreciation" 187 

Reporting*  at  the  Source- 
See  "Information  at  the  Source." 

Residence — 

Rental    140,  141 

Resident  Alien — 

Defined   lor  tax  purposes 435 

Taxes  paid  or  accrued  to  a  foreign  country 153 

Taxes  paid  or  accrued  to  a  Possession  of  U.  S 153 

Returns — 

Collector  to  make  in  certa^  cases  264 


INDIVIDUALS— Continued. 

Paragraph 
No. 
Returns — Continued. 
Failure  to  File: 

"Reasonable  cause  of"  defined  278 

Refund  of  portions  of  amount  paid  as  penalties  for 

failure  to  file  for  year  1913 266 

2%   penalty — Disclosre  of  liability  to  file  prevents....  267 
Written    waiver    of    exemption    after    expiration    of 

time  limit  270 

False  Return: 

Defined    265 

Fraudulent  penalties   268,   284 

Extension    of    time — citizens    residing    abroad,    non- 
resident and  alien  corporations  276 

Extension  of  time  to  citizens  of  U.   S.,  non-resident 

individuals  abroad  '. 276 

Filing  of: 

Individual    having    no    legal    residence    or    place    of 

business  in  U.  S 253 

Where    filed    252 

Forms    of    , 243(a) 

•  Forms   of — What   to   contain    254 

Individual — 

Adjustment    of   tax    by    commissioner    256 

Agent   for    taxpayer — to    make    return,    when    243 

Amended  return  not  required  when  individual  found       ; 

subject   to    further    tax   255 

Dividends  to  be  included  in  245 

Fiscal  year  return  basis — See  "Fiscal  Year." 
Fiscal  year — See  "Fiscal  Year." 

Mailed   returns   244 

Non-resident  aliens — See  "Non-resident  Aliens." 
Period  to  be  covered  by  return  unless  changed  to  a 

fiscal    year    >. 246 

Who  shall   make,  when  made 243 

Verification  of: 

Understatement  of  Income: 

Penalty    5%    of   deficiency   plus   1%    250 

Oaths — Who  may  administer 272 

Persons  in  naval   or   military   service 7.  273 

To  be  verified  under  oath 271-273 

United   States   Bonds — Owners  to  make   statement  wltli 

return   86(4) 

Withholding  agents — See  "Withholding  at  the  Source." 

Royalty- 
Income    from    taxable    77 

Salary — 

Bad  debts  arising  from  unpaid  175 

Earned  in  one  year  and  not  paid  until  next  year 17,  bi^ 

Foreign  employe — Not  subject  to  withholding  at  source..  361 

Included    as    income 15 

Non-resident  alien  individual,  paid  by  resident  individual 

or  domestic  corporation,   exempt :  480 

Paid   after   death lOd 

Paid  by  organizations  exempt  from  tax :     82 

Payer  must  make  return  of  information 350 

Salary   and   bonus ^. :.....     79 

Salary  and  commissions  ^ 19 

Two  years'  salary  paid  conditionally  .,-,.... , .     85 


INDIVIDUALS— Continued. 

Paragraph 
No. 

Salvation  Army — 

Contributions    to    212 

Securities — 

Assessments   on   122 

Book  values — Shrinkage  in  203 

Commissions  paid  for  purchase  and  sale  of  125 

Dealers   in   203,  205 

Exempt  securities — Income  from,  how  treated  96 

Investment    certificates    310 

Investment    certificates    310 

Issued  by  War  Finance  Corporation,  exempt 12(b),  86(4) 

Issued   under   Federal  Farm   Loan  Act   86(4) 

Owned  by  foreign  governments  86(5) 

Leased  line  or  stock  trust  certificates — taxable  status....     32 

Promissory  note  of  corporation 311 

See  also   "Stocks,"   "Bonds,"   "Bonds — United   States." 
Value  reduced  at  direction  of  Comptroller  of  Currency....  170 

Sta£re  Costmnes — 

Depreciation    207 

State  or  Political  Subdivision — 

Bonds  of — Certificate  of  ownership  not  required 315 

Bonds    of — Interest    from    exempt 314 

Contractor  with — Status  of  70 

Expense  incurred  in  earning  income  not  allowable  deduc- 
tion       101 

Income  derived  from  public  utility  86(7) 

Obligations    of — Definition    88 

Obligations  of — Interest  from  exempt  85(4) 

Obligations  of — Interest  on  exempt  from  tax  86(4) 

Officer  or  employee  of — definition 70 

Political    subdivision — Definition    87 

Taxes  imposed  by — See  "Taxes." 

Warrants  issued  by  '.... 78 

Stock  Dividend — 

See   "Dividends." 

Schedules  of  rates  for  previous  years  for  guidance  in 
allocating  tax  on  stock  dividends  and  for  other 
purposes  See  page     1371 

Stockholder — 

Of    corporation    to    be    taxed    on    undistributed    profits — 

when    11 

Rentals  paid  by  lessee  directly  to 31 

Stock    (Securities) — 

Bonus   in   common   stock 51 

Dividends  on — See  "Dividends." 

Profit  from  sale  of — how  treated 72 

Profit  from  sale  of  lots  purchased  at  different  times 72 

Profit  from  sale  of  stock  acquired  by  gift 75 

"Rights"    '(subscription)    income   from 74 

Stock  Trust  Certificates — 

Income  from  considered  as  dividends 32 

Tariff- 
See  "Customs  Duties." 

Taxes — 

Against    Local    Benefits: 

Local   Benefits   defined 157, 158 

Not  Allowable  Deduction — 
Law,  page  62,  line  48. 

INDEX  PAGE  21 


INDIVIDUALS— Continued. 

Paragraph 
No. 
Taxes — Continued. 

As  Expense  or  Deduction: 

Paid  by  tenant  as  part  of  rent 76 

Customs  duties  are  part  of  cost  of  goods 155 

Deductible   from   income 147 

By    beneficiary    of   an    estate    149(a) 

By  member  of  a  partnership  149(a) 

Porto     Rico     and    Philippine     Islands — Imposed     by 

authority  of  149 

State,  county  and  municipal  taxes 150 

United  States — Imposed  by  authority  of 149 

Deductible  as  Rental: 

Paid  by  tenant  to  landlord 143 

Deductible  from  Total  Amount  of  Tax: 

Income,  war  profits  and  excess-profits  taxes  imposed 

by  U.   S.   Possessions  and  foreign  countries 149 

Foreign  Taxes 146(a),  149  to  152 

Foreign  taxes — (paid  to  foreign  countries) 149(b) 

Imposed    by    United    States    Gov't — Read    H16(a)     and 
Us  147  to  152. 

Income  taxes  not  deductible 133 

Local    benefits — Taxes    against    not    deductible 150,  157 

Not  Deductible  from  Income: 

Imposed  by  Philippine  Islands,  Porto  Rico 149 

Income,    war-profits    and    excess-profits    taxes 14 

Paid  in  behalf  of  stockholder  by  bank  on  capital  stock 

allowable    deduction    37,  214 

Paid   to   foreign   country   deductible   from    total   amount 

of  income  tax 149(b) 

Philippine    Islands: 

Taxes  imposed  by 146(a),   149  to  152 

State  or  Political  Sub-division: 

Taxes  imposed  by 150 

U.     S.     Gov't — Taxes    imposed    by — Read     tI146(a)     and 
Us  147   to  152. 
Tax— free  Covenant — 

See  "Bonds." 
Tenant — 

Permanent  improvement  made  by 42 

Repairs  made  by,  as  part  of  rent 76 

Taxes  paid  by  as  part  of  rent..... 76, 143 

Territory — 

Interest  from  obligations  of 86(d). 

Timber — 

Depreciation  and  depletion  allowed 198  to  202 

Loss  by  fire  of  standing  timber 165 

Town — 

See    "Municipality." 
Treasury  Decisions — 

Promulgated  under  Acts  of  1916  and   1917   for  guidance 
of  those  who  are  required  to  make  amended  returns 
for  those  years.     (See  Index  to  Treasury  Decisions.) 
Trustee — 

See  Fiduciary. 
Treasury   Decisions — 

Effective  date   of 38t 

Trust   Companies — 
See  "Banks," 

INDEX  PAGE  22 


INDIVIDUALS— Continued. 

Paragraph 
No. 
Undistributed  Profits — 

See  "Profits." 
U.  S.  Government — 

Bonds  of — See  "Bonds — United  States." 
Government  officers  and  employes: 

Compensation  not  paid  in  money 95 

Taxable   status   of   income 95 

Liberty  Bonds — See  "Bonds — United  States." 

Officers  of — Income  subject  to  tax 15,  15(a) 

President  of — See   '-President  of  United   States." 
Securities    issued     by    War     Finance     Corporation — See 
"Securities." 

Taxes  deductible  from  income 149 

Taxes  imposed  by  authority  of — See  "Taxes." 
Vocations — 

Income  from  taxable 15, 15(a) 

Wagres — 

See  "Salary." 
War  Finance   Corporation — 

Securities   issued   by,    exempt 86(4),  12(b) 

War-Profits  Tax — 

Amount  paid  as  not  deductible 149,  150 

Warrants  of  City  or  Town 78 

Wife- 
Taxable  status — See  "Husband  and  Wife." 
Withholdingf  at  the  Source — 

Bond — Certificates    of    ownership — See     "Certificates    of 

Ownership." 
Bond   Interest — Tax  on: 

Amount  of  tax  to  be  withheld 308 

Bonds  containing  tax-free  covenant 309 

Bonds   without   tax-free    covenant — Payment   cannot 

be  made)  at  source 309(e) 

Citizen     or     Resident — May     file    certificate     of     ex- 
emption    309(a) 

Exempt  organization — Certificates  to  be  filed —  313 

No  withholding  when  individual  exemption  claimed. 309 (b 
Of    2%    to    be   deducted    from    income    of   citizen    or 

resident  or  non-resident  alien   individual 309 

Owners   not   known   to   withholding   agent — Commis- 
sioner may  authorize  deduction 309 

Tax-free    Bonds — Important    distinction    for    income 

tax    purposes 309(f) 

Tax-free    bonds — issued    with    and    without    tax-free 

covenant — Important     distinction 309(e),  309(f) 

Varying   policy   of   corporations 309 

Tax-free  bonds  only 308,  309 

Tax-free     covenant — Contract     between     corporation 

and  bondholder 309(c) 

Tax  withheld  only  a  partial  tax 309(d) 

Exempt  organizations  subject  to  provisions  of  lav/ 293 

Fiduciaries     404 

Foreign    corporations 291(b) 

Non-resident  alien  individuals 291  (a) 

Non-resident    alien — Tax   on    dividends    not    to    be    with- 
held        294 

Non-resident  Alien : 

Interest  from  bank  deposits — Tax   on 347 

Interest   from   notes 348,  349 

INDEX  PAGE  23 


INDIVIDUALS— Continued. 

Paragraph 
No. 
Withholdinsf  at  the  Source — Continued. 

Payment  of  tax  withheld 304 

Provisions   of   the   act,   as   applied   to   citizens,   residents 

and  non-resident  aliens 291 

Also  see  Law,  page  69,  lines  27-48. 
Returns: 

Of  information  at  the   source.      See   "Information  at 
the  Source." 
Withholding  Agent: 

Annual    return    of 305 

Bond    interest — Non-resident    aliens 312 

Corporation  may  appoint  paying  agent 335,  335 

Defined     317,292 

Monthly   Return  of , 306 

Non-resident  aliens  318 

Paying    agents    317 

Payments  of  tax  withheld 304 

Penalty   for   divulging   information 306 

Returns  of: 

Annual  return  305,  344 

Monthly     list 304,  306,  344 

Monthly  List — Duplicates  to  be  filed 338 

Monthly   list— Where   filed 337,   344 

Penalty  for  divulging  information.. 307 

Salary  of  foreign  employe  exempt 361 

Withholding-  Ag-ent — 

See   "Withholding   at   the   Source." 
Workmen's   Compensation  Insurance — 

Compensation  for  personal  injuries  86(6) 

Voung'  Men's  Christian  Association — 

Contributions  to 212 


INDEX  PAGE  24 


Corporations. 


Reference   is   made   to  Paragraph.  Numbers 
and  NOT  to  pases. 

Paragraph 
No. 

Assessments — 

Additional     779 

Acconntingr — 

See  "Bookkeeping." 

Additions  and  Betterments — 

Not    deductible    593 

Siding  or  spur  traclvs  605a 

Affiliated  Corporations — 

Consolidated    returns    by    specific    exemptions    allowable 

— definition  of  711 

Agricnltural  Orgranizations — 

See  "Exempt  Corporations." 

Amortization — 

Buildings,  etc.,  constructed  for  war  purposes  651 

Bonds     201 

Bonds,   discount   and   expense   663 

Assessments — 

Additional     779 

Assets — 

Carrying   charges   577,  594 

See  "Capital  Assets." 

Associations — 

Definition  of  490,  491 

Limited    partnerships    495 

Private  banks  497 

Bad   Debts — 

Arising    from   unpaid   wages   638 

Doubtful     accounts     636 

Loss  must  be  definite   637 

Recovered     639 

When  determined  635 

Bankruptcy — 

Bad  debts  charged  off  180 

Banks — 

Bank   stock   taxes    687 

Gross    income    of    550-720 

Interest  paid  on  deposits  or  investment  611 

Banks  and  Other  Financial  Institutions — 

Gross  income  defined  as  taxable  720 

Boards  of  Trade — 

See  "Exempt  Corporations." 
Bonds    (Securities) — 

Tax-free    684 

Discount  and  expense  to  be  amortized 663 

Discount    on,    not    deductible    662 

•  Tax-free — Special      distinction,     for     income      tax     pur- 
poses    between     bonds     which     contain     a     tax-free 
covenant   and   those   which   do   not.      Read   carefully 
309-310. 
Tax-free    Covenant — See 309 


CORPORATIONS— Continued. 

Paragraph 
No. 
Bonds   (Securities) — Continued. 
Tax  Free — 

Status  of  ihterest  from  under  income  tax — See  page....l375 

Amortization    of 204 

Certificates  of  Ownership — 

See  "Certificates  of  Ownership." 

Certificates  of  ownership   to  be  filed 297 

County  Bonds — Exempt  314 

Coupon   Bonds — 

See   "Certificates  of  Ownership." 
Coupons  due  in  tax  year  but  not  collected  until  following 

year    17 

Coupons — Foreign — License     required     to     collect.       See 

"License." 
Depreciation   or   loss   written   off   at   direction   of   Comp- 
troller of  Currency 170 

District   Irrigation    Bonds — Losses    on... 172 

Exempt   Corporations — 

Owner  must  file  certificates  of  ownership 313 

Fidelity — 

Premium    on    allowable    deduction .^ 137 

Foreign   Corporation — 

How  treated  for  income  tax  purposes 321 

Foreign  Bonds — 

Collection     of     coupons     and     other     foreign     items 

requires    a    license 354 

License — Penalty  for  failure  to  obtain 354 

See  also   "License." 
Interest  from — 

Bonds   purchased   between   interest   dates 49 

Municipal   Bonds — Exempt   315 

Municipality — Public   utility   acquired   by 31$ 

Notes — Promissory   note   of   corporation _...  311 

Public   Utility — Acquired   by   municipality 316 

Purchased  between  interest  dates 48 

Registered    Bonds — 

Retired   within   interest   period 319 

See    "Certificate   of   Ownership." 

Scrip    (dividend) — Not  obligation  similar  to  bonds 312 

State    Bonds — Exempt 314 

Status  of  bonds  under  income  tax See  page     1375 

Tax  Exempt — Income  from,  exempt 314 

State    Bonds — Exempt 314 

War   Finance   Corporation — See   "War   Finance   Corpora- 
tion." 
Withholding    provisions    as    to    tax    on    interest    from — 

See    "Withholding    at    the    Source." 
Bonds — United   States — 

Information  at  the  source  not  required 315 

Interest    from    exempt 86(4),  90 

Liberty  Bonds — 

Dividends   paid    in 27 

Interest   on    indebtedness    incurred    to    purchase    not 

deductible,    when    146 

Taxable   status   of 89,  90 

No  certificate  of  ownership  required 314,  315 

Owners  of  must  make  statement  of  ownership 86(4) 

Income  from,  exempt 314 


CORPORATIONS— Continued. 

Pi 
No. 
Bonuses —  _ 

Bonus  paid  in  common  stock 51 

Special  payments  614 

Taxable   status   of , 80 

Books — 

Examination    of 778 

Bookkeeping* — 

No    particular   system   -  774 

Book  Values — 

Shrinkage   in 203,205 

Brokerage — 

Interest  received  by 585 

Building:  and  Zioan  Association — 

Income  from  shares — ^how  treated :. 50 

Without    capital    stock,    operated    for    mutual    purposes, 

without  profit  .— 527 

Business  Zieag-ues — 

See  "Exempt  Corporations." 
Capitalization — 

Capital  Stock — 

Delinition     of 543 

Donations   545 

Of  lessor  companies— not.  to  be  included   by   lessee 

companies .— .  515 

Paid-up    — 542 

Received  by  a  corporation  544 

Capital  Assets — 

Drawings,  Models,  Etc. — 

Expenditure  for 667 

Value  of — 

When  exchanged  for  capital  stock  576 

When   sold   to   other   corporation   578 

When  sold  by  subsidiary  to.  parent  company 579 

Capital  Stock — 

See  "Premium  and  Discount." 
Certificates   of   Ownership — 

Use  of  in  connection  with  coupons  and  interest  orders, 

309(f)  to  309(j) 

Banks  and  trust  companies — Execution  of 343 

Bonds: 

Coupons- 
Substitute    certificates    to    bank    or    collecting 

agency   , 322,  339 

,,        Registered    Bonds: 

Certificates   of   ownership   not   required   to   ac- 
company orders  or  checks  in  payment  of 

interest 320,  329,  340 

Containing  tax-free  covenant 309  (f ) 

Containing  tax-free  covenant — exemption  claimed..309(h) 
Containing  tax-free  covenant — exemption  waived.. ..3 09 (j) 

Foreign   Corporation — How   treated - 321 

Forms  to  be  filed 309(h),  309  (j) 

Identity  of  persons  i)resented  required  of 343 

Not  tax-free 300 (j) 

Read   also   t|298   and   299. 

Of  exempt  organizations — Certificates  to  be  filed 313 

Private  corporation  may  print  for  own  use 299 

Sinking   fund   and   similar   bonds   retired   within    in- 
terest  period   , 319 


CORPORATIONS— Continued. 

Paragraph 
No. 
Certificate  of  Ownership— Continued. 

State,  Government,  Municipal  and  similar  bonds: 

No  certificates  of  ownersiiip  required 314,  315 

Tax-free  but  not  containing  a  tax-free  covenant 309 (j) 

Corporations — Certificates  of  33i 

Foreign  Partnership  composed  of  non-resident  alien  cor- 
porations and   citizens   of  U.   S 333 

May  be  signed  by  duly  authorized  agents 330 

Non-resident   alien    corporations — Certificates   of 332 

Registered    Bonds — Certificates    not    required    to    accom- 
pany   interest    orders 32d 

Substitute  certificates  of  banks  and  collecting  agency 322 

Chambers  of  Conuuerce-— 

See  "Exempt  Corporations." 

Charitable   Organizations — 

See  "Exempt  Corporations." 
Checks — 

Uncertified — 

Liability  for  payment  of  763 

Cemetery  Companies — 

See  "Exempt  Corporations," 
Citizens  of  17.  S. — 

Possessions    773 

City- 
See   "Municipality." 

Warrants  of — Face  value  to  be  accounted  as  income..     78 
Civic  Zieagnes — 

See  "Exempt  Corporations." 
Close  Corporations — 

Compensation    of    officers    38 

Liable  to  tax  502 

Clnbs — Pleasure  or  Recreation — 

See  "Exempt  Corporations." 
Collection  Districts — 

Complete  list  with  names  and  addresses  of  collectors. 

See  page     1365 
Compensation — 

Of  individuals  composing  company  with  two  stockholders  561 
Commissions — 
Deduction: 

Paid  to  real  estate  agent 119 

Paid  to  salesmen 120 

Common-Iiaw  Partnerships — 

Not    associations    496 

Contracting-  Companies- 
Income — see     "Corporations"     503 

Co-operative  Associations — 

See   "Definitions." 
Co-operative  Dairy — 
See   "Definitions." 
Copyrights — 

■  Amount  expended  for  an  investment  of  capital 134 

Corporations — 

Definition    of    490 

Dividends — 

Return  of  dividends  paid  when  required  by  Commis- 
sioner (See  page  86,  line  41)  351 

Affiliated   711 

As  withholding  agent  334 


CORPORATIONS— Continued. 

Paragrapn 
No. 
Corporations — Continued. 

Banks  and  other  financial  institutions  720 

Bonds — shrinkage   in   value   of   ...i.. 172 

Capitalization — 

See  "Capitalization." 

Change  of  name  of  518 

Close  Corporation — 

Division    of    profits    considered    to    be    dividends    to 

stockholders     3$ 

Contracting  Companies — 

Income    of    503 

Dissolved    494 

Domestic     711 

Domestic,  doing  business  in  foreign  country  must  make 

return    504 

Exempt — 

See  "Exempt  Corporations." 

Foreign    691 

Foreign,  with  office  in  United  States — 

Designate    principal    office    516 

Incomplete     493 

Information  Returns — 

Of  all  payments  over  $1,000  made  to  another  corpora- 
tion, firm  or  individual 350 

Irrigation — 

Assessments  on  stock  of  173 

Manufacturing    721 

Mercantile    722 

Miscellaneous — income   defined    555 

New — 

Fiscal  year  returns  517 

New — 

Fiscal  year — returns  of  744 

Notes  of — 

Promissary  notes  311 

Operating  corporation  controlled  by  stock  ownership  556 

Organized — 

During    year    make    returins    519 

Personal  Service — 

Definition    541(a) 

Payment  agent — corporation  may  appoint  335 

Personal  Service  Corporations — 

See  "Personal  Service  Corporations." 
Philippine  and  Porto  Rican  corporations  — 

Tax     on     492 

Premiums   paid   on    lives   o   officers   not   expense 616 

Promissary  Note  of — 

Taxable   status   311 

Property  taken  over  in  exchange  for  stock  571 

Receivers,  trustees  or  assignees  to  make  return  728 

Returns  of — 

Mutual    telephone    501 

Mutual    insurance    501 

Consolidated    711 

Close    corporations    502 

Sinking   fund   investments   56  4 

Sinking  fund  reserve  563 

Tax    on    488 

INDEX  PAGE  29 


CORPORATIONS— Continued. 

Paragraph 
No. 
Corporations — Continued. 
Treasury  stock — 

When   taxable 566 

Voluntary  payments  by  stockholders 566 

County — 

See  also   "State  or  Political   Subdivision." 
Conpons — 

See    also    "Bonds." 

Due  in  tax  year  but  not  collected  until  following  year....     17 

Exchange   of — 

For  funding   purposes , 568 

Credits — 

Allowed  as  deduction  ,., ..., -  548 

Example   of 690 

Excess-profits    tax 686 

Cnstom  Duties — 

Deductible  as  expense  688 

Dairy — Co-operative — See    "Definitions." 
Debts — 

See    "Bad   Debts." 
Deductions — 

Allowable --  586 

Bad  Debts — 

See  "Bad  Debts." 
Dividends — 

See    "Dividends." 
Dividends — 

See  "Dividends." 
Expenses — 

See  "Expenses." 

For  depreciation 72S 

For  general  expenses ;. -  724 

Bad  debts :.  725 

For  interest  on  indebtedness 727 

For  Losses: 

Insurance  Companies — 

See  "Insurance  Companies." 
Interest — 

See  "Interest." 
Losses — 

See  "Losses." 

Operation  and  maintenance  588 

Rent — 

See  "Rent." 
Taxes — 

See  "Taxes." 

Deed    of    Trust 418 

Default  on  Installment  Payments 48 

Definitions — 

Associations    490,  491 

Clubs,   exemption  538 

Co-operative   associations   537 

Co-operative    dairy 536 

Corporations    : 496 

Insurance  companies  490 

Joint-stock    companies    : •. 490,  491 

Paid    596 

Paid  or  accrued  and  paid  and  Incurred  596 

Society  or  association  exemption  _ 683 

INDEX  PAGE  30 


CORPORATIONS— Continued. 

Paragraph 
No. 

Definitions — Continued. 

Social  clubs,  exemption 1 534 

Taxable  year 489 

Taxable  period 489 

Depletion — 

Mines,  oil  and  gas  wells  632,  676,  677 

Depreciation — 

Deductions  for  726 

Allowance  for  property  646 

Assets  subject  to  wear  and  tear 650 

Cost  of  buildings,  not  allowed 618 

Diversion  of  funds 653 

Estimated    value,    when 652 

Improvements    675 

Life  of  buildings 649 

In  excess  of  cost  655 

Mines,  oil  and  gas  wells 63S 

Must  be  charged  ofC  657 

Patents    666 

Rate  for  computing 648 

Reserve 654 

Reserve    654,  656 

Securities 660 

Shrinkage  in  book  values 658 

Stocks  and  bonds 659 

Disclosure  of  Information  in  Return — 

Penalty 771 

Discount — 

On  bonds  not  deductible  , 662 

Sale  of  capital  stock  583 

Dissolved  Corporations — 

Liability    for    tax    494 

District   Irrigation   Bonds — Losses   on 172 

District  of  Columbia — 

Income  derived  from  public  utility 86(7) 

Obligations  of — Interest  from  exempt  86(4) 

Dividends — 

Definition 19 

Cash  dividends 20 

Close    Corporation — Division    of    profits    by    stockholders 

considered  a  dividend  38 

Declared  from  special   surplus   99 

Declared  in  one  tax  year  and  paid  in  another 17 

Deductions  from  gross  income  598 

Deductible    645 

Earnings    or    dividends    from    subsidiary    companies    not 

deductible  by  parent  or  holding  company  560 

Federal  Reserve  Bank — Dividends  on  stock  exempt.... 91 

Dividends  from  stock  of  member  banks  not  exempt..     92 
Foreign  corporation  which  derives  its  entire  income  from 

business   within   U.    S 295 

From  leased  line  or  stock  trust  certificates 32 

Non-resident  Alien  Corporation — Tax  on  not  to  be  with- 
held      : 294 

Paid  with  securities  26 

Paid   in   Liberty   Bonds   27 

Paid  out  of  depreciation  reserve  28 

Paid  by  foreign  corporations  83 

From  earnings  wholly  within  United  States S4 

INDEX  PAGE  31 


CORPORATIONS— Continued. 

Paragrapl) 
Dividends — Continued.  No. 

Private    banks    498,  499 

Received  by  record  owner  where  another  is  actual  owner     35 

Return  of  ., 753 

Scrip  dividends   36,  312 

Stock  Dividends: 

Court  decisions  on  taxable  status  of 21 

Definition    of 22 

Received   by   fiduciary    395 

Taxable   at   what   rates 24 

Value  of — How  computed 23 

Subject   to   additional    tax    30 

Taxes  paid  on  capital  stock  of  banks  taxable   to   stock- 
holder as  dividends   37,  214 

Domestic  Buildingr  and  I^oan  Associations — 

See  "Exempt  Corporations." 
Domestic  Corporations — 

Indebtedness   of   719 

Instructions  re  making  returns  of  annual  net  income  ....  716 

Returns  on  stock  owned  in  foreign  corporation  711 

What  constitutes  capital  stock  in  making  return  718 

Donations — 

See  "Expenses" 

Not   deductible    628 

"When  donations  are  deductible." 
Drainag^e— 

Taxes  issued  for  purposes  of  157,  158 

Drawing's,  Models,  Etc. — 
See  "Losses." 
See  "Capital  Assets." 

Obsolescence    669 

Duties- 
See   "Customs  Duties."  >, 
Edncational  Organizations — 

See  "Exempt  Corporations." 

ISzamination    of    Books    778 

Dzcess  Profits  Tax — 

Amount   paid  as   not  deductible 148 

For  digest  of  law  and  regulations  relating  to,  see  Index 
page. 
Sxempt  Corporation — 

Income  from  bonds  of  313 

Exempt  Organizations — 

Bonds  of — Certificates   of  ownership   to   be   filed 313 

Conditional     520 

Unconditional — 

Boards  of  Trade 522 

Business   League   522 

Cemetery  companies 522,  535 

Charitable    organizations    522 

Chambers   of   Commerce    522 

Civic    Leagues    522 

Clubs — Pleasure  or  Recreation  622 

Domestic  building  and  loan  associations  522,  527 

Educational    organizations    « 522 

Farmers',  Fruit  Growers'  or  like  associations — mar- 
keting on  mutual  basis  522,  535a 

Farmers'  or  other  mutual  insurance  company 522 

Mutual  ditch  or  irrigation  522 

Mutual   or   co-operative   telephone 522 

INDEX  PAGE  32 


CORPORATIONS— Continued. 

Paragraph 
No. 
Exempt  Org-anizations — Continued. 

Federal    land    banks   <... 522 

Fraternal  beneficiary  societies  522 

Holding    companies — title    to    property 522 

Humane  organizations  522 

Labor  agricultural  or  horticultural  organizations..522-526 

Mutual  savings  banks  522 

Personal  service  corporations,  conditional  522 

Qualifications    for    528 

Religious  organizations  522 

Scientific   organizations   522 

See  "Exempt  Organizations." 
Exempt    Org-anizations 
Bonds  of — 

Certificates  of  ownership  to  be  filed  297 

Salaries  paid  by  subject  to  tax  82 

Withholding  of  tax  at   source   293,   291,  346 

Exempt  Securities — 
See  "Securities." 
Exemption — 

See  "Credits." 
Clubs- 
See  "Definitions." 
Doubtful — 

Organizations   to   make   return   528 

Established  530,  531 

Social  Clubs — 

See  "Definitions." 
Society  and  Association — 
See  "Definitions." 
Expenses — 

Advertising    109 

Allowable  deductions  for  587 

Architect's  services — ^A  capital  investment  12i 

Assessments  on  securities  122 

Bonuses  or  additional  compensation  614 

Campaign    expenses    121 

Charges  against  current  earnings  597 

Commissions — see  "Commissions." 

Commissions  paid  salesmen  621 

Compensation  paid  in  stock 62? 

Company  composed  of  two  stockholders  561 

Copyrights,    plates,    etc. — Amoimt    expended    for    invest- 
ment of  capital — not  deductible  134 

Cost  of  improvements  592 

Cost  of  material  .' 589 

Customs  duties  deductible  688 

Deductions  for  general  expenses  724 

Depositors'  guarantee  fund  : 591 

Donations  deductible,  under  certain  conditions  627 

Earnings — Public   Utility    602 

Entertainment    (customers')    expense   127 

Incidental   repairs   590 

Import  or  tarifC  duties  689 

Insurance: 

Business   insurance    premiums   118 

Fire    insurance    premiums    138 

Lobbying    expenses    121,  601 

INDEX  PAGE  33 


CORPORATIONS— Continued. 

Paragraph 
No. 
Expenses — Continued. 

Maintenance    : 608 

Merchant    109 

Operation    and    maintenance    588 

Operation    and    maintenance    613 

Payment  for  labor  and  material  609 

Pensions  paid  employes,   deductible   624 

Rents — See  "Rentals." 

Salaries  paid  officers  and  employes  595 

Salary  drawn   from  own   business 38,  145 

Special    compensation    626 

Special   compensation   to   employees    18,  144 

Spending     money     600 

Sale  of  capital  stock  603 

Taxes — see  "Taxes." 

Tenant  corporations  604 

Titles  to  property — Cost  of  defending  a  capital  invest- 
ment      135 

Traveling  expenses — per  diem  allowances  , 73 

liztension — 

Collectors  may  grant,  in  case  of  sickness  or  absence 509 

Commissioner   may   grant   for   good   reason 510 

Farmers'  and  Pmit  Growers'  Associations — 

See  "Exempt  Corporations." 
Parmers'  or  Other  Mutnal  Insurance  Companies — 
Federal  Farm  I^oan  Act — 

Securities  issued  under,  exempt  86(4),  92 

See  "Exempt  Corporations." 
Federal  Iiand  Banks — 
Federal  Reserve  Bank — 

Dividends  from  capital   stock  of  exempt   91 

Dividends  from  stock  of  member  banks  not  exempt 91 

See  "Exempt  Corporations." 
Fiscal  Year — 

Amended  instruction  for  guidance  in  determining  746 

Collectors  must  make  designation  of  , 747 

Computation    basis    745 

Corporation — 

Computation  of  tax 547 

Of  New  Corporations — 

Returns  of  net  income  for — 

How    made    744 

Foreclosure — 

Difference  between  purchase  price  and  debt  not  deducti- 
ble as  bad  debt  181 

Foreisru  Corporations — 

Deductions  allowable  693 

Deductions — 

How  evidenced   707 

.  Income  in  United  States  subject  to  withholding  — 

Income — 

Withholding  of  tax  on  at  source  291(b) 

Amortization — 

Deductions  allowable   705 

Bonds   of — 

How   treated  for   incorfie  tax  purposes  321 

Debts   deductible 700 

Depletion   and   depreciation — 

Allowed  on  mines,  oil  and  gas  wells,  etc 706 

INDEX  PAGE  34 


CORPORATIONS— Continued. 

Paragraph 
No. 

Foreign  Corporations — Continued. 

Depreciation  allowed  702 

Dividends  deductible  _..:.. 701 

Dividends  of — 

When  all  income  derived  from  sources  with  U.  S 295 

Expenses  deductible  694 

Firms,  corporations  which  are  exempt  from  withholding 

at   source   486 

Interest  on  bonds  not  deductible  698 

Interest   on    indebtedness   695 

Inventories    required 709 

Losses    deductible    699 

New    buildings,    permanent    improvements,    betterments, 

etc.,  not  deductible  703 

Restoration   of  property  not  deductible   704 

Returns — 

Domestic  corporations — books  in  foreign  country 692 

Source  of  income  „ 696 

Taxes  697 

Taxation  of  691 

Tax  Withheld  at  Source  Deductible — 

Deduction  for  losses  not  compensated  by  insurance..  708 

Foreign  Coupons,  Checks,  Bills  of  Ezchang-e  354,  361 

Fire  Insurance — 

Premiums  paid  on  , 138 

Foreclosure — 

Sale   on   mortgage 181 

Foreign  Governments — 

Income   from  investments   in   U.   S 86(5) 

Not  taxable   538 

Taxes  paid  to — deductible  from  total  amount  of  income 

tax    149(a) 

Forms — 

In  absence  of  forms  a  statement  is  accepted  until  sub- 
stituted by  return  on  prescribed  form  730 

Prescribed  by  department  must  be  used  729 

Returns  itemized  on  supplementary  statement,  Form  1031  715 
To  be  furnished  for  reporting  returns  712 

Fraternal  Beneficiary  Societies — 
See  "Exempt  Corporations." 

Gifts- 
See  also  "Bonus." 

Property  acquired  by  15,  15(d),  86(3) 

To   corporations   567 

Good  Will- 
Deduction  for  depreciation,  not  allowed 664 

Gross  Income — 
See   "Income." 

Holding  Companies — 

See  "Exempt  Corporations." 

Carrying  charges  599 

Returns    of 505 

Horticultural  Orgranizations — 
See  "Exempt  Corporations." 

Humane  Organization — 

See  "Exempt  Corporations." 

Import  or  Tariff  Duties — 

Deductible  as  taxes 689 

INDEX  PAGE  35 


C  ORPORATIONS— Continued. 

Paragraph 
No. 
Zxnprovexnents — 

Cost  of  renewals 606 

Depreciation     675 

Leased  property „ 617 

New  buildings,  no  deduction  paid  for  same 620 

Inoome — 

Accrued   interest  deductible   from 775 

Bad  debt  if  collected  183 

Bank     discount ^ 574 

Basis  of  tax 546 

Bonuses  and  special  payments 614 

Books  of  account  best  guide  to 776 

Capital    assets,    sale    of    575 

Damages  569 

Expenditures  included  as  such 607 

Fiscal    year 547 

Gross — 

Banks  and  financial  institutions 550 

Insurance    companies 551 

Gross  income  defined 558 

Gross — 

Miscellaneous    corporations 555 

Gross  computed  by  banks  and  other  financial  institu- 
tions    720 

Gross  computed  by  manufacturing  corporations  721 

Gross  computed  by  mercantile  corporations 722 

Gross  computed  by   other  corporations 723 

Interest — 

Brokers  to  include  in  gross  income 585 

Net  Computed  by  New  Corporations — 
Fiscal  Year  Returns  of — 

How    made 744 

Computed  on  fiscal  year  basis 745,  746 

Other    552 

Patents,   sale  of  570 

Personal   property — sale  of,   on   installments 553 

Refunds  of  excess  paid 762 

Royalties  from   patents 573 

Voluntary  payments  by  stockholders 566 

Zucomplete    Corporations — 

Roturns  by,   liability   for '. 493 

Indebtedness — 

Lessee  companies  not  to  include  that  of  lessor  compa- 
nies       515 

Individual  Ownership — 
Private  Banks — 

Association,  held  not  to  be 500 

Information — 
To  States — 

When    767 

Regulations    governing   inspection 768 

Information  at  the  Source — 

Brokers — To  make  return  of  profits  of  customers  when 

required    (see   page    86,    line    51)    352 

Dividends — Corporations  to  make  return  of  dividends 
paid  on -request  of  Commissioner  (see  page  86,  line 
41)    350(a) 

INDEX  PAGE  36 


CORPORATIONS— Continued. 

Paragraph 
No. 
Information  at  tlie  Source-^Continued. 

Partnerships  and  corporations  required   to  make  return 

of  income  paid  to  another 350 

Obligations  of  U.  S. — return  not  required 315 

Return  of  information  of  all  payments  of  $1,000  or  more 

made  to  another 354 

Where  corporation  receiving  payment  is  not  the  actual 

owner  of  income 345 

Zustallment  Payments — 

Default    on,    bad    debts , 45 

Income  from  sale  of  property  paid  by  44,  45 

Loss  from  default  of — how  computed  45 

Insurance- 
Business   Insurance — See   "Business   Insurance." 

Insurance  Companies — 
Deductions — 

Net  addition  to  reserve  funds 605 

Policies  covering  life,  health  and  accident 605 

Definition    of 490 

Gross  income  of 551 

Mutual   Insurance — 

Premium    deposits 605 

Mutual  Marine — 

Amount  repaid  to  policyholders  605 

Interest — 

Deductions — 

Bonds — See  "Bonds,"  "Bonds — United  States." 

Income  from  15,   15(a) 

Obligations    of    State,    Territory,    County,    Municipality, 

etc 86  ( 4 ) 

Return  of  information  at  source  required  of  payer 350 

Tax-free  Bonds — See  "Withholding  at  the  Source." 

By  corporation  operating  leased  or  purchased  lines  556 

On  indebtedness  727 

Accrued,   deductible   from    income 775 

Added  where  extension   is  granted 757 

Allowable    678 

Banks — 

On  deposits  or  investment 611 

Brokers — 

Gross  income  when  receivetl  by 585 

Charged  when  abatement  of  taxes  is  claimed 765 

Deposits    680 

Different    rates 681 

Indebtedness  as  rental 679 

Income  from — 

Exchange  of  coupons  for  funding  purposes 568 

Paid  by  brokerage  corporation 682 

Paid   or  accrued 610 

On  exempt  bonds,  corporation 562 

On  indebtedness  of  leased  property,  assumed  by  lessee....  515 
Ikiventories — 

Merchandise    582 

Securities    582 

Investment  Certificates — 

Status  of  „ 32,  310 

INDEX  PAGE  37 


CORPORATIONS—Continued. 

Paragraph 
No. 
XTTigration  Company — 

Assessment   on   stock   of 173 

Shrinkage  in  value  of  securities 172 

Irrig-ation  District — 

See  also  "Irrigation  Corporations." 

Taxes  assessed  by  157 

Xrrlg-atiou  Bonds  (District) — 

Losses 

Joint  Stock  Companies — 

Definition    of 490,  491 

£abor  Org-anizations — 

See  "Exempt  Corporations." 

Iiandlord — 

Permanent  improvements  made  by  tenant 42 

Taxes   paid  by   tenant  143 

Ziease — 

Permanent  improvements  made  under  42 

Ikeased  l^ine  Certificates — 

Income  from  considered  to  be  dividends 32 

Iieased  Properties — 
See  "Rent." 

I^essee   (Corporation) — 

Rentals  paid  directly  to  bondholder  or  stockholder 31 

ILiberty  Bonds — 

See  "Bonds — United  States." 

z;icense — 

Annual  list  return  : 35d 

Application    for    355 

Branch  offices 356 

Licensee  to  furnish  list 357(a) 

Licensee  to  keep  records 360 

Penalty  for  failure  to  obtain  356 

Required  for  collection  of  foreign  coupons,  checks,  bills 

of  exchange  354 

Iiimited  Partnerships — 

Associations,  held  to  be 495 

Iiiquidation — 

Of  assets — how  valued  25 

lobbying*    Expense 121 

]Losses — 

Deductions  for — 

Bad  debts 725 

Corporation —  . 

Irrigation    Co. — 

Assessment  on  stock  of 173 

Shrinkage  in  value  of  securities 172 

Inventory 634 

Irrigation    bonds „ 661 

Judgments 633 

Models,  drawings,  etc 667 

Previous    losses 644 

Sustained    630 

Removal  of  buildings ■.. 640 

Retirement  of  bonds 643 

When     deductible 631 

MannfactnrinsT — 

Cost  of  manufactured   products 554 

Manufacturing-  Corporations — 

Gross  income  defined  as  taxable 721 


CORPORATIONS— Continued. 

Paragraph 
No. 
Merchandise — 

Inventory     of /.: 582 

Mercantile  Corporations — 

Gross  income  defined  as  taxable 722 

Mines- 
See  "Depreciation." 
Deductions — 

Allowed  between  the  lessor  and  lessee 632 

Value  March  1,  1913 632 

Miscellaneons  Corporations — 

Gross  income  of 555 

Mortg-ag-e — 

Foreclosure — Difference  between  purchase  price  and  debt 

not  deductible  181 

Security — See  "Bonds." 
Municipality — 

See  also   "State  or  Political  Subdivision." 

Bonds  of — Certificates   of   ownership   not   required 315 

Bonds  of — Exempt  from  tax 315 

Bonds  of  Public  Utility  acquired  by  316 

Bonds — Public    Utility    acquired    by — Income    from    not 

exempt     316 

Taxes  against  local  benefits — definition  158 

Warrants  of  city — Face  value  to  be  accounted  as  income     78 
Mutual  Ditch  and  Irrigfation  Companies — 

See  "Exempt  Corporations." 
Mutual  Insurance  Companies^ — 

Returns  to  be  made  by 501 

Mutual  or  Co-operative  Telephone  Companies — 

See  "Exempt  Corporations." 
Mutual  Saving's  Banks — 

See  "Exempt  Corporations." 
Mutual  Telephone  Companies — 

Returns  to  be  made  by 501 

Natural  Deposits — 

Depletion  allowance  defined  198  to  ?02 

Name  of  Corporation — 

Charge   in 518 

New  Building's — 

Erection  of  not  deductible 641 

Non-resident  Alien  Corporations — 

Bonds  of — Tax  on   interest  to   be  withheld  and   paid   at 

source 318 

Deductions: 

Depreciation 463 

Mines,  oil  and  gas  well  464,  467 

Interest  on  bank  deposits — Tax  on  to  be  withheld 347 

Notes — Tax  on  interest  from  to  be  withheld  348 

Stock — Certificate   to   disclose   ownership 447 

Withholding  provisions  of  law  as  applied  to  income 

291(a),  291(b) 

Tax  on  dividends  exempt  from  withholding  294 

Withholding  tax  at  source  of  income 478 

When  all  tax  not  withheld 479 

Oblig'ations  of  United  States — 
See   "Bonds — -United   States." 
Of  State— See  "State  or  Political  Subdivision." 

INDEX  PAGE  39 


CORPORATIONS— Continued. 

Paragraph 

Obsolescence- 
Models,   drawings,  etc 609 

Physical    property   670 

When   no   depreciation   is   deducted 671 

OU  and  Gas  WeUs— 
See  "Depreciation." 
Deductions — 

Allowed  between  the  lessor  and  lessee 632 

Value    March    1,    1913 632 

Other  Corporations — 

Gross  Income  defined  as  taxable 723 

Other  Income — 
See  "Income." 

Partnerships — 

Common-Law,  not  associations  496,  541 

Liimited,   held   to   be  associations 495 

Patents — 

Royalties  from — 

See   "Income." 
Sale  of  570 

Patents — 

Depreciation    of    666 

Sale    of    672 

Paying-  Ag-ent — 

Bond  Interest — Corporations  niay  appoint  335,  336 

Returns  of — See   "Withholding  at  Source." 

Payment  of  Tax — 

Abatement  of  taxes  (see  "Abatement") 287 

At  the  source — See  "Withholding  at  the  Source." 

Evasion    of    payment,    penalty    285 

Excess  payment  of  tax — how  treated  '. 281 

Failure    to    pay    286 

Failure  to  Pay: 

No  penalty  in  case  of  insane,  deceased  and  insolvent 

persons    418 

Instalment    payments 253 

•    Payment    optional    260 

Receipt  for  to  be  given  on  request  279 

Taxes   withheld   at   source   304 

When  extension  of  time  for  filing  return  is  granted 259 

Penalties — 

Evasion  of  tax 285 

Far   failure   to   pay   tax   when   due 764 

For  failure  to  file  return 732 

For  failure   to   pay  tax 731 

For  false  or  fraudulent  return  734 

For   false   statement   of   liability    period    ("Returns") 740 

For  giving  information  re  Return.^ 742 

For   wilfully   refusing   to   file   returns 736 

Paid  by  uncertified  check , 763 

Refund   for   failure   to  make  return   in   1913 739 

Remitting  for  failure  to  file  return 741 

Returns  properly  mailed  in  time 750 

Specific — 

For   failure    to   pay   or   collect    tax,    make    return    or 

supply   information   735 

W^aived  upon  filing  claim  for  abatement 765 

Period  of  Return — 

Taxable   period   , 511 

INDEX  PAGE  40 


CORPORATIONS— Continued. 

Paragraph 
No. 

Personal  Property — 
See  "Property." 

Personal  Service  Corporation — 

Definition    541(a) 

Not  subject  to  tax  as  corporations  4i 

To  make  returns  as  partnerships  41 

Philippine  Islands — 

Taxes  imposed  by — See  "Taxes" 

Obligations  of — Interest  on  exempt  86 (4 > 

Philippine  and  Porto  Bican  Corporations — 

Tax  on   492,  777 

Plates   (PubUshers)— 

Amount  expended  for  an   investment  of  capital 13 » 

Porto  Bico— 

Obligations  of — Interest  on  exempt  86(4) 

Taxes  imposed  by  authority  of — See  "Taxes." 

Public  Utilities- 
Income   from — when   not  taxable 539 

Purchased  by  Municipality — 

Indebtedness   of   540 

Prenxiam — 

Sale  of  capital   stock 583 

Premixuus — 

Paid  on  lives  of  officers  or  corporation 616 

Private  Banks — 
See  "Bank." 

Associations,    held    to    be 497,   499 

Individual  ownership  of  association,  held  not  to  be 500 

Stockholders   of,   dividends   of 498,  499 

Profits — 

Undistributed,  tax  contingent  on  11 

Promissory  Note  of  Corporation  311 

Property — 

See  also  "Real  Estate." 

Damages    recovered    by    corporation 569 

Depreciation   of    (court  decision) 674 

Exchange   of   - 

Exchange  of  corporation  property  for  stock 571,  576 

Income   from   sale   of   :. 43-45 

Income  from  sale  of,  on  installment  plan 553 

Losses  in   connection   with — See   "Losses." 

Method  of  determining  value  of  45 

Obsolescence   of   670 

Permanent    improvements    made    under    lease    or    rental 

contract  -     42 

Title   to — Cost  of  defending  a  capital   investment 135 

PubUc  Utility- 
Bonds  of  acquired  by   municipality  not  exempt 316 

Income  from  accruing  to  State,  Territory,  political  sub- 
division and  District  of  Columbia  86(6) 

Qualifications   for   Exemption 528 

Bailroad  Companies — 

Operating   leased   or   purchased   lines 556 

Beal  Estate — 

See  also  "Property." 

Depreciation    of — See    "Depreciation"    209 

Foreclosure  of  mortgage  on — See  "Bad  Debt." 

Income   from   sale   of 558 

Installment  payment  on — See  "Installment  Payments." 

INDEX  PAGE  41 


CORPORATIONS— Continued. 

Paragraph 
No. 
Real  Estate — Continued. 

Permanent    improvements    made    under    lease    or    rental 

contract 42 

Rebates — 

Loss  from  payment  of  under  contract  166 

Reclaimatioji — 

Taxes  assessed  for  purposes  of  15? 

Refund  of  Tax —  ♦ 

Claims  for  290(b) 

Refnnds — 

Income,  war-profits  or  excess-profits  paid   in  excess 762 

Limitation  of  time  for  allowance  of 762 

Relig'ious  Orgranizations — 

See  "Exempt  Corporations." 
Repairs — 

Cost  of — How  treated  in  computing  "depreciation" 187 

Reporting'   at  the   Source- 
See  "Information  at  the  Source." 
Rent — 

Bond  interest  and  dividends  paid  in  lieu  of  rental....  513,  557 

Paid  to  stockholders  of  lessor 512 

Rentals — 

Amounts  expended  for  taxes  or  repairs  by  tenants 76,  143 

Paid   directly   to   bondholder   or   stockholder — Bad   debts 

arising  from  unpaid ...., : 179 

Permanent    improvements    made    under    lease    or    rental 

contract  ,.. , 42 

Return  of  information  at  the  source  required  of  payer....  350 

Sale  of  leasehold — deduction 139 

Taxes  paid  by  tenant  to  landlord 143 

Tenant  corporations  making  repairs 619 

Reserves — 

Insurance,   not  deductible 629 

Sinking  Fund,   for 563 

Sinking  Fund   investments  564 

Returns — 

By    brokers    754 

By  domestic  corporation  on  stock  owned  in  foreign  cor- 
poration   711 

Close  corporation  502 

Consolidated   711 

Consolidated   returns  by  affiliated   corporations 711 

Copies  of,  Certified — 

Furnished  by  commissioner  upon  request  of  Attorney 

General 770 

Corporations,    all    not    exempt    to    make 501 

Disclosure  of — 

Penalty    771 

Domestic  corporations,  doing  business  in  foreign  country  504 
Domestic    corporations    with    principal    office    in    foreign 

country — where    filed    6.07 

Extension   for   filing   748 

Failure  to  file — 

Penalty    732 

Failure  to  receive 713 

25%  additional  tax  for  failure  to  receive  returns 714 

False — 

Definition  of  743 

INDEX  PAGE  42 


CORPORATIONS— Continued. 

Paragraph 
No. 
Betums — Continued. 

False  or  fraudulent — 

Penalty    734 

Fiscal   year   returns   not   acceptable 717 

For  fiscal  year  of  new  corporations — 

Forms  for  712 

Form  of — 

Corporations    710 

Insurance  companies 710 

Mutual  insurance  companies 710 

Railroad  corporations 710 

Further  extension   for  filing 749 

Holding  companies  505 

How   made   744 

Incomplete    corporations   ^ 493 

Independent  for  each  taxable  period 511 

Instructions   to   corporations   re   annual   net   income 716 

Itemized    supplementary    statement    on    Form    1031 715 

"Last   due   date"    defined 751 

When  falling  on  Sunday  or  legal  holiday 752 

Mutual    telephone    companies 501 

Mutual  insurance  companies 501 

New  corporations,  fiscal  year  basis 517 

Net  income  computed  on  fiscal  year  basis 745 

Of   dividends   753 

Acting    for    customers -. 754 

On   paid-up   capital   stock 718 

Payments  of  $1,000  by  individuals,  corporations  or  part- 
nerships  in   any  capacity 755 

Penalty  for  false  statement  of  liability  period 740 

Penalty  for  giving  information  of 742 

Properly  mailed  in  time  not  subject  to  penalty 750 

Reasonable  cause  for  failure  to  file 733 

Remitting  penalties  for  failure  to  file 741 

Statement  to  be  used  in  absence  of  prescribed  forms  730 

Specific  penalty  for  failure  to  make  return 735 

Penalty    736 

Subsidiary    companies    506 

Tentative    508 

To  be  made  by  receivers,  trustees  or  assignees  of  cor- 
porations    728 

To  be  made  on  forms  prescribed 729 

Upon  which  tax  has  been  determined  are  public  records..  766 

Verifying  accuracy   of 737 

Wilful  refusal  to  file — 

Royalty — 

Income  from  taxable = 77 

Salary — 

Employee — 

Paid  after  death,  not  deductible 625 

Foreign  employe — Not  subject  to  withholding  at  source....  361 

Scientific  Org'anizations — 

See  "Exempt  Corporations." 

Securities — 

Assessments   on   — - - .- 122 

Book   values — Shrinkage    i'a 203 

Commissions  paid  for  purchase  and  sale  of 125 

Dealers  in  203,205 

INDEX  PAGE  43 


CORPORATIONS— Continued. 

Paragrapn 
No. 
Securities — Continued. 

Exempt  securities — Income  from,  how  treated 96 

Inventory   of   582 

Investment    certificates    31u 

Issued  by  War  Finance  Corporation,  exempt 12(b),  86(4) 

Issued  under  Federal  Farm  Loan  Act 86(4) 

Owned  by  foreign  governments 86(5) 

Leased  line  or  stock  trust  certificates — taxable  status 32 

Promissory  note  of  corporation 311 

See  also  "Stocks,"  "Bonds,"  "Bonds — United  States." 
Shrinkage  in  value  of — 

Written  off  by  authority  of  State  officials 581 

Value  reduced  at  direction  of  Comptroller  of  Currency....  170 
Sinkingr  Fund — 

Investments    by    corporations „ 564 

Reserves  set  aside  by  corporations 563 

State  or  Political  Subdivision — 

Definition    87 

Bonds  of — Certificate  of  ownership  not  required 315 

Bonds  of — Interest  from  exempt : 314 

Contractor  with — Status  of 70 

Expense   incurred   in   earning  income   not  allowable   de- 
duction      101 

Income  derived  from  public  utility 86(7) 

Obligations  of — Definition  88 

Obligations  of — Interest  from  exempt 85(4) 

Obligations  of — Interest  on  exempt  from  tax 86(4) 

Officer  or  employee  of — definition 70 

Taxes    imposed   by — See   "Taxes." 

Warrants  issued  by 78 

Statistics — 

Publication  of — 

Commissioner    shall   annually    issue 772 

Stock — 

Treasury  stock,  when  taxable 566 

Stock  Dividend — 
See  "Dividends." 

Stockholders — 

Private  banks  498,  499 

Rentals  paid  by  lessee  directly  to 31 

Stock  (Securities) — 

Bonus  in  common  stock 51 

Dividends  on — See  "Dividends." 

Profit  from   sale  of — how  treated 72 

Profit  from  sale  of  lots  purchased  at  different  times 72 

Profit  from  sale  of  stock  acquired  by  gift 75 

"Rights"    (subscription)    income   from 74 

Stock  Trust  Certificates — 

Income  from  considered  as  dividends 32 

Subsidiary  Companies — 

Earnings  or  dividends  from,  not  deductible 560 

Returns  by 506 

Supplementary  Statements — 

Publicity   of — prohibited — same   status   as   returns 769 

Tariff- 
See   "Customs  Duties." 

INDEX  PAGE  44 


CORPORATIONS— Continued. 

No. 
Paragraph 
Taxes — 

Allowable    683 

Allowable   deduction   612 

Are  not  to  be  re-collected  when  once  paid 738 

As  Expense  or  Deduction: 

Paid  by  tenant  as  part  of  rent 76 

Assessment  and   payment  of — 

Installment   payments    756 

Bank  stock  taxes 687 

Basis   of   546 

Corporations,   imposed   on 488 

Custom    duties — not    taxes — deductible    expenses 688 

Deductible   from   income 147 

By  beneficiary  of  an  estate 149(a) 

By  member  of  partnership 149(a) 

Porto     Rico     and     Philippine     Islands — Imposed     by 

authority    of    149 

State,  county  and  municipal  taxes....'. 150 

United   States — Imposed  by  authority  of 149 

Deductible  as  Rental: 

Paid  by  tenant  to  landlord 143 

Deductible  from  Total  Amount  of  Tax: 

Income,  war  profits  and  excess-profits  taxes  imposed 

by  U.  S.  Possessions  and  foreign  countries 149 

Excess   profits   tax   credit 686 

Failure  to  pay — 

Penalty    731 

Falsely   or   fraudulently   returned 760 

Fiscal    year    basis 547 

Foreign  Taxes  146(a),  149  to  152 

Foreign   taxes — (paid   to   foreign   countries) 149(b) 

Import  or  tariff  duties :. 689 

Imposed    by    United    States    Gov't — Read    11416(a)     and 

Us  147  to  152. 

Income  taxes  not   deductible 133 

Limitation  of  time  for  filing  refund  claim 758(b) 

I-iimit  of  time  for  assessing  tax 760 

Local   benefits   685 

Made  in  single  payment 758 

Not   Deductible   from   Income: 

Imposed  by  Philippine  Islands,  Porto  Rico 149 

Income,  war-profits  and  excess-profits  taxes 14 

On  bonds  containing  a  tax-free  clause 759 

Paid  by  uncertified  check  not  honored  by  bank — 

Liability   for   763 

Paid  in  behalf  of  stockholder  by  bank  on  capital  stock 

allowable  deduction  37,  214 

Paid    to    foreign    country   deductible   from   total   amount 

of  income  tax 149 (b) 

Past  due  voluntarily  paid 761 

Payments   where   extension   is   granted — 

Interest   added    757 

Payment  at  source  on  income  to  non-resident  aliens 759 

Penalty  for  failure  to  pay  when  due 764 

Philippine   and   Porto    Rican   corporations 492,  777 

Philippine  Islands: 

Taxes  imposed   by 146(a),  149  to  152 

Refund  of  penalties  for  failure  to  make  return  in  1913....  739 

INDEX  PAGE  45 


CORPORATIONS— Continued. 

No. 
Paragraph 
Taxes — Continued. 

Refund  under  any  previous  or  the  present  Act 758(a) 

Specific  penalty  for  failure  to  pay  or  collect  tax 735 

State  or  Political  Sub-division: 

Taxes  imposed  by 150 

Tax-free  bonds,  taxes  not  deductible 684 

Tax-Free  Covenant — 
See  "Bonds." 

U.     S.     Gov't — Taxes     imposed     by — Read     11146(a)     and 
!Isl47   to   152. 

When  abatement  is  claimed — 

Penalty  relapses  and  interest  is  charged 765 

Taxable  Period — 

Definition   of   489 

Taxable  Year — 

Definition    of 489 

Tax-Free  Bonds — 

Taxes    on — not    deductible    684 

Tenant — 

Permanent   improvement   made   by   42 

Repairs  made  by,  as  part  of  rent  76 

Taxes   paid   by  as  part  of   rent   76,  143 

Tentative  Returns  508 

Territory — 

Interest   from   obligations   of   86(d) 

Timber — 

Depreciation  and  depletion  allowed  198  to  202 

Loss  by  flre  of  standing  timber  165 

Timber  l^ands — 

Regulations    governing    673 

Town — 

See  "Municipality." 
Trade  Marks  and  Trade  Brands — 

Deduction   for   depreciation  not   allowed   663 

Trading  Stamps — 

Redemption   of   615 

Treasury  Decisions — 

Effective   date   of 381 

Trust  Companies — 

See  "Banks." 

Gross  income  of  550 

trndistribnted  Profits — 

See  "Profits." 
United  States — 

Bonds  of — See  "Bonds — United   States." 
TT.  S.  Government — 

Bonds  of — See  "Bonds — United  States." 
Government  officers  and  employes 

Compensation  not  paild  in  money  95 

Taxable   status   of   income   96 

Liberty  Bonds — See  "Bonds — United  States." 

Securities     issued     by     War     Finance     Corporation — See 
"Securities." 

Taxes  deductible  from  income 149 

Taxes  imposed  by  authority  of — See  "Taxes." 
United    States   Possessions — 

Citizens  of  773 

War  Pinance  Corporation — 

Securities  issued  by,  exempt  86(4),  12(b) 

TTvrmrv   T>Amr    ac 


CORPORATIONS— Continued. 

No. 
Paragraph 
War-Profits  Tax 

Amount  paid  as  not  deductible  149,  150 

Warrants  of  City  or  Town 78 

Where  Filed — 
Returns  by — 
Domestic  corporations  having  principal  office  in   foreign 

country 507 

Withholding-  Agrent — 

See  "Withholding  at  the  Source." 
Withholding:  at  the  Source — 

Bond — Certificates    of    ownership — See    "Certificates    of 

Ownership." 
Bond  Interest — Tax  on: 

Amount  of  tax  to  be  withheld  308 

Bonds   containing   tax-free   covenant   309 

Bonds   without    tax-free   covenant — Payment    cannot 

be    made    at    source    309(e) 

Citizen  or  Resident  Corporation — May  file  certificate 

of    exemption 309  (a) 

Exempt   organization — Certificates    to    be    filed 313 

No   withholding   when   exemption    claimed 309(b) 

Of    2%    to    be    deducted    from    income    of    citizen    or 

resident  or  non-resident  alien  corporation 309 

Owners   not  known   to   withholding   agent — Commis- 
sioner  may   authorize    deduction    309 

Tax-free    Bonds — Important    distinction    for    income 

tax  purposes 309  (f ) 

Tax-free    bonds — issued    with    and    without    tax-free 

covenant — Important  distinction 309(e),  309(f) 

Varying    policy    of    corporations    309 

Tax-free  bonds  only 308,  309 

Tax-free     covenant — Contract     between     corporation 

and  bondholder  309  (c) 

Tax  withheld  only  a  partial  tax  309(d) 

Exempt   organizations   subject   to   provisions   of   law 293 

Fiduciaries     404 

Foreign   corporations   291  (b) 

Non-resident    alien    corporations    291(a) 

Non-resident   alien    corporations — Tax    on    dividends    not 

to  be  withheld 294 

Non-resident  Alien  Corporation: 

Interest    from    bank   deposits — Tax    on    347 

Interest   from    notes 348,  349 

Payment   of   tax   withheld   : 304 

Provisions    of    the    act,    as    applied    to    citizen,    resident 

and  non-resident  alien  corporations 291 

Also  see  Law,  page  69,  lines  27-48. 
Returns: 

Of  information  at  the  source.     See  "Information  at 
the  Source." 
Stock  and   Treasurry   Stock — 
Withholding  Agent: 

Annual    return   of    305 

Bond    interest— Non-resident    alien    corporations 312 

Corporation   may  appoint  paying  agent   335,  336 

Defined   317,  292 

Monthly    Return    of    306 

INDEX  PAGE  47 


CORPORATIONS-Continued. 

No. 
Paragraph 
Withholding*  at  the  Souroe-— 

Non-resident    alien    corporations    318 

Paying    agents    317 

Payments  of  tax  withheld  304 

Penalty  for  divulging  information  306 

Returns  of: 

Annual    return    305,  344 

Monthly  list  304,  306,  344 

Monthly  List — Duplicates  to  be  filed  338 

Monthly   list — ^Where  filed 337,  344 

Penalty  for  divulging  information  307 

Salary-  of  foreign  employe  exempt  361 


INDEX  PAGE  48 


War-Profits  and  Excess-Profits  Tax. 

Reference  is  made  to  Faragrraph  Numbers 
and  NOT  to  pages. 

Paragraph 
No. 
Accoiuiting- — 

Methods  of  application  to  invested  capital  adjustments....  863 
Accounts  Receivable — 

Tangible  property  848 

Act  of  1917— 

"Excess  Profits  Tax  Primer,"  published  for  the  guidance 
of  those  who  may  be  required  to  file  amended  returns 

for  the  year  1917 See  pages     1347  to  1364 

Additions  to  Capital — 

Allowable    904 

Amortization — 

Improper   allowance   for   862 

Assets — 

Admissible — Law,  page  94,  line  52. 

Tangible    902 

Intangible    905 

Inadmissible — Law,  page  94,  lire  40. 

Tangible 923 

Intangible     905 

Averag'e  Adjustments  of  Capital — 

Illustration    914 

Balance  Sheets  868  to  880 

Illustrations — 

Capital  adjustments  864  to  897 

Must  conform  to  adjustments  of  capital  912 

Bills  Receivable- 
Tangible  property 848 

Bonds — 

Tangible  property  - 848 

Calendar  Year — 

Returns,   due  date  of 788 

Capital  Invested — 

Defined    Z 840 

Dividends  paid,  allocated  894,  896 

Addition  of  reserves  for   taxes  886 

Adjustments  during  the  year  883 

Allowance  for  depletion  and  obsolescence  in  connection 

with    840 

Average   adjustments    (illustration) 914 

Averaged  for  year  by  months 841 

Borrowed    capital    excluded    844 

Capital    stock    and    surplus    882 

Certain    exempt    securities    may    be    included    845-846 

Corporations  at  disadvantage  due  to  manner  of  account- 
ing       859 

Donated    stock    890 

Exceptional  cases  where  capital  cannot  be  satisfactorily 

determined     854,     855 

Expense  in  securing  data  on  foreign  corporations  in  con- 
nection with  invested  capital  857 

INDEX  PAGE  49. 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX— Continued. 

Paragri^)b 
No. 

Capital  Invested — Continued. 

Foreign    corporations    (proportion)    .» 849 

Inflated  value  of  good  will  » .— .  891 

Items  not  allowed  to  be  included  842 

Mixed  aggregate  of  tangible  and  Intangible  property  in 

connection   with   858 

Organization  expenses  889 

Overvaluation    of    stock    892 

Patents  and  copyrights 903 

Pre-war    period 853 

Reserves  for  bad  debts  .....885,  888 

Reserves  for  improvements  and  contingencies  887 

Reserves  subject  to  careful  scrutiny 884 

Sinking  fund  reserve  897 

Stock  issued  for  intangible  assets  900 

Stock  of   foreign   corporations   847 

Stocks,  bonds  etc.,  not  to  be  included  843 

Tangible  and  intangible  assets  defined  848 

Taxes  paid  under  1917  Act,  relation  to  924 

Tax  free  securities  and  profits  from  tradings  846 

Value   of   intangible   assets 901 

Where   capital   is   disproportionate   by    comparison    with 

representative    corporations    860 

Copyrisrhts,  Valuation — 

Intangible    assets,    valuation    of    901 

Corporations — 

Adjustment  due  to  improper  valuation  899 

Balance   sheets   illustrated '. 869 

Capital  adjustments  882  to   897 

Capital,  pre-war  period 853 

Denied   right  of  comparison   898 

Exempt   corporations   792 

Income  from  gold  mining  792 

Net  income  less  than  $3,000  792 

Same  corporations  exempt  as  under  Title  II.    (Cor- 
poration  Income   Tax) 792 

Foreign  corporations  791,   849 

Limitation   of   tax 806 

Method  of  calculating  tax .*.. 797 

Organized  prior  to  July  1,  1919 852 

Rates  of  tax 794 

Rate  per  cent,  of  tax 802 

Reorganized  after  Jan.  1,  1911 850 

Reorganized  after  March  3,  1917 851 

Subject   to   tax   790 

When  credit  exceeds  20%   of  capital   (illustration) 803 

Credits- 
Excess  profits 827 

Illustration    814 

War  Profits  Credit — 

How    determined    828 

Alternative    method    813 

Defective  AooonntinsT — 

Where  capital  cannot  be  accurately  determined  856 

INDEX  PAGE  50. 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX— Continued. 

Paragraph 
No. 

Definitions 780 

Dividends   785 

Fiscal   year   782 

Paid  or  accrued  784 

Personal  Service  Corporation  ...783 

Pre-war  period 786 

Taxable    year    1 781 

Dividends — 

Allocation    of 894 

Received   from   foreign   corporations 835 

Excess  Profits — 

Excess  profits  credit  827 

Method  of  computation  807 

Rates  of  tax  794 

When  credit  exceeds  20%   of  capital  803 

Fiscal  Year — 

Amount  paid  under  1917  Act  a  credit  916 

Computations 915 

Partnership  or  personal  service  corporation  918 

Proportionate  amount  payable  917 

Refunds  of  taxes  paid 919 

Returns,  due  date  of 789 

Foreign    Corporations — 

Invested  capital  of  847 

Not  entitled  to  exemption 791 

Stock  of,  in  relation  to  invested  capital  814 

Gold  Mining- — 

Income  derived  from    (exempt) 792 

G-ovemznent  Contracts — 

50%   or  more  from -. 831 

ninstrations — 

Balance    sheets    showing    capital   adjustments    ....868    to    880 

Limitation  of  tax  806 

Methods  of  calculating 797 

When    excess    profits    credit    exceeds    20%    of    invested 

capital    803 

Intangible  Property 905  to  908 

Defined 848 

Stock   issued    for 900 

Valuation   of   901 

As    admissible    or    inadmissible    assets — Law,    page    94, 
line    40. 

Invested  Capital — 

See   "Capital"   for  details. 

Trade   or   business   having   826 

I^easeliolds — 

Tangible  property   848 

I^imitation  of  Tax — 

From  sale  of  mines  921 

Illustration 815 

Mines- 
Limit  of  tax  from  sale  of  921 

Net  Income — 

Average  for  pre-war  period  839 

Classification  of  793 

For  calendar  years  1911-1912  836 

For  fiscal  year  1913  837 

For    taxable    year    838 

INDEX  PAGE  51. 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX— Continued. 

Paragraph 
No. 

Notes   and   Other  Evidence   of  Indebtedness — 

Tangible    property    848 

Paid  or  Accrued — 

Definition    of    785 

Partnerships — 

Credit  for  taxes  916 

Fiscal   year   basis   918 

Refunds  of  taxes  paid  under  1917  Act  919 

Patents  and  Copyrifirhts — 
Intangible  Assets — 

Valuation    of    901 

Pre-war  Period — 

Corporation  not  in  existence  during 831 

No  net  income  for  830 

War  profits  credit 831 

Property — 

Intangible    848 

Limitation  on  value  of  intangible  901 

Limitation  on  value  of  tangible  923 

Returns    787 

Due  date,  calendar  year  788 

Due   date,    fiscal   year    789 

Sinking  Pnnd  Reserve—- 

Segregation  of  surplus  897 

Stock- 
Constitutes  tangible  property 848 

Issued  for  tangible  property,  or  returned  as  a  gift  902 

Surplus — 

Reconstruction    of    accounts    903 

Tangible  Property — 

Bills  and  accounts  receivable  848 

Bonds    848 

Construction  oi  term  848 

Excess  value  of 902,  911 

Leaseholds    848 

Limitation  on  value  of  923 

Mixed  aggregate  of  tangible  a©d  intangible  833 

Notes,    etc 848 

Stock  or  shares  issued  for  923 

Stocks    _ 848 

Tax,  Rates  of-— 

Comparison  with  similar  corporations  819 

Computation   for   fiscal  year  822 

Credit   for   1917    taxes   825 

Determined   by  commissioner   820 

Due  to  abnormal   conditions  834 

Foreign   corporation   818 

Limitation    of   805 

Limit  of,    in    connection   with   mines   921 

Method  of  calculating  j* 794 

Rate  per  cent  on  $500,000  „ 797 

Rates  for  1919  and  subsequent  years 922 

When   50%    or  more  of  net  income,   conditions  821 

When  not  satisfactorily  determined 817 

Taz-Pree  Securities — 

When  income  from,  consists  partly  of  profits  from  trad- 
ings in 846 

INDEX  PAGE  Sa. 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX— Continued. 

Paragraph 
No. 
Undivided   Surplus   — 

Employed    in    business    910 

Reconstruction  of  accounts  903 

Values — 

Tangible  property,  other  than  cash  paid  in  for  stock  or 

shares    923 

Excess  value  of  tangible  property 902 

War-Profits  Credit — 

How  computed  828 

Alternative  method  813 

Foreign  Corporations  814 


INDEX  PAGE  53. 


Estate  Tax. 


Section  Page 

Schedule  of  Tax  Rates 401  100 

Estate^ 

Gross  estate — Value  of,  how  determined 402  101 

Net  estate — Value  of,  how  determined : 402  102 

Exemption   allowed   102 

Executor — 

Definition    400  100 

Notice  of  qualification 404  104 

Statement    by 404  104 

Penalties     408  105 

Returns     404  20 

Failure  to  file 405  104 

Where  no  administration  is  granted 405  104 

False   return   410  106 

Payment  of  Tax — 

When    due    406  105 

When  paid 407  105 

Where  amount  of  tax  cannot  be  determined 407  105 

Receipts   for    407  105 

Failure   to   pay 408  105 


INDEX  PAGE  55. 


Transportation  and  Other  Facilities  and  On 
Insurance. 

Section  Page 
Transportation — 

Freight    500  (a)  107 

502  109 

Express     500  (b)  107 

502  109 

Passenger     500  (c)  107 

Parlor  car  and  sleeping  car 500  (d)  108 

Conditional  tax  on  mileage  books  and  tickets...     501  (b)  108 
Taxes    on  : 

Who  pays  501  (a)  108 

How   applied    50J  (c)  109 

502  109 

Payee  to  collect  tax 502  109 

Payee  to  make  returns  and  pay  tax 502  109 

Refund    of    payment 502  110 

Returns     502  110> 

Payment  of  tax — when  due -502  110 

Oil  by  pipe  line 500  (e)  108 

501  (d)  109 

502  109 

Teleg'raph  and  Telephone —  - 

Telegraph  messages  500  (f)  108 

Telegraph  leased  wires 500  (g)  108 

Telephone  messages  500  (f)  108 

Telephone  leased  wires 500  (g)  108 

Cable    messages    500  (f)  108 

Insurance    503  110 

Life   insurance    503  (a)  110 

Marine,  inland  and  fire  insurance 110 

Casualty  insurance  _ 503  (b),  503  (c)  110 

Exempt  insurance  503  (d)  110 

Insurance  Co.  to  collect  tax — 

Tax  assessed  against  insurer 503  110 

Insurance  Co.  to  make  return  and  pay  tax 504  110 

Payment  of  tax — when  due 504  110 


ywrnrv   -DAnir    rfr 


Treasury  Decisions. 


The  following  is  an  index  of  Treasury  Decisions,  Court  De- 
cisions and  other  Income  and  Excess  Profits  Tax  data  promul- 
gated under  the  Act  of  September  8th,  1916,  as  amended,  and  the 
Act  of  October  3rd,  1917,  which  have  been  issued  since  the  pub- 
lication of  the  Standard  Manual  of  Income  Tax  for  1918.  Such 
of  these  decisions  as  apply  to  the  existing  law  have  been  digested 
and  embodied  in  the  Manual  for  1919.  Others  have  no  direct 
bearing  on  the  Revenue  Act  of  1918,  and  are  published  merely 
for  the  guidance  and  benefit  of  those  who  may  be  required  to 
file  amended  returns  for  the  year  1917  and  also  for  information 
where  the  subject  matter  pertains  to  the  Revenue  Act  of  1918. 


Page 

T.  D.   2649 1203  T.  D. 

T.  D.   2652 1204  T.  D. 

T.  D.  2654 1204  T.  D. 

T.  D.   2659 1205  T.  D. 

T.  D.   2660 1207  T.  D. 

T.  D.  2661 1208  T.  D. 

T.  D.   2662 1210  T.  D. 

T.  D.   2663 1212  T.  D. 

T.  D.   2665 1213  T.  D. 

T.  D.  2666 1215  T.  D. 

T.  D.  2668 - 1218  T.  D. 

T.  D.  2670 1222  T.  D. 

T.  D.   2671 1224  T.  D. 

T.  D.   2672 1224  T.  D. 

T.  D.   2673 1225  T.  D. 

T.  D.   2674 1225  T.  D. 

T.  D.   2677 * 1226  T.  D. 

T.  D.  2678 1226  T.  D. 

T.  D.  2679 1227  T.  D. 

T.  D.   2683 1228  T.  D. 

T.  D.  2686 - 1229  T.  D. 

T.  D.  2687 1231  T.  D. 

T.  D.  2688 1232  T.  D. 

T.  D.   2689 1233  T.  D. 

T.  D.   2691- 1235  T.  D. 

T.  D.  2692 1235  T.  D. 

T.  D.   2693 1237  T.  D. 

T.  D.   2695 1238  T.  D. 

T.  D.  2696 - 1238  T.  D. 

T.  D.  2697 1241  T.  D. 

T.  D.  2698 1245  T.  D. 

T.  D  .2700 1246  T.  D. 

T.  D.  2702 1247  T.  D. 

T.  D.  2705 1248  T.  D. 

T.  D.  2706 1249  T.  D. 

T.  D.   2707 1250  T.  D. 


Page 

2708 1251 

2709 1252 

2711 1253 

2715 1254 

2716 "...1255 

2720 1257 

2721 1264 

2722 1269 

2723 1272 

2724 1278 

2725 1282 

2726 - 1283 

2729 1286 

2730 ....1291 

2731 1297 

2732 1302 

2733 1304 

2734 1308 

2735 1310 

2736 1310 

2737 1315 

2740 1316 

2744 1319 

2747 1319 

2754 1320 

2755 1321 

2756 1321 

2759 1323 

2762 1326 

2763 1328 

2770 1329 

2771 1330 

2772 1331 

2773 1332 

2778 1333 

2783 ....1335 


Standard  Manual  of  the 
Income  Tax 


On  the  preceding  pages  will  be  found  a  digest  of  the  new 
Revenue  Law.  That  digest  was  prepared  to  familiarize  the 
user  of  this  book  with  the  general  provisions  of  the  Act,  par- 
ticularly the  changes  therein,  and  to  serve  as  a  groundwork 
for  utilizing  the  more  detailed  information  which  follows. 


INDIVIDUALS 
Normal  and  Additional  Tax 


THE  NORMAL  TAX. 

^  1— Who  and  What  is  Taxable. 

Title  II  of  the  Revenue  Act  of  1918  imposes  a  normal  tax 
for  the  year  1918  as  follows : 

If  2 — Citizens  and  Residents. 

(a)  6  per  centum  on  the  first  $4,000  of  net  income  in  ex- 
cess of  the  credits  allowed  ($1,000  or  $2,000),  received  in  the 
preceding  taxable  year  from  all  sources  by  an  individual,  a 
citizen  or  resident  of  the  United  States,  and  12  per  centum 
on  all  net  income  in  excess  of  the  first  $4,000. 

^  3 — Non-Resident  Aliens. 

(b)  12  per  centum  on  the  entire  net  income  in  excess  of 
the  credits  allowed,  received  in  the  preceding  taxable  year 
from  all  sources  within  the  United  States  by  every  indi- 
vidual, a  non-resident  alien,  including  interest  on  bonds, 
notes  or  other  interest-bearing  obligations  of  residents,  cor- 
porate or  otherwise. 

177 


INDIVIDUALS-^Continued  NORMAL  TAX 

Ti  4 — Naturalized  Citizens  Residing  Abroad. 

Naturalized  citizens  who  have  brought  upon  themselves 
the  presumption  of  expatriation,  under  provisions  of  Section 
2  of  the  Act  of  March  2,  1907,  by  protracted  residence 
abroad,  may  overcome  such  presumption  only  upon  present- 
ing satisfactory  evidence,  etc. — Letter  of  Secretary  Bryan. 

*[  5— Citizenship. 

Determination  of  the  State  Department  of  right  to  regis- 
try is  not  conclusive  upon  the  Treasury  in  fixing  citizenship 
for  income  tax  purposes.  The  Treasury  Department,  there- 
fore, holds  that  native  and  naturalized  status  remains  unless 
changed  by  affirmative  action  or  forfeited  by  overt  act. 

|[  6 — Income  Tax  Laws  of  Other  Countries. 

American  citizens,  whether  residing  at  home  or  abroad, 
and  non-resident  aliens,  receiving  incomes  from  property 
owned  and  from  business,  trade  or  profession  carried  on 
within  the  United  States,  are  not  reheved  from  tax  liability 
by  being  subject  to  the  income  tax  laws  of  other  countries. 

ff  7—  ADDITIONAL  OR  SURTAX. 

The  additional  graduated  tax  rates  and  amounts  of  income 
subject  thereto  imposed  in  accordance  with  the  provisions 
of  the  Revenue  Act  of  1918,  on  net  incomes  of  more  than 
$5,000  for  the  year  1918,  are  as  follows : 

Amount 

Net  Income  Taxable 

A  B  C 

$5,000   to         $6,000 $1,000 

6,000    to           8,000 2,000 

8,000    to         10,000 2,000 

10,000    to         12,000 2,000 

12,000    to         14,000 2,000 

14,000    to         16,000 2,000 

16,000   to         18,000 2,000 

18,000    to         20,000 2,000 

20,000   to         22,000 2,000 

22,000    to         24,000 2,000 

24,000    to         26,000 2,000 

26,000  to        28,000 2,000 

28,000   to         30,000 2,000 

178 


Tax  on 

Taxed 

Am'tAdd'l 

Amt.  in 

At 

Tax 

Column  B 

JD 

E 

F 

1% 

$10 

$10 

2% 

40 

50 

3% 

60 

110 

4% 

80 

190 

5% 

100 

290 

6% 

120 

410 

7% 

140 

550 

8% 

160 

710 

9rcf 

180 

890 

10% 

200 

1,090 

11% 

220 

1,310 

12% 

240 

1,550 

13% 

260 

1,810 

INDIVIDUALS— Continued      ADDITIONAL  OR  SURTAX 

Tax  on 

Amount  Taxed    Am't  Add'l  Amt.  in 

Net  Income  Taxable  At  Tax       Column  B 

A  B                                            C  D  E  F 

30,000  to        32,000 2,000  14%  $280  $2,090 

32,000   to         34,000 2,000  15%  300  2,390 

34,000    to         36,000 2,000  16%  320  2,710 

36,000    to         38,000 2,000  17%  340  3,050 

38,000    to         40,000 2,000  18%  360  3,410 

40,000  to        42,000 2,000  19%  380  3,790 

42,000   to         44,000 2,000  20%  400  4,190 

44,000    to         46,000 2,000  21%  420  4,610 

46,000   to        48,000 2,000  22%  440  5,050 

48,000    to         50,000 2,000  23%  460  5,510 

50,000    to         52,000 2,000  24%  480  5,990 

52,000    to         54,000 2,000  25%  500  6,490 

54,000   to         56,000 2,000  26%  520  7,010 

56,000   to         58,000 2,000  27%  540  7,550 

58,000   to         60,000 2,000  28%  560  8,110 

60,000    to         62,000 2,000  29%  580  8,690 

62,000    to         64,000 2,000  30%  600  9,290 

64,000    to         66,000 2,000  31%  620  9,910 

66,000   to        68,000 2,000  32%  640  10,550 

68,000    to         70,000 2,000  33%  660  11,210 

70,000   to         72,000 2,000  34%  680  11,890 

72,000    to         74,000 2,000  35%  700  12,590 

74,000   to         76,000 ^              2,000  36%  720  13,310 

76,000    to         78,000 2,000  37%  740  14,050 

78,000    to         80,000 2,000  38%  760  14,810 

80,000    to         82,000 2,000  39%  780  15,590 

82,000   to         84,000 2,000  40%  800  16,390 

84,000   to         86,000 2,000  41%  820  17,210 

86,000    to         88,000 2,000  42%  840  18,050 

88,000    to         90,000 2,000  43%  860  18,910 

90,000   to         92,000 2,000  44%  880  19,790 

92,000    to         94,000 2,000  45%  900  20,690 

94,000    to         96,000 2,000  46%  920  21,610 

96,000    to         98,000 2,000  47%  940  22,550 

98,000   to       100,000 2,000  48%  960  23,510 

100,000   to       150,000 50,000  52%  26,000  49,510 

150,000   to      200,000 50,000  56%  28,000  77,510 

200,000   to       300,000 100,000  60%  60,000  137,510 

300,000   to       500,000 200,000  63%  126,000  263,510 

500,000   to    1,000,000 500,000  64%  320,000  583,510 

Exceeding     1,000,000 65%  

An  individual  who  is  single  with  a  net  income  of  $5, 
100,000  will  be  obliged  to  pay  the  normal  and  additional  tax 

179 


INDIVIDUALS— Continued      ADDITIONAL  OR  SURTAX 

calculated  on  the  amounts  in  accordance  with  the  following 
methods : 

Net   *$5,100,000 

Exemption  1,000 

t$5,099,000 

*Amt.  on  which  additional  tax  is  calculated. 
fAmt.  on  which  normal  tax  is  calculated. 

1i  8—      CALCULATION  OF  ADDITIONAL  TAX. 

Amt. 

Taxed  at  of  Tax 
Total 

$5,000    None  None 

1,000   1%  $10 

2,000    2%  40 

'             2,000    3%  60 

2,000    4%  80 

2,000    5%  100 

2,000    6%  120 

2,000    7%  140 

2,000    8%  160 

2,000    9%  180 

2,000    10%  200 

2,000    11%  220 

2,000    12%  240 

2,000    13%  260 

2,000    14%  280 

2,000    15%  300 

2,000    16%  320 

2,000    17%  340 

2,000    18%  360 

2,000    19%  380 

2,000    20%  400 

2,000    21%  420 

2,000    22%  4€0 

2,000    23%  460 

2,000    24%  480 

2,000    25%  500 

2,000    26%  520 

2,000    27%  540 

2,000    28%  560 

2,000 29%  580 

2,000    30%  600 

2,000    31%  620 

2,000    32%  640 

2,000    33%  660 

180 


INDIVIDUALS— Continued      ADDITIONAL  OR  SURTAX 


$2,000 

2,000 

2,000 

2,000 

2,000 

Ji,000 

2,000 

2,000 

2,000 

2,000 

2,000 

2,000 

2,000 

2,000 

2,000 

50,000 

50,000 

100,000 

200,000 

500,000 

4,100,000 


$5,100,000 


ted  at 

of  Tax 

Total 

34% 

$680 

35% 

700 

36% 

720 

37% 

740 

38% 

70U 

39% 

380 

40% 

800 

41% 

820 

42% 

840 

43% 

860 

44% 

880 

45% 

900 

46% 

92a 

47% 

940 

48% 

960 

52% 

26,000 

56% 

28,000 

60% 

60,000 

63% 

126,000 

64% 

320,000 

65% 

2,665,000 

$3,248,510 

K  9—  CALCULATION  OF  NORMAL  TAX. 

$5,099,000  Amount  subject  to  normal  tax. 
4,000  At  6% $240 


$5,095,000  Balance  at  12%.__       611,400 


$611,640  Total  normal  tax. 
3,248,510  Additional  tax. 


$3,860,150  Total  tax  due. 

In  the  above  example,  for  the  purposes  of  the  normal  tax 
only,  he  would  be  allowed  to  deduct  from  his  net  income  all 
amounts  received  as  dividends  on  capital  stock  or  from  the 
net  earnings  of  corporations,  the  amount  received  as  in- 
terest from  obligations  of  the  United  States  and  bonds  is- 
sued by  the  War  Finance  Corporation,  plus  the  $1,000  or 

181 


INDIVIDUALS— Continued      ADDITIONAL  OR  SURTAX 

$2,000  exemption  allowed  according  to  the  marital  status 
of  the  individual,  in  addition  to  $200  for  each  dependent  if 
under  18  years  of  age,  or  incapable  of  self-support  because 
mentally  or  physically  defective. 

\\  1 0 — Income  from  Dividends  to  Be  Included. 

For  the  purpose  of  additional  tax,  there  shall  be  in- 
cluded as  income,  the  income  derived  from  dividends  on  the 
capital  stock  or  from  the  net  earnings  of  any  corporation, 
joint-stock  company,  or  association,  or  insurance  company, 
except  that  in  the  case  of  non-resident  aliens  such  income 
derived  from  sources  without  the  United  States  shall  not  be 
included. 

1111 — Tax  Contingent  on  Undistributed  Profits. 

Section  220  of  the  Act  provides  that  if  any  corporation, 
however  created  or  organized,  if  formed  or  availed  of  for 
the  purpose  of  preventing  the  imposition  of  the  surtax  upon 
its  stockholders  or  members  through  the  medium  of  per- 
mitting its  gains  and  profits  to  accumulate  beyond  the 
reasonable  needs  of  the  business  instead  of  being  divided  or 
distributed,  such  corporation  shall  not  be  subject  to  the  cor- 
poration income  tax  imposed  by  Section  230,  but  that  the 
stockholders  or  members  thereof  shall  be  subject  to  taxa- 
tion in  the  same  manner  as  partners.  Such  corporations  are, 
however,  subject  to  the  war-profits  and  excess-profits  tax 
imposed  by  Title  III  of  the  Revenue  Act  of  1918  and  the 
amount  of  that  tax  shall  be  deducted  from  the  net  income 
before  computing  the  proportionate  share  of  each  stock- 
holder or  member. 

In  other  words,  if  the  Commissioner  of  Internal  Revenue 
decides  that  a  corporation  has  allowed  its  profits  to  accumu- 
late beyond  the  reasonable  needs  of  the  business  and  for 
the  sole  purpose  of  allowing  the  individual  stockholder  to 
escape  payment  of  the  surtax  on  their  individual  incomes, 
the  profits,  after  deducting  the  war-profits  and  excess-profits 
tax  imposed  by  Title  III  of  the  Revenue  Act  of  1918,  which 
have  been  so  accumulated  shall  be  assigned  to  the  individual 
stockholders  in  proportion  to  their  stockholdings  and  shall 
be  taxable  to  them,  not  as  dividends  received  from  corpora- 

182 


INDIVIDUALS— Continued  INCOME—Net  Income 

tions,  but  as  a  distribution  of  partnership  profits  and  sub- 
ject to  both  the  normal  tax  of  6  and  12  per  cent,  and  the 
additional  taxes. 

With  respect  to  a  similar  provision  in  the  Act  of  Oct.  3, 
1913  (old  law),  Treasury  Decision  2135  held  that  the  law 
imposes  no  duty  on  the  taxpayer  to  ascertain  his  distribu- 
tive interest  in  the  undivided  surplus  of  corporations  for  the 
purpose  of  making  return  of  the  amount,  in  addition  to  divi- 
dends declared  on  his  stock,  unless  the  Secretary  of  the 
Treasury  has  certified  that,  in  his  opinion,  such  accumula- 
tion is  unreasonable  for  the  purpose  of  business. 


INCOME. 


NET  INCOME. 

^  12 — Definition  of  Net  Income. 

The  net  or  taxable  income  of  an  individual  is  his  gross  in- 
come, i.  e.,  his  total  gains,  profits  and  income  derived  from 
every  source,  less  the  deductions  allowed. 

^13 — Normal  Tax — Upon  What  Computed. 

In  computing  the  taxable  income  for  the  purposes  of  the 
normal  tax  there  shall  be  deducted  from  the  net  income  as 
above  ascertained : 

(a)  Dividends  on  the  stock  or  from  the  net  earnings  of 
corporations,  joint-stock  companies,  or  associations,  or  in- 
surance companies  which  are  taxable  under  the  law.  See 
Law,  page  73,  Hhe  54,  page  74,  line  18. 

(b)  The  amount  received  as  interest  upon  obligations  of 
the  United  States,  and  bonds  issued  by  the  War  Finance 
Corporation,  which  is  included  in  gross  income.    See  tf  29. 

(c)  The  personal  exemption  of  $1,000  or  $2,000,  as  the 
case  may  be,  and  $200  for  each  dependent.    See  If  21 6,  21 7. 

U  1 4 — Net  Income — How  Computed. 

An  individual  shall  compute  net  income  upon  the  basis  of 
his  annual  accounting  period  (fiscal  year  or  calendar  year, 
as  the  case  may  be)    in  accordance  with  the  method  of 

183 


INDIVIDUALS— Continued  INCOME— Gross  Income 

accounting  regularly  employed  in  keeping  his  books,  but  if 
no  such  method  of  accounting  has  been  employed  or  if  it 
does  not  clearly  reflect  the  income,  the  computation  shall  be 
made  upon  such  basis  and  in  such  manner  as  in  the  opinion 
of  the  Commissioner  does  clearly  reflect  the  income.  If  the 
taxpayer's  annual  accounting  period  is  other  than  a  fiscal 
year  or  if  the  taxpayer  has  no  annual  accounting  period  or 
does  not  keep  books,  the  net  income  shall  be  computed  on 
the  basis  of  the  calendar  year.  If  a  taxpayer  changes  his 
accounting  period  from  fiscal  year  to  calendar  year,  from 
calendar  year  to  fiscal  year,  or  from  one  fiscal  year  to  an- 
other, the  net  income  shall,  with  the  approval  of  the  Com- 
missioner, be  computed  on  the  basis  of  such  new  account- 
ing period,  subject  to  the  provisions  of  Section  226.  See 
H  247  to  251. 

1115—  GROSS  INCOME. 

The  gross  income  of  a  taxable  person  includes : 
Gains,  profits  and  income  derived  from — 

(a)  Salaries,  wages,  or  compensation  for  personal  service 
of  whatever  kind  and  in  whatever  form  paid.  (Including 
in  the  case  of  the  President  of  the  United  States,  the  judges 
of  the  Supreme  and  inferior  courts  of  the  United  States,  and 
all  other  officers  and  employes,  whether  elected  or  ap- 
pointed, of  the  United  States,  Alaska,  Hawaii,  or  any  politi- 
cal subdivision  thereof,  or  the  District  of  Columbia,  the 
compensation  received  as  such.) 

(b)  Professions,  vocations,  businesses,  trade,  commerce, 
or  sales,  or  dealings  in  property,  whether  real  or  personal, 
growing  out  of  the  ownership  or  use  of,  or  interest  in,  real  or 
personal  property. 

(c)  From  interest,  rent,  dividends,  securities,  or  the  trans- 
action of  any  business  carried  on  for  gain  or  profit,  or  gains 
or  profits,  and  income  derived  from  any  source  whatever. 

(d)  Gains  or  profits  and  income  derived  from  any  source 
whatever,  including  the  income  from,  but  not  the  value  of, 
property  acquired  by  gift,  bequest,  devise  or  descent. 

If  the  property  so  acquired  (by  gift,  etc.)  is  subsequently 
sold  at  a  price  greater  than  the  fair  market  value  on  the  date 

184 


INDIVIDUALS— Continued  INCOME— Gross  Income 

received,  or  the  fair  market  value  on  March  1,  1913,  if  re- 
ceived prior  to  that  date,  the  gain  in  value  is  held  to  be  in- 
come and  subject  to  tax  under  the  provisions  of  the  Federal 
income  tax  law. 

^  1 6 — Legacies — Bequests. 

The  general  policy  of  the  law  and  rule  of  interpretation 
require  that  legacies  in  all  cases,  unless  clearly  inconsistent 
with  the  intention  of  the  testator,  should  be  held  to  be 
vested  rather  than  contingent. 

The  legal  definition  of  "vested"  is  any  property  interest 
whether  actually  in  possession  or  not  that  is  not  subject  to 
contingency  or  to  conditions  unperformed. 

Where  there  is  a  vested  interest,  the  income  from  such 
interest,  if  undistributed,  is  taxable  in  the  hands  of  the  fidu- 
ciary ;  if  distributed,  it  is  taxable  in  the  hands  of  the  bene- 
ficiaries, and  the  fiduciary  is  required  to  make  return,  for 
information  purposes,  if  the  amount  distributed  to  any  one 
beneficiary  during  the  year  1918  equalled  or  exceeded  $1,000 
or  $2,000,  according  to  the  marital  status  of  the  individual, 
estate  or  trust  for  which  he  acts. 

Tf  1 7 — Time  of  Accrual  of  Income. 

Fixed  and  determinable  income,  becoming  due  and  pay- 
able since  February  28,  1913,  such  as  that  derived  from 
salaries,  wages,  compensation,  etc.,  or  from  interest  on 
bonds,  should  be  returned  as  income  for  the  year  (calendar 
or  fiscal  year)  in  which  such  income  is  received.  Thus — 
(Return  made  on  basis  of  calendar  year.) 

(a)  Coupons  which  fell  due  prior  to  Jan.  1,  1918,  but 
which  were  not  paid  until  that  date  or  later ; 

(b)  Income  received  by  trustees  prior  to  Jan.  1,  1918,  but 
not  paid  over  to  the  beneficiary  until  that  date  or  later ; 

(c)  Dividends  declared  prior  to  Jan.  1,  1918,  but  not  paid 
until  that  date  or  later ; 

(d)  Salary  or  wages  earned  in  1917,  but  not  paid  until 
Jan.  1,  1918,  or  later  — 

all  should  be  returned  as  income  for  the  year  ended  Dec. 
31,  1918. 

185 


INDIVIDUALS— Continued  INCOME— Dividends 

U  1 8 — Receipt  Basis. 

Actual  receipt  is  a  reduction  to  possession.  Constructive 
receipt  is  where  income  is  credited  to  or  made  available  to 
recipients  and  is  to  be  reported  as  income;  as  credit  to  ac- 
count of  recipients  of  savings-bank  interest,  etc. 

In  the  case  of  compensation  for  service  renavired,  where 
no  determination  of  compensation  is  had  until  the  com- 
pletion of  the  service,  the  amount  received  in  consideration 
of  the  service  is  income  to  be  accounted  for  as  for  the  cal- 
endar year  of  its  receipt. 

Where  the  service  and  payment  period  is  divided  by  the 
end  of  the  taxable  year,  the  compensation  for  the  period  so 
divided  at  the  end  of  the  year  will  be  accounted  for  as 
income  for  the  year  in  which  payment  is  actually  received. 
Where  the  service  is  compensated  by  fee,  or  is  of  such 
nature  that  no  part  of  the  fee  or  compensation  becomes 
due  until  the  completion  of  the  service,  the  entire  amount 
rceived  should  be  income  to  be  accounted  for  as  for  the  year 
of  receipt. 

A  person  having  a  salary  by  the  year  ahd  in  addition 
commissions  on  sales,  the  salary  to  be  paid  at  the  time 
commissions  are  determined,  and  the  determination  of  com- 
missions is  in  the  succeeding  calendar  year,  the  entire 
amount  of  salary  and  commissions  should  be  accounted  for 
as  income  of  the  calendar  year  of  receipt. — Art.  4,  Reg. 
33,  Revised. 

DIVIDENDS. 

^  1 9 — Income  from  Dividends. 

Income  from  dividends,  while  not  subject  to  normal  tax, 
must  be  included  in  every  return.    See  jf  29. 

The  term  "dividend"  means  any  distribution  made  by  a 
corporation  other  than  a  personal  service  corporation  to  its 
shareholders  or  members  whether  in  cash  or  in  other  prop- 
erty or  in  stock  of  the  corporation  out  of  its  earnings  or 
profits  accumulated  since  February  28th,  1913 ;  or  any  such 
distribution  made  by  a  personal  service  corporation  out  of 
its  earnings  or  profits  accumulated  since  February  28th, 
1913,  and  prior  to  January  1st,   1918.     Any  distribution 

186 


INDIVIDUALS— Continued  INCOME— Dividends 

shall  be  deemed  to  have  been  made  from  earnings  or  profits 
unless  all  earnings  and  profits  have  first  been  distributed. 
Any  distribution  made  in  the  year  1918  or  subsequent  years 
shall  be  deemed  to  have  been  made  from  earnings  or  profits 
accumulated  since  Feb.  28,  1913,  or,  in  the  case  of  a  personal 
service  corporation,  from  the  most  recently  accumulated 
earnings  or  profits ;  but  any  earnings  or  profits  accumulated 
prior  to  March  1,  1913,  may  be  distributed  in  stock  divi- 
dends or  otherwise,  exempt  from  the  tax,  after  the  earnings 
and  profits  accumulated  since  Feb.  28,  1913,  have  been 
distributed.  (The  first  income  tax  act  became  effective 
March  1,  1913.) 
]f  20 — Cash  Dividends. 

Cash  dividends  or  their  equivalent  paid  from  the  net 
earnings  or  established  surplus  or  undivided  profits  of  cor- 
porations, accumulated  since  Feb.  28,  1913,  constitute  tax- 
able income  in  the  hands  of  shareholders  or  beneficiaries 
when  received,  and  should  be  included  in  the  return  when 
the  total  net  income  of  any  individual  is  in  excess  of  $1,000 
or  $2,000,  according  to  the  marital  status  of  the  taxpayer, 
inclusive  of  such  dividends,  and  the  additional  tax  should  be 
paid  thereon  at  the  rates  prescribed  by  law  for  the  year  in 
which  the  dividends  were  received. 
^  21— Stock  Dividends. 

There  have  been  two  court  decisions  in  connection  with  stock  dividends 
which  may  ultimately  have  an  important  bearing  on  the  present  law.  The 
case  of  Towne  vs.  Eisner  on  January  7th,  1918,  in  which  the  United  States 
Supreme  Court  ruled  that  stock  dividends  paid  during  the  years  1913,  1914 
and  1915  were  not  taxable  income;  and  the  decision  handed  down  by  Judge 
Mayer  of  the  United  States  District  Court  on  January  23rd,  1919,  in  which 
it  waB  held  that  stock  dividends  were  not  taxable  as  income  under  the  Act 
of  September  8th,  1916. 

If  this  latter  decision  by  the  lower  court  is  eventually  upheld  by  the 
Supreme  Court,  it  may  invalidate  the  provision  of  the  present  Act  with 
respect  to  the  taxable  status  of  stock  dividends. 

Until  the  highest  court  has  passed  upon  the  matter,  however,  the  re- 
cipient of  stock  dividends  has  no  option  and  must  make  his  return  in  ac- 
cordance with  the  provisions  of  the  Act. 

In  the  event  of  the  higher  court  affirming  the  opinion  of  Judge  Mayer 
of  the  District  Court,  the  taxpayer  would  have  recourse  to  an  application 
for  refund  of  tax  illegally  assessed. 

(In  the  case  of  Towne  vs.  Eisner,  the  United  States  Supreme  Court  held 
that  under  the  provisions  of  the  Act  of  Oct.  3,  1913,  effective  from  Mar.  1, 
1913,  to  Dec.  31,  1915,  stock  dividends  were  not  taxable  income.  That  Act, 
however,  did  not  specify  stock  dividends  as  taxable  income,  and  the  tax 
was  levied  under  a  ruling  of  the  Treasury  Department.  This  omission  was 
corrected  in  the  Acts  of  1916,  1917  and  the  present  Act. 

187 


INDIVIDUALS— Continued  INCOME— Dividends 

The  court  held  in  effect  that  a  dividend  paid  in  stock  did  not  distribute 
any  assets  of  the  company,  but  constituted  merely  a  change  in  the  form 
of  the  evidence  of  ownership  of  such  assets.  The  theory  behind  the  specific 
taxation  of  stock  dividends  in  the  Acts  of  1916,  1917  and  1918  is  obviously 
that  a  corporation  could  indefinitely  accumulate  and  conserve  its  profits, 
and  thus  escape  taxation  on  such  profits  during  a  period  in  which  the  Gov- 
ernment needs  every  dollar  of  revenue.) 

1122- 

A  stock  dividend  is  a  distribution  by  a  corporation  to  the 
stockholders  of  capital  stock  of  the  distributing  corporation. 
A  distribution  of  capital  stock  other  than  that  of  the  distri- 
buting corporation  is  not  a  stock  dividend  but  a  dividend  in 
property. 

112a- 

A  stock  dividend  shall  be  considered  income  to  the  amount 
of  the  earnings  or  profits  so  distributed. 

Here  is  an  important  distinction.  In  effect  the  law  says 
that  the  value  of  stock  received  as  a  dividend  out  of  earn- 
ings shall  be  for  taxation  purposes,  not  its  market  value, 
but  the  valuation  placed  upon  it  by  the  distributing  corpora- 
tion, which  should  represent  the  amount  of  earnings,  profits 
or  surplus  distributed. 

—ILLUSTRATION. 

Corporation  A,  with  a  capital  stock  of  $10,000,000 
par  value  $100  per  share  and  an  accumulated  surplus  of 
$5,000,000  decides  to  capitalize  this  accumulation  and  dis- 
tribute the  same  to  stockholders  in  the  form  of  a  dividend. 

After  such  distribution  is  made  the  market  price  of  the 
$15,000,000  capital  stock,  may  be,  say,  $75  per  share,  and 
the  market  value  of  the  $5,000,000  stock  distributed  would 
be  $3,750,000. 

The  corporation,  however,  has  reduced  its  profit  and  loss 
surplus  by  $5,000,000  and  in  its  balance  sheet  has  substituted 
an  item  of  $5,000,000  additional  capital  stock  for  the  $5,000,- 
000  profit  and  loss  surplus.  For  taxation  purposes,  there- 
fore, the  value  of  the  stock  distributed  is  $5,000,000,  and 
the  taxable  value  per  share  would  be  $100. 

If  the  stock  of  a  corporation  had  no  par  value,  the  distri- 
bution might  have  been,  say,  50,000  shares  of  stock,  but  the 
value  of  the  earnings  or  profits  so  distributed  would  be  $100 

188 


INDIVIDUALS— Continued  INCOME— Dividends 

per  share,  provided  the  assets  distributed  were  valued  at 
$5,000,000  by  the  corporation. 

1I24-. 

Stock  dividends  are  taxable  to  the  recipient  at  the  rates 
of  tax  in  effect  during  the  calendar  year  in  which  received, 
except  that  any  stock  dividend  (1)  received  by  a  taxpayer 
between  January  1st  and  November  1st,  1918,  both  dates 
inclusive,  or  (2)  during  such  period  is  bona  fide  authorized 
or  declared,  and  entered  on  the  bookg  of  the  corporation, 
and  received  by  a  taxpayer  after  November  1,  1918,  and 
before  the  expiration  of  30  days  after  the  passage  of  the 
Revenue  Act  of  1918,  then  such  stock  dividend  shall,  in  the 
manner  provided  in  Section  206  (parts  of  income  subject  to 
rates  for  different  calendar  years) ,  be  taxed  to  the  recipient 
at  the  rates  prescribed  by  law  for  the  years  in  which  the 
corporation  accumulated  the  earnings  or  profits  from  which 
such  dividend  was  paid,  but  the  dividend  shall  be  deemed  to 
have  been  paid  from  the  most  recently  accumulated  earnings 
or  profits. 

As  an  illustration  of  the  above  paragraph,  assume  that  a 
taxpayer  received  income  for  the  calendar  year  1918  as 
follows : 

Net  income  from  ordinary  sources $18,000 

Dividends  declared  and  paid  in  stock  on  March  1,  1918,  designated 
by  the  corporation  as  having  been  paid  from  surplus  accumu- 
lated during  the  year  1917 12,000 

Total  net  income $30,000 

Deduct  dividends  before  computing  normal  tax 12,000 

Net  income  less  dividends $18,000 

Specific  exemption   (married  man) 2,000 

Net  income  subject  to  normal  tax $16,000 

Normal  tax   (6%  on  first  $4,000) 240 

12%  on  balance  of  $12,000 1,440 

Surtax  on  $18,000  (at  1918  rates) 550 

Total  normal  and  surtax  (net  income  less  stock  dividends)  at 

1918    rates $2,230 

Computation  of  tax  on  the  above  stock  dividends  (paid  from  1917 

earnings) : 
Net  income   (exclusive  of  the  stock  dividends) $18,000 

189 


INDIVIDUALS— Continued  INCOME— Dividends 

Sto.;k  dividends $12,000 


Total  1918  net  income $30,000 

Of  the  $12,000  of  stock  dividends  the  first  $2,000  taxable  at  the 

1917  rates  between  $15,000  and  $20,000  @  5%: 

$2,000  @  5% $100 

The  balance  or  $10,000  taxable  at  the  1917  rates  between  $20,000 

and  $40,000  @  S%: 
$10,000  @  8% $800 

Surtax  on  stock  dividends  at  rates  in  effect  for  the  year  1917 $900 

Add — normal  and  surtax  (on  net  income  less  stock  dividends)  at 

1918  rates 2,230 

Total  $3,130 

It  will  be  seen  from  the  above  computation  that  if  the 
stock  dividends  received  in  the  year  1918  were  taxable  at 
the  rates  in  effect  for  the  year  1918  instead  of  at  the  rates 
of  the  year  1917,  the  amount  of  $12,000  would  be  taxable 
at  from  8  to  1 4  per  cent,  while  the  tax  at  the  1917  rate  is 
only  from  5  to  8  per  cent. 

If  25 — Distribution  of  Assets  in  Liquidation. 

Amounts  distributed  in  the  liquidation  of  a  corporation 
shall  be  treated  as  payments  in  exchange  for  stock,  and  any 
gain  or  profit  realized  thereby  shall  be  taxed  to  the  distri- 
butee as  other  gains  or  profits. 

—ILLUSTRATION. 

In  1912  John  Doe  purchased  100  shares  of  the  stock  of 
Corporation  B  for  $8,000.  The  fair  value  of  this  stock  on 
March  1,  1913,  was,  say  $9,000.  In  the  year  1918  Corpora- 
tion B  went  into  voluntary  liquidation  and  by  Dec.  31,  1918, 
had  distributed  to  John  Doe  cash  or  its  equivalent  to  the 
extent  of  $11,000.  For  taxation  purposes,  therefore,  his 
profit  is  the  difference  between  $9,000  (the  fair  value  of  the 
stock  on  March  1,  1913)  and  $11,000,  or  $2,000. 

Any  additional  cash  or  its  equivalent  that  might  be  dis- 
tributed from  the  assets  of  the  corporation  in  the  year  1919 
would  be  included  as  profits  in  John  Doe's  return  for  the 
year  1919. 

Conversely,  if,  after  complete  liquidation  of  the  assets 
of  Corporation  B,  John  Doe  received  less  than  $9,000,  he 
could  deduct  such  difference  as  a  loss,  but  only  after  the 

190 


INDIVIDUALS— Continued  INCOME— Dividends 

liquidation  of  the  assets  of  Corporation  B  had  become  a 
completed  and  closed  transaction. 

]j  26 — Dividends  Paid  With  Securities. 

Dividends  declared  by  a  corporation  and  paid  with  securi- 
ties in  which  the  surplus  of  the  corporation  has  been  in- 
vested, regardless  of  the  character  of  such  securities,  is  to 
be  accounted  for  as  a  dividend  for  income-tax  purposes  by 
the  recipients  of  same  to  the  extent  that  it  represents  a  dis- 
tribution of  surplus  accrued  to  the  corpc|fation  since  March 
1,  1913.— Art.  4,  Reg.  33,  Revised. 

See  11  23  above. 

If  27 — Dividend  Payable  in  Liberty  Bonds. 

An  opinion  has  been  rendered  that  where  stockholders  of 
a  corporation  receiving  a  dividend  declared  payable  and  dis- 
tributable in  Liberty  bonds,  the  same  should  be  returned  as 
income  —  Opinion  Attorney  General.  —  Treasury  Decision 
2512,  June  8,  1917. 

The  Commissioner  of  Internal  Revenue  has  ruled  that 
when  dividends  are  paid  in  Liberty  bonds,  the  amount  to  be 
returned  by  the  taxpayer  as  income  shall  be  the  market 
value  of  the  bonds  at  the  time  of  receipt. 

This  ruling  appears  to  be  in  conflict  with  the  opinion  of 
the  Attorney  General,  in  which  it  was  held  that  dividends 
paid  in  Liberty  bonds  were  taxable  to  the  recipient  "to  the 
amount  of  the  earnings  or  profits  invested  by  the  corpora- 
tion in  the  bonds." 

These  two  contrary  opinions  will  probably  be  clarified  at 
an  early  date  by  the  issuance  of  a  Treasury  Decision. 

If  28 — Dividends  Paid  Out  of  Amounts  Set  Aside  for 
Depreciation. 

Dividends  paid  out  of  reserves  set  aside  for  depreciation 
do  not  represent  a  distribution  of  capital  assets.  All  such 
dividends  received  by  stockholders  declared  out  of  such  re- 
serves accumulated  subsequent  to  March  1,  1913,  constitute 
income  to  the  stockholders  and  must  be  accounted  for  in 
returns  of  net  income. — Treasury  Decision  2540,  October 
10,  1917. 

191 


INDIVIDUALS— Continued  INCOME— Dividends 

^  29 — Dividends  to  be  Included  in  Return. 

Dividends  must  be  included  in  a  return  of  income,  but 
persons  subject  to  the  normal  tax  only  are  permitted  to 
deduct  from  their  net  income  the  amounts  so  received.  Un- 
der the  law,  corporations,  joint-stock  companies,  associa- 
tions, etc.,  are  taxed  directly  on  the  net  income  avail- 
able for  payment  of  such  dividends ;  theref ore,the  individual 
stockholder  has  indirectly  paid  the  normal  tax  on  income 
derived  from  that  source  before  receiving  his  dividends. 

If  30 — Dividends  Are  Subject  to  Additional  Tax. 

For  the  purpose  of  ascertaining  the  amount  upon  which 
the  normal  tax  of  6  and  12  per  cent,  is  chargeable,  a  person 
having  a  net  income  of  over  $5,000,  and  therefore  subject  to 
the  additional  tax,  may  deduct  income  received  as  dividends 
from  net  income,  to  ascertain  the  normal  tax,  but  the 
additional  tax  is  levied  against  net  income  exceeding  $5,000, 
including  dividends.  ♦ 

—EXAMPLE. 

For  instance,  a  person  having  an  income  of  $15,000  from 
dividends  and  $15,000  from  other  sources  may  deduct  from 
his  total  net  income  of  $30,000  the  $15,000  received  as  divi- 
dends, leaving  a  net  income  of  $15,000,  subject  to  the  normal 
tax.  He  would,  however,  be  obliged  to  pay  an  additional  tax 
on  the  amount  by  which  his  total  net  income,  including  divi- 
dends, exceeded  $5,000.  His  income,  subject  to  the  addi- 
tional tax,  therefore,  would  be  $25,000. 

^  31  — Rentals  Paid  Direct  to  Bondholders  and  Stockholders. 

While  the  payments  made  by  the  lessee  direct  to  the  bond- 
holders or  stockholders  are  rentals  to  both  it  and  the  lessor, 
rentals  paid  in  one  case  and  rentals  received  in  the  other,  to 
the  bondholders  and  the  stockholders  they  are  interest  and 
dividend  payments  received  as  from  the  lessor,  and  as  such 
will  be  accounted  for  in  their  returns  of  annual  net  income. 
—Art.  103,  Reg.  33  Revised. 
^  32— Stock  Trust  Certificates. 

Stock  trust  certificates  or  leased  line  certificates,  as  the 
case  may  be,  issued  by  the  lessee  for  the  purpose  of  securing 

192 


INDIVIDUALS— Continued  INCOME— Dividends 

or  holding  control  of  the  stock,  of  the  lessor  are  held  to  be 
issued  in  lieu  of  the  certificates  of  capital  stock,  and  for  the 
purpose  of  this  tax  will  be  treated  as  capital  stock  and  the 
amounts  received  by  the  holders  of  these  certificates  are 
dividends  to  the  holders,  to  be  treated  as  rentals  by  both 
lessee  and  lessor  and  constitute  an  allowable  deduction  in 
the  one  case  and  an  item  of  income  in  the  other,  accordingly 
as  they  are  paid  and  received. — Art.  104,  Reg.  33,  Revised. 

T[  33 — Dividends  from  Stock  or  Net  Earnings  of  Foreign 
Corporations. 

Dividends  received  by  citizens  or  residents  from  stock  or 
net  earnings  of  foreign  corporations  not  subject  to  payment 
of  the  tax  on  net  earnings  imposed  by  this  law,  must  be 
included  as  income  by  persons  subject  either  to  the  normal 
tax  only,  or  to  the  normal  and  additional /tax.  Such  divi- 
dends cannot  be  deducted  from  gross  income. 

Tf  34 — Dividends  Paid  by  Foreign  Corporations  from 
Earnings  Wholly  in  United  States. 

Dividends  declared  and  paid  by  a  foreign  corporation 
which  derives  its  entire  income  from  business  done  wholly 
within  the  United  States  and  pays,  under  the  'provisions  of 
the  Federal  Income  Tax  Law,  a  tax  upon  its  net  income, 
should  be  treated  in  the  same  manner  as  dividends  from 
domestic  corporations.  — ^Treasury  Decision  2090. 

^  35 — Record  Owner  of  Stocks  When  Another  Is  Actual 
Owner. 

Where  a  person  holds,  in  his  own  name,  stocks  which 
actually  belong  to  another,  such  person  is  not  required  to 
include  dividends  from  such  stocks  in  his  own  return,  unless 
a  question  be  raised  as  to  why  such  dividends  were  not  in- 
cluded. In  such  circumstances  the  record  owner  may  be  re- 
quired to  show  that  actual  ownership  rests  with  another. 

—ILLUSTRATION. 

On  Jan.  1, 1918,  John  Doe  purchases  100  shares  of  X.  Y.  Z. 
stock  at  $100  per  share  through  Smith,  Jones  &  Co.,  his 
brokers,  and  makes  a  partial  payment  of  $1,000  on  the  total 

193 


INDIVIDUALS— Continued  INCOME— Dividends 

purchase  price  of  $10,000,  borrowing  the  remainder  from 
his  brokers  and  depositing  with  them  the  100  shares  of 
stock  as  security  for  the  loan.  The  stock  is  transferred  to 
the  name  of  Smith,  Jones  &  Co.,  the  brokers,  who  thus  be- 
come the  record  owner,  while  John  Doe  is  the  actual  owner. 

On  July  2,  1918,  John  Doe  sells  the  100  shares  at  95,  rep- 
resenting a  loss  of  $500,  but  meantime  the  record  owners. 
Smith,  Jones  &  Co.  have  received  two  dividends  on  the  stock 
amounting  to  $400,  which  amount  was  duly  credited  to  the 
account  of  John  Doe  as  actual  owner. 

The  correct  accounting  of  John  Doe  for  tax  purposes 
would  be  as  follows. 

Cost  price $10,000 

*Commissions  25 

Total  cost $10,025 

Sale  price »     9,500 

Deductible  loss $525 

*See  H  125. 

It  will  be  noted  that  he  received  dividends  of  $400  from 
X.  Y.  Z.  stock  and  that  amount  would  be  included  in  his 
statement  of  gross  income  from  all  sources,  but  for  purposes 
of  the  normal  tax  only,  he  is  allowed  to  deduct  that  amount 
as  a  credit.  If  he  be  subject  to  the  additional  tax  the 
amount  must  be  included  as  income  subject  to  such  addi- 
tional tax. 

John  Doe  also  paid  to  his  brokers  $270  as  interest  on  the 
loan  of  $9,000  for  six  months.  This  would  be  a  separate 
deduction  from  his  net  income  under  the  head  of  interest 
paid  on  indebtedness. 

TI  36 — Scrip  Dividends. 

A  dividend  paid  in  scrip  is  held  to  be  equivalent  to  a  pay- 
ment in  cash,  and  should  be  returned  as  income  to  the 
amount  of  its  face  value.    Compare  If  312. 

A  scrip  dividend  is  a  written  promise  of  a  corporation  to 
pay  a  fixed  sum  of  money  at  a  future  date,  in  lieu  of  cash, 
and  is  virtually  the  equivalent  of  a  promissory  note. 

194 


INDIVIDUALS— Continued  INCOME—Dividends 

Tf  37 — State  Taxes  on  Capital  gtock  of  Banks. 

State  taxes  on  capital  stock  of  banks,  paid  by  banks  are 
assessed  against  the  individual  stockholder  and  constitute 
an  allowable  deduction  in  the  return  of  such  individual. 
If  such  individual  is  subject  to  the  additional  tax,  the 
amount  of  taxes  so  paid  should  be  included  in  his  return  as 
income,  the  said  amount  being  included  as  additional  divi- 
dends to  the  amount  of  taxes  paid.  Claim  for  deduction  of 
the  amount  should  then  be  made  under  the  heading  "Taxes.*' 

]f  38 — Compensation  of  Stockholders  of  a  Close  Corporation. 

When  a  company  composed  of  two  stockholders  divide 
profits  between  them,  calling  it  compensation,  same  cannot 
be  deducted  as  expense  of  business.  Money  paid  out  under 
those  circumstances  is  equivalent  to  dividends  and  must 
be  treated  as  income  of  the  corporation. 

With  respect  to  amounts  ostensibly  paid  as  compensa- 
tion for  services  of  officers  and  employes  of  business  enter- 
prises, the  Government  is  interested  and  authorized  to  see 
that  expenditures  of  this  character  are  "necessary"  as  the 
law  provides  that  in  the  case  of  individuals  and  corpora- 
tions only  "the  necessary  expenses  paid  in  carrying  on 
business"  shall  be  allowed  as  a  deduction. 

The  question  of  deductibiHty  will  be  considered  with  pay- 
ments made  for  services  and  amounts  ordinarily  paid  for 
like  services  in  other  enterprises  of  a  similar  character,  or 
whether  the  same  include  some  other  element. 

The  following  will  be  taken  into  consideration  in  this  con- 
nection. 

Any  amount  paid  in  form  of  compensLti'  but  not  in 
fact  as  the  purchase  price  of  services,  is  not  deductible. 

An  ostensible  salary  may  be  a  distribution  of  dividends, 
which  is  likely  to  occur  in  corporations  having  a  few  stock- 
holders, and  a  part  of  the  salary  in  cases  of  this  kind  would 
not  be  considered  as  being  paid  for  services  wholly  ren- 
dered. This  condition  may  also  arise  where  salaried  em- 
ployes own  a  majority  of  the  stock,  as  the  payment  of  an 
ostensible  salary  may  be  in  part  a  waste  or  appropriation  of 
assets  of  the  corporation. 

195 


INDIVIDUALS— Continued  INCOME— Miscellaneous 

An  ostensible  salary  may  be  paid  in  part  payment  for 
property.  This  is  occasioned  by  a  partnership  selling  out 
to  a  corporation,  the  partners  continuing  in  the  service  of 
the  corporation,  and  it  may  be  found  that  the  salary  in  part 
constitutes  payment  for  the  transfer  of  their  business. 

In  the  case  of  contingent  compensation,  consideration  will 
be  taken  of  the  fact  as  to  whether  the  agreement  was  made 
before  or  after  the  services  were  rendered,  and  the  facts 
surrounding  the  transaction. 

For  full  details  see  Index  "Treasury  Decisions" ;  Treasury 
Decision  No.  2696. 

^  39 — Dividends  Paid  on  Life  Insurance  Policies. 

Dividends  paid  on  life  insurance  policies  that  have  not 
matured  are  not  taxable  income.  Dividends  from  paid-up 
policies  must  be  included  as  income — Treasury  Decision 
2137. 


^  40 — Limited  Partnerships. 

Income  from  limited  partnerships  of  the  Pennsylvania 
type,  where  the  liability  of  all  the  members  is  limited  and 
the  respective  partnership  shares  are  transferable  much 
the  same  as  corporate  shares,  is  to  be  treated  as  income  re- 
ceived from  corporate  dividends. 

Limited  partnerships  of  the  New  York  type  which  cannot 
limit  the  liabilities  of  the  partners  and  where  the  respective 
partnership  shares  are  not  transferable,  the  partners  not 
having  the  privilege  of  sueing  in  the  partnership  name  are 
not  to  be  classed  as  corporations  and  the  income  received 
from  this  class  of  partnerships  is  to  be  treated  as  ordinary 
Pi  itne^ship  profits. — See  Treasury  Decision  2711. 

H  41  — Personal  Service  Corporations. 

(For  definition  of  a  "Personal  Service  Corporation,"  see 
Law,  page  52,  line  45. 

Personal  service  corporations  shall  not  be  subject  to  taxa- 
tion as  corporations,  but  will  be  required  to  make  returns 
as  partnerships  and  the  individual  stockholders  shall  be 
taxed  in  the  same  manner  as  the  members  of  partnerships, 
and  all  the  profits  of  the  taxable  year  shall  be  taxed  to  the 

196 


INDIVIDUALS— Continued  INCOME— Miscellaneous 

distributees  and  any  portion  remaining  undistributed  at  the 
end  of  the  taxable  year  shall  be  assigned  to  the  respective 
shareholders  in  proportion  to  their  stockholdings. 

If  42 — Permanent  Improvements  Under  Lease  or  Rental 
Contracts. 

When  improvements  become  a  part  of  real  estate,  the 
difference  between  cost  of  the  improvement  and  a  rea- 
sonable allowance  for  exhaustion,  wear  and  tear,  and  obso- 
lescence during  the  lease  term,  is  gain  or  profit  to  the 
lessor  at  the  end  of  the  lease  term  and  is  to  be  accounted 
for  as  income  at  that  time. — Treasury  Decision  2442 ;  also 
Art.  4,  Reg.  33,  Revised. 

—ILLUSTRATION. 

A  leases  a  plot  of  ground  from  B  for  a  term  of  five  years 
under  a  stipulation  that  any  permanent  improvements  made 
thereon  by  A  during  the  term  of  the  lease,  become  the  prop- 
erty of  lessor  B  at  the  termination  of  the  lease. 

Lessee  A  erects  a  public  garage  on  the  leased  plot  at  a  cost 
of  $3,000.  At  the  end  of  five  years  title  to  this  garage 
passes  to  lessor  B. 

For  income  tax  purposes  the  income  of  lessor  B  has  been 
increased  by  $3,000,  the  cost  of  the  garage,  less  a  reasonable 
allowance  for  exhaustion,  wear  and  tear,  and  obsolescence. 

Tf  43 — Income  from  Sale  of  Property. 

For  the  purpose  of  ascertaining  the  gain  derived  from  the 
sale  or  other  disposition  of  property,  real,  personal,  or 
mixed,  acquired  before  March  1,  1913,  the  fair  market  price 
or  value  of  such  property  as  of  March  1,  1913,  shall  be  the 
basis  for  determining  the  amount  of  such  gain  derived. 
(Law,  page  54,  line  13.) 

^  44 — Income  from  Sale  of  Personal  Property  on  the 
Installment  Plan. 

It  has  been  ascertained  that  dealers  in  personal  property 
who  sell  on  the  installment  plan  adopt  one  of  four  ways  of 
protecting  themselves  in  case  of  default,  namely : 

(1)  A  provision  that  title  is  to  remain  in  the  seller  until 
the  buyer  has  performed  his  part  of  the  agreement. 

197 


INDIVIDUALS— Continued  INCOME— Miscellaneous 

(2)  A  conveyance  of  title  to  the  purchaser  subject  to  a 
lien  for  the  unpaid  portion  of  the  purchase  price. 

(3)  The  conveyance  to  the  purchaser  and  an  immediate 
reconveyance  by  way  of  chattel  mortgage  to  the  seller. 

(4)  Conveyance  to  a  trustee  in  trust  to  hold  the  title 
pending  performance  of  the  contract  and  subject  to  its  pro- 
visions. 

The  purpose  is  the  same  in  all  of  these  transactions. 

In  view  of  the  fact  that  in  a  number  of  States  it  is  held 
that  the  form  first  mentioned  shall  not  be  enforced  accord- 
ing to  its  terms,  but  will  be  regarded  as  a  sale  with  a  chattel 
mortgage  back  to  secure  the  unpaid  purchase  price,  it  is 
desirable  that  a  uniform  rule  be  established  which  will  be 
equitable  and  applicable  to  all. 

The  rule  prescribed  is  that  in  the  sale  or  contract  for  sale 
of  personal  property  on  the  installment  plan,  whether  or  not 
title  remains  in  the  vendor  until  the  property  is  fully  paid 
for,  the  income  to  be  returned  by  the  vendor  will  be  that 
proportion  of  each  installment  payment  which  the  gross 
profit  to  be  realized  when  the  property  is  paid  for  bears  to 
the  gross  contract  price.  If,  for  any  reason,  the  vendee  de- 
faults in  his  installment  payments  and  the  vendor  repos- 
sesses the  property,  the  entire  amount  received  on  install- 
ment payments  less  the  profit  originally  returned  will  be 
income  to  the  vendor  to  be  so  returned  for  the  year  in  which 
the  property  was  repossessed. 

(This  ruling  amends  Articles  117  and  120  of  Regulations 
33,  Revised,  relating  to  the  Revenue  Act  of  1916,  and  re- 
vokes all  previous  decisions  and  rulings  which  are  in  conflict 
herewith. — Treasury  Decision  2707.) 

K  45 — Method  of  Determining  Value  as  of  March  1 ,  1 91 3. 

No  method  of  determining  this  value  can  be  stated  by  the 
department  which  will  adequately  meet  all  circumstances. 
What  that  value  was  is  a  question  of  fact  to  be  established 
by  any  evidence  which  will  reasonably  and  adequately  make 
it  appear. — Art.  4,  Reg.  33  Revised. 

In  the  case  of  real  property,  if  the  fact  can  be  estabhshed 
that  a  bona  fide  offer  was  received  approximately  at  this 

198 


INDIVIDUALS— Continued  INCOME— -Miscellaneous 

date  or  a  competent  appraisal  was  made  based  on  surround- 
ing values,  this  would  be  an  equitable  basis  upon  which  to 
establish  the  fair  market  value  as  of  this  date. 

In  the  case  of  securities,  the  average  market  value  between 
the  opening  and  the  closing  price  of  March  1,  1913  is  the 
basis. 

For  income  tax  purposes,  where  there  is  an  actual  sale 
and  transfer,  profit  will  be  considered  as  realized  even 
though  payment  is  to  be  made  in  installments,  as  notes  for 
deferred  payments  are  secured  by  the  title  to  the  property 
and  presumably  bear  interest  and  are  held  to  be  worth,  in 
cash,  their  face  value. 

In  case  of  default  on  installment  payments  there  may  be 
charged  off  as  bad  debts  the  amount  of  such  unpaid  install- 
ments less  the  salvage  value  of  the  real  estate  repossessed. 
— Treasury  Decision  2090. 

Tf  46 — Income  Received  by  Estates  of  Deceased  Persons. 

Income  received  by  estates  of  deceased  persons  during  the 
period  of  administration  or  settlement  of  the  estate  is  sub- 
ject to  the  normal  and  additional  tax,  and  will  be  taxed  to 
their  estates. — Law,  page  67,  line  36. 

Tf  47 — Income  of  Estates  or  Property  Held  in  Trust. 

Such  income  of  estates  or  any  kind  of  property  held  in 
trust,  including  such  income  accumulated  in  trust  for  the 
benefit  of  unborn  or  unascertained  persons,  or  persons  with 
contingent  interests,  and  income  held  for  future  distribution 
under  the  terms  of  the  will  or  trust,  shall  likewise  be  taxed. 
Except  where  such  income  is  returned  for  the  purpose  of  tax 
by  the  beneficiary,the  tax  in  each  instance  will  be  assessed 
to  the  executor,  administrator  or  trustee. 

Where  the  income  is  to  be  distributed  annually  or  regu- 
larly between  existing  heirs  or  legatees  or  beneficiaries, 
the  rate  of  tax  and  method  of  computing  the  same  shall 
be  based  in  each  case  upon  the  amount  of  the  individual 
share  distributed,  and  the  tax  shall  be  paid  by  the  bene- 
ficiaries and  not  by  the  fiduciary. 

199 


INDIVIDUALS— Continued  INCOME— Miscellaneous 

Tf  48 — Bonds  Purchased  Between  Interest  Dates. 

Interest  accrued  to  the  time  of  purchase  (advanced  by 
purchaser)  is  not  to  be  accounted  for  as  income  by  the 
purchaser.  Only  the  amount  of  interest  assignable  to 
the  portion  of  the  interest  period  subsequent  to  the  pur- 
chase has  a  status  of  income  for  the  purposes  of  return 
and  tax  by  purchaser. 

The  amount  of  accrued  interest  so  advanced  by  the  pur- 
chaser is  taxable  income  to  be  accounted  for  in  the  return 
of  the  vendor. — Art.  4,  Reg.  33,  Revised. 

Where  a  taxpayer  purchases  a  6%  $100  coupon  bond  at 
it  face  value,  plus  $1.50 — that  is  three  months'  accrued 
interest — and  three  months  later  detaches  a  coupon  there- 
from and  collects  $3  interest,  it  is  necessary  to  report  in 
your  return  only  so  much  interest  as  accrued  after  the  date 
of  your  purchase.  It  is  the  seller's  duty  to  report  the  bal- 
ance.— Primer,  Question  42. 

If  49 — Bonds^ — Coupons  Exchanged  for  Other  Bonds. 

Coupons  from  bonds  for  interest  thereon,  exchanged  for 
other  bonds,  are  held  to  be  the  equivalent  of  payment  of 
the  interest  coupons  and  purchase  of  the  new  bonds  with 
the  cash.  The  amount  of  the  coupons  is  to  be  accounted 
for  as  income  for  the  calendar  year  in  which  the  exchange 
is  made. — Art.  4,  Reg.  33,  Revised. 

If  50 — Building  and  Loan  Associations. 

Amount  credited  to  shareholders  of  building  and  loan 
associations,  when  title  to  such  credit  passes  to  the  share- 
holder at  the  time  of  the  credit,  has  a  taxable  status  for 
the  normal  and  additional  tax  as  for  the  year  of  the  credit. 
Where  the  amount  of  such  accumulations  does  not  "become 
available  to  the  shareholder  until  the  maturity  of  a  share, 
the  amount  of  a  share  in  excess  of  the  aggregate  amount 
paid  in  by  the  shareholder  is  income  to  be  accounted  for 
as  for  the  year  of  the  maturity  of  the  share  for  both  the 
normal  and  additional  tax. — Art.  4,  Reg.  33,  Revised. 

Tf  51  — Bonus  in  Common  Stock. 

Where  common  stock  is  received  as  a  bonus  in  considera- 
tion of  the  purchase  of  preferred  stock,  the  entire  proceeds 

200 


INDIVIDUALS— Continued  INCOME— Miscellaneous 

derived  from  the  sale  or  transfer  of  such  stock  is  income 
subject  to  the  normal  and  additional  tax. — Art.  4,  Reg.  33, 
Revised. 

U  52 — Commissions  on  Renewal  Premiums  for  Insurance. 

An  amended  return  is  required  in  cases  where  receipts 
from  this  source  were  not  included  in  1913  return. — Treas- 
ury Decision  2011. 

Any  commissions  received  by  insurance  agents  on  account 
of  business  written  are  taxable  income  for  the  year  in  which 
received. — Primer,  Question  40. 

Tf53 — Commission  Retained  by  Agent  on  His  Own  Life 
Insurance. 

Commission  retained  by  agent  on  his  own  life  insurance 
policy  is  held  to  be  income  accruing  to  the  agent,  and  should 
be  included  in  his  return  of  income  for  the  assessment  of 
the  income  tax. 

^  54 — Compensation  for  Service  Upon  an  Annual,  Monthly 
or  Weekly  Basis. 

Where  a  service  and  payment  period  is  divided  by  the 
end  of  a  taxable  year,  the  compensation  for  the  period  so 
divided  at  the  end  of  the  year  will  be  accounted  for  in  the 
return  for  the  year  in  which  payment  is  made  and  received. 
Where  the  service  is  of  such  nature  as  to  be  compensated 
by  fee,  or  of  such  nature  that  no  portion  of  the  amount 
becomes  due  until  the  service  is  completed,  then  the  total 
amount  of  the  compensation  should  be  included  in  the  return 
for  the  year  in  which  the  compensation  is  received. — Treas- 
ury Decision  2090. 

Tf  55 — Compensation  Not  Paid  in  Money. 

Where  service  is  rendered  for  stipulated  price,  wage,  or 
salary  and  paid  with  something  other  than  money,  the  stipu- 
lated value  of  service  in  terms  of  money  is  the  value  at 
which  the  thing  taken  in  payment  is  to  be  considered  for 
the  purpose  of  the  income  tax. 

Where  there  is  no  stipulation  as  to  the  value  of  service 
and  payment  for  service  is  made  with  something  other 
than  money,  the  market  or  reasonable  value  of  the  thing 

201 


INDIVIDUALS— Continued  INCOME— Miscellaneous 

taken  in  payment  is  the  amount  to  be  included  as  income 
for  the  purposes  of  the  income  tax. — Art.  4,  Reg.  33,  Re- 
vised. 

Where  a  person  receives  a  cash  compensation  for  services 
rendered,  and  in  addition  thereto  commissions,  living  ex- 
penses and  other  allowances,  a  return  is  required  in  each 
case  where  the  cash  compensation  plus  the  value  of  the 
allowances  equals  or  exceeds  $1,000  for  the  tax  year. — 
(Primer,  Question  135.) 

Board  and  lodging,  or  other  consideration  received  in 
lieu  of  rental  or  cash,  is  considered  income  equal  in 
amount  to  the  indebtedness  in  payment  of  which  it  is 
received,  and  should  be  included  in  any  return  of  annual 
net  income  its  recipient  is  required  to  render. — Treasury 
Decision  2137. 

1156 — Farm  Products — Income  From — How  Treated. 

Income  from  farm  products  and  crop-share  rentals  to 
be  included  in  return  of  income  for  year  in  which  sold  or 
exchanged  for  money,  or  a  money  equivalent. — Treasury 
Decision  2153. 

T[  57— Farm. 

The  term  "farm"  as  herein  used  embraces  the  farm  in  the 
ordinary  accepted  sense,  plantations,  ranches,  stock  farms, 
dairy  farms,  poultry  farms,  fruit  farms,  truck  farms  and  all 
lands  used  for  similar  purposes;  and  for  the  purposes  of 
this  decision  all  persons  who  cultivate,  operate,  or  manage 
farms  for  gain  or  profit,  either  as  owners  or  tenants,  are 
designated  as  "farmers." 

1158- 

All  gains,  profits,  and  income  derived  from  the  sale  or 
exchange  of  farm  products,  whether  produced  on  the  farm 
or  purchased  and  resold  by  a  farmer,  shall  be  included  in 
the  return  of  income  for  the  year  in  which  the  products 
were  actually  marketed  and  sold;  and  all  allowable  deduc- 
tions, including  the  legitimate  expenses  incident  to  the 
production  of  that  year  or  future  years,  may  be  claimed  in 
the  return  of  income  for  the  tax  year  in  which  the  right  to 

202 


INDIVIDUALS— Continued  INCOME— Miscellaneous 

such  deduction  shall  arise,  although  the  products  to  which 
such  expenses  and  deductions  are  incidental  may  not  have 
been  sold  or  exchanged  for  money,  or  a  money  equivalent 
during  the  year  for  which  the  return  is  rendered. 

Rents  received  in  crop  shares  shall  likewise  be  returned 
as  of  the  year  in  which  the  crop  shares  are  reduced  to  money 
or  a  money  equivalent,  and  allowable  deductions  likewise 
shall  be  claimed  in  the  return  of  income  for  the  tax  year 
to  which  they  apply,  although  expenses  and  deductions 
may  be  incident  to  products  which  remained  unsold  at  the 
end  of  the  year  for  which  the  deductions  are  claimed.  When 
farm  products  are  held  for  favorable  market  prices,  no 
deduction  on  account  of  shrinkage  in  weight  or  physical 
value  or  losses  by  reason  of  such  shrinkage  or  deterioration 
in  storage  shall  be  allowed. — Art.  4,  Reg.  33,  Revised. 

Tieo- 

The  value  of  grain,  stock,  and  other  products  produced 
on  a  farm  is  not  considered  taxable  income  until  reduced  to 
cash  or  the  equivalent  of  cash.  Therefore,  if  crops  and 
stock  were  produced  in  1917  on  a  farm  owned  and  they 
were  sold  in  1918,  the  total  amount  received  therefor  is 
to  be  included  under  "Gross  Income"  in  the  1918  return. 
Crops  and  stock  produced  in  1918,  and  on  hand  December  31 
of  that  year,  need  not  be  considered;  but  the  amount  re- 
ceived therefor  should  be  included  in  the  return  rendered  for 
the  year  during  which  they  are  sold. 

Farmers  who  keep  books  according  to  some  approved 
method  of  accounting,  which  clearly  show  the  net  income, 
may  prepare  their  returns  from  such  books,  although  the 
method  of  accounting  may  not  be  strictly  in  accordance  with 
the  above  paragraph. — Primer,  Question  28. 

A  farmer  is  not  required  to  report  the  value  of  the  farm, 
produce  which  is  consumed  by  himself  and  family ;  but  any 
amount  of  expense  incurred  in  producing  garden  truck,  or 

203 


INDIVIDUALS— Continued  INCOME— Miscellaneous 

other  products  so  consumed,  cannot  be  claimed  as  a  deduc- 
tion.— Primer,  Question  30. 

The  price  placed  by  the  merchant  upon  the  goods  ex- 
changed for  farm  produce  is  to  be  included  as  income  in  the 
farmer's  return. — Primer,  Question  31. 

^  64 — Life  Insurance. 

Where  insured  receives,  under  any  form  of  life  insurance, 
an  amount  in  excess  of  premiums  paid  for  the  insurance, 
such  excess  has  a  taxable  status  and  is  to  be  accounted  for 
as  for  the  calendar  year  of  its  receipt. — ^Art.  4,  Reg.  33, 
Revised. 

Tf  65 — Dividends  on  Paid-up  Policies. 

Dividends  on  paid-up  policies  are  in  the  nature  of  cor- 
porate dividends  and  are  to  be  accounted  for  as  income  for 
the  purposes  of  the  additional  tax  only. — ^Art.  4,  Reg.  33, 
Revised. 

^  66 — Endowments. 

Where  a  taxpayer  receives  $1,000  in  1918  on  the  maturity 
of  an  endowment  life  insurance  policy  upon  which  pay- 
ments have  been  made  for  20  years,  only  the  difference  be- 
tween the  aggregate  amount  of  premium  paid  and  the 
amount  received  upon  the  maturity  of  contract  is  to  be  in- 
cluded in  income  tax  return. 

fl  67 — Other  Taxable  Income  from  Insurance. 

For  other  taxable  income  from  life  insurance  see  Index, 
"Life  Insurance." 

^  68 — Living  Quarters  Furnished  as  Part  of  Compensation. 

Where  an  individual  is  furnished  living  quarters  in  addi- 
tion to  salary  the  rental  value  of  such  living  quarters  is 
regarded  as  compensation  subject  to  the  income  tax. — 
Treasury  Decision  2090;  also,  see  H  55. 

^  69— Mileage. 

The  difference  between  the  amount  received  as  mileage 
and  the  amount  of  actual  necessary  expenses  incurred  on 

204 


INDIVIDUALS— Continued  INCOME— MisceUaneous 

a  journey  shall  be  returned  as  income. — Treasury  Decisions 
2090  and  2079;  also,  see  If  73.  - 

If  70 — Officer  or  Employe  of  a  State. 

An  individual  who  enters  into  a  contract  with  a  State, 
or  any  political  subdivision  thereof,  for  the  doing  of  a 
thing  or  things  specified  by  the  contract,  the  completion 
of  which  will  constitute  a  fulfillment  of  the  contract  on  the 
part  of  such  individual,  is  not  an  officer  or  employee  of  the 
State  or  political  subdivision  thereof  within  the  meaning 
and  intent  of  Section  4  of  the  Income  Tax  Law  and  the 
amount  received  by  him  from  the  State  or  political  subdi- 
vision thereof  under  the  terms  of  the  contract  is  to  be 
accounted  for  as  income. — ^Art.  4,  Reg.  33,  Revised. 

^  71  — Pensions. 

Pensions  paid  by  the  United  States,  private  institutions, 
or  individuals  are  to  be  accounted  for,  for  income  tax  pur- 
poses, in  all  cases  where  income  of  the  pensioner  is  liable 
for  income  tax. — Art.  4,  Reg.  33,  Revised. 

II  72— Profit  from  the  Sale  of  Stock. 

When  stock  is  sold  from  lots  purchased  at  different  times 
and  at  different  prices  and  the  identity  of  the  lots  can  not 
be  determined  as  to  dates  of  purchase,  the  stock  sold  shall 
be  charged  against  the  earliest  purchases  of  such  stock. 
The  difference  between  cost  and  amount  realized  on  the 
sale  will  be  the  profit  to  be  accounted  for  as  income  if 
the  purchase  was  on  or  after  March  1,  1913.  Profit  derived 
from  the  sale  of  stock  purchased  prior  to  March  1,  1913,  is 
the  difference  between  the  fair  market  price  or  value  as  of 
that  date  and  the  selling  price. — Art.  4,  Reg.  33,  Revised. 

Tf  73 — Per  Diem  Allowances  in  Lieu  of  Subsistence  While 
Traveling  Under  Orders. 

The  difference  between  the  amount  received  as  a  per  diem 
allowances  and  the  amount  of  actual  necessary  expenses  in- 
curred on  a  journey  shall  be  returned  as  income.  An  amount 
equal  to  ordinary  home  living  expense  should  be  excluded 
as  the  same  is  not  a  proper  deduction. 

205 


INDIVIDUALS— Continued  INCOME— Miscellaneous 

It  74— Proceeds  of  Sale  of  "Rights"  Income. 

In  cases  wherein  corporations  desiring  to  secure  addi- 
tional capital  propose  to  issue  and  sell  further  shares  of 
stock,  reserving  to  their  stockholders  the  right  to  subscribe 
for,  at  par  or  any  other  stipulated  price,  a  certain  number 
of  shares  of  the  new  stock  issue,  proportioned  to  the  number 
previously  held,  and  if  such  stockholders  shall  sell  their 
rights,  it  will  be  held  that  the  proceeds  of  such  sale  are  in 
their  entirety  income  for  the  year  in  which  the  rights  are 
sold,  and  should  be  so  returned  by  the  stockholders,  whether 
they  be  individuals  or  corporations. — Art.  95,  Reg.  33,  Re- 
vised. 

If  75— Sale  of  Stock  Acquired  by  Gift. 

The  fair  market  price  or  value  of  stock  acquired  by  gift 
subsequent  to  March  1,  1913,  is  the  basis  for  computing 
gain  derived  or  loss  sustained  by  the  sale  thereof.  If  ac- 
quired by  gift  prior  to  March  1,  1913,  the  fair  market  price 
or  value  as  of  that  date  is  the  basis  for  computation. — Art. 
4,  Reg.  33,  Revised. 

1j  76— Rent. 

Amounts  expended  by  tenants  for  taxes  and  necessary 
repairs  under  agreement,  in  addition  to  a  stipulated  cash 
rental,  are  items  of  taxable  income,  and  as  such  should  be 
reported  in  the  return  of  the  landlord.  A  corresponding 
amount  may  be  deducted  by  the  landlord. 

Tl  76(a)— Retired  Pay. 

Retired  pay  of  Army  and  Naval  officers  and  judges  of  the 
United  States  courts  is  subject  to  the  income  tax. 

]j  77— Royalty. 

Royalty  paid  to  a  proprietor  by  those  who  are  allowed  to 
develop  or  use  property,  or  operate  under  some  right  be- 
longing to  him,  is  to  be  accounted  for  as  income. — Art.  4, 
Reg.  33,  Revised. 

^  78— Warrants  of  City,  Etc. 

In  cases  wherein  warrants  are  issued  by  a  city,  town,  or 
other  political  subdivision  of  a  State,  and  are  accepted  by 

206 


INDIVIDUALS— Continued  INCOME— Miscellaneous 

the  contractor  in  payment  for  public  work  done,  the  face 
value  of  such  warrants  must  be  returned  as  income  for 
the  year  in  which  they  are  received.  If,  for  any  reason, 
the  contractor  upon  conversion  of  the  warrants  into  cash, 
does  not  receive  and  can  not  recover  the  full  face  value  of 
the  warrants  so  returned,  he  may  allowably  deduct  from 
gross  income  for  the  year  in  which  the  warrants'  are 
converted  into  cash,  any  loss  sustained,  which  loss  will  be 
measured  by  the  difference  between  the  face  value  of  the 
warrants  returned  as  income  and  the  amount  actually  re- 
ceived for  them  in  cash,  or  its  equivalent,  when  redeemed 
or  disposed  of. — Art.  108,  Reg.  33,  Revised. 

Tl  7d — Compensation. 

If  an  employe's  total  compensation,  salary  and  bonus  is 
fixed,  determined,  and  paid  to  him  at  one  time,  the  same 
should  be  considered  income  for  the  year  in  which  received. 
It  follows  that  where  a  part  of  the  compensation  is  in  the 
form  of  a  salary  payable  monthly,  and  a  part  in  the  form 
of  a  bonus  not  fixed  and  determined  until  on  or  after  Jan- 
uary 1  of  the  year  following  that  in  which  the  services 
were  rendered,  the  two  parts  of  any  one  year's  compensation 
can  not  be  considered  together  for  the  purpose  of  including 
both  amounts  in  the  same  year;  but  the  fixed  salary  of 
one  year  should  be  considered  together  with  the  bonus 
received  on  or  after  January  1  of  that  year.  Thus,  if  the 
services  were  rendered  in  the  year  1914  the  employe's  com- 
pensation would  be  liable  to  tax  together  with  the  fixed 
salary  and  the  bonus  paid  on  or  after  January  1,  1914.  The 
bonus  to  be  paid  on  or  after  January  1,  1915,  will  belong 
to  the  tax  year  1915,  together  with  the  fixed  salary  re- 
ceived during  1915. — Treasury  Decisions  2135  and  2616. 

Tl  80— Bonuses. 

The  question  of  when  a  bonus  is  taxable  to  the  employe 
receiving  it  and  when  it  is  exempt  from  taxation  in  his 
hands  has  always  been  a  perplexing  one  to  a  great  many 
taxpayers. 

In  most  cases  a  bonus  is  in  reality  only  additional  salary 
or  compensation  and  not  an  actual  gift.    The  determining 


INDIVIDUALS— Continued  INCOME— Miscellaneous 

factor  is  whether  or  not  it  has  been  charged  off  by  the 
payor  (corporation,  firm  or  individual)  as  an  expense.  If 
the  payor  has  not  charged  off  as  expense  the  amount  paid 
as  bonuses,  then  it  is,  in  fact,  a  gift  to  the  employe  and  is 
free  of  tax  in  his  hands;  but  if  the  payor  charges  off  the 
bonuses  on  his  books  as  an  expense,  the  same  as  salary,  it 
naturally  follows  that  the  payor  has  paid  no  tax  on  this 
amount  so  charged  off  and  it  is  therefore  not  a  gift  but  has 
the  status  of  additional  salary  or  compensation  and  is  tax- 
able in  the  hands  of  the  employe  as  such. 

Tf  81 — Salary  and  Commissions. 

A  person  receiving  a  salary  and  in  addition  a  commission 
of  1  per  cent,  on  all  sales,  the  exact  amount  due  on  account 
of  commissions  not  being  determinable  until  February  fol- 
lowing the  year  in  which  the  commissions  were  earned,  at 
which  time  both  his  salary  for  the  preceding  year  and  his 
commissions  are  paid  to  him,  should  return  as  income,  for 
the  year  in  which  payment  was  made,  the  aggregate  amount 
received  on  account  of  salary  and  commissions. 

^  82 — Salaries  Paid  by  Organizations  Exempt  From  the 
Income  Tax. 

Salaries  paid  by  exempt  corporations  are  subject  to  the 
income  tax  and  should  be  returned  as  income  by  the  indi- 
vidual.— Treasury  Decision  2090. 

Tf  83 — Special  Compensation  for  Service  Rendered.  ^ 

Special  compensation  for  service  rendered  must  be  in- 
cluded as  income. 

If  84 — Voluntary  Offerings. 

Easter  offerings,  and  fees  received  by  clergymen  for 
funerals,  masses,  marriages,  baptisms,  etc.,  are  considered 
income  subject  to  tax  under  the  provision  of  the  Income 
Tax  Law  of  October  3,  1913.  Christmas  gifts,  however,  are 
not  considered  income  within  the  meaning  of  the  law  and 
should  not  be  included  in  a  return. — Treasury  Decision  2090. 

208 


INDIVIDUALS— Continued  INCOME— Tax  Exempt 

^  85^ — Where  an  Employe  Is  Paid  Two  Years'  Salary 
Conditionally. 

Where  an  employe  is  paid  a  sum  equal  to  two  years' 
salary  on  condition  that  he  surrender  his  contract  of  em- 
ployment, such  sum  should  be  reported  by  him  on  his  annual 
return  as  income. 

]\  86 — Income  Exempt  from  Tax. 

(See  Law,  page  60,  line  35.) 

The  following  income  is  exempt  from  the  provisions  of 
the  law  and  is  not  to  be  included  in  a  return  of  income : 

(1)  The  proceeds  of  life  insurance  policies  paid  upon  the 
death  of  the  insured  to  individual  beneficiaries  or  to  the 
estate  of  the  insured ; 

(2)  The  amount  received  by  the  insured,  as  a  return  of 
premium  or  premiums  paid  by  him  under  life  insurance, 
endowment,  or  annuity  contracts,  either  during  the  term  or 
at  the  maturity  of  the  term  mentioned  in  the  contract  or 
upon  the  surrender  of  the  contract. 

(3)  The  value  of  property  acquired  by  gift,  bequest, 
devise,  or  descent  (but  the  income  from  such  property  shall 
be  included  as  income) . 

(4)  Interest  upon  (a)  the  obhgations  of  a  State,  Terri- 
tory, or  any  political  subdivision  thereof,  or  the  District  of 
Columbia,  or  (b)  securities  issued  under  the  provisions  of 
the  Federal  Farm  Loan  Act  of  July  17,  1916;  or  (c)  the 
obligations  of  the  United  States  or  its  possessions,  or  (d) 
bonds  issued  by  the  War  Finance  Corporation.  In  the  case 
of  obligations  of  the  United  States  issued  after  September 
1,  1917,  and  in  the  case  of  bonds  issued  by  the  War  Finance 
Corporation,  the  interest  shall  be  exempt  only  if  and  to 
the  extent  provided  in  the  respective  Acts  authorizing  the 
issue  thereof,  and  shall  be  excluded  from  gross  income  only 
if  and  to  the  extent  it  is  wholly  exempt  from  taxation 
to  the  taxpayer  both  under  this  title  and  under  Title  III. 

Every  person  owning  any  of  the  obligations,  securities  or 
bonds  enumerated  in  paragraph  (4)  shall  submit  with  his 
return  of  income  a  statement  in  such  form  and  with  such 


INDIVIDUALS— Continued  INCOME— Tax  Exempt 

information  as  the  Commissioner  of  Internal  Revenue  may 
require,  showing  the  number  and  amount  of  such  obhga- 
tions,  securities  and  bonds  so  owned  and  the  income  re- 
ceived therefrom. 

(5)  The  income  of  foreign  governments  received  from 
investments  in  the  United  States  in  stocks,  bonds,  or  other 
domestic  securities,  owned  by  such  foreign  governments, 
or  from  interest  on  deposits  in  banks  in  the  United  States 
of  moneys  belonging  to  such  foreign  governments,  or  from 
any  other  source  within  the  United  States. 

(6)  Amounts  received,  through  accident  or  health  insur- 
ance or  under  workmen's  compensation  acts,  as  compensa- 
tion for  personal  injuries  or  sickness,  plus  the  amount  of 
any  damages  received  whether  by  suit  or  agreement  on 
account  of  such  injuries  or  sickness ; 

(7)  Income  derived  from  any  public  utility  or  the  exer- 
cise of  any  essential  governmental  function  and  accruing 
to  any  State,  Territory,  or  the  District  of  Columbia,  or  any 
political  subdivision  of  a  State  or  Territory,  or  income 
accruing  to  the  government  of  any  possession  of  the  United 
States,  or  any  political  subdivision  thereof. 

Whenever  any  State,  Territory,  or  the  District  of  Colum- 
bia, or  any  pohtical  subdivision  of  a  State  or  Territory,  prior 
to  September  8,  1916,  entered  in  good  faith  into  a  contract 
with  any  person  or  corporation,  the  object  and  purpose  of 
which  is  to  acquirt;,  construct,  operate,  or  maintain  a  public 
utiHty,  no  tax  shall  be  levied  under  the  provisions  of  this 
title  upon  the  income  derived  from  the  operation  of  such 
public  utility,  so  far  as  the  payment  thereof  will  impose  a 
loss  or  burden  upon  such  State,  Territory,  District  of  Colum- 
bia, or  political  subdivision;  but  this  provision  is  not  in- 
tended to  confer  upon  such  person  or  corporation  any  finan- 
cial gain  or  exemption  or  to  relieve  such  person  or  corpora- 
tion from  the  payment  of  a  tax  as  provided  for  in  this 
title  upon  the  part  or  portion  of  such  income  to  which  such 
person  or  corporation  is  entitled  under  such  contract; 

(8)  So  much  of  the  amount  received  by  a  person  in  the 
military  or  naval  forces  of  the  United  States  as  salary  or 

210 


INDIVIDUALS— Continued  INCOME— Tax  Exempt 

compensation  in  any  form  from  the  United  States  for  active 
services  in  such  forces  as  does  not  exceed  $3,500. 

The  word  "United  States"  as  used  in  this  title  shall  be 
construed  to  include  the  States,  the  Territories  of  Alaska 
and  Hawaii,  and  the  District  of  Columbia. — Law,  page  51, 
line  20. 

^  87 — Political  Subdivision  of  State. 

A  political  subdivision  as  here  used  is  held  to  mean  a 
district,  division,  or  community  created  by  proper  State 
authority  and  which,  by  virtue  of  such  authority  is  vested 
with  power  to  exercise  certain  governmental  functions,  such 
as  prescribing  regulations  for  its  government,  the  exercise 
of  certain  police  powers,  the  assessment  and  collection  of 
taxes,  etc. — Art.  83,  Reg.  33,  Revised. 

^  88 — Obligations  of  State,  Etc. 

Obligations  issued  by  the  duly  constituted  authorities  of 
such,  a  community  so  organized  and  empowered  are  the  obli- 
gations of  a  political  subdivision  of  the  State,  and  the 
interest  received  on  obligations  of  this  character  is  ex- 
empt from  the  taxes  imposed  by  the  Revenue  Act  of  1918 
subject  to  the  provisions  of  Section  213  (Law,  page  60, 
lines  10  and  48).  However,  a  district  without  power  to  ex- 
ercise any  governmental  function,  created  for  the  purpose 
of  making  some  improvement,  primarily  beneficial,  to 
the  property  located  in  and  comprising  the  district,  is 
not,  within  the  meaning  of  these  acts,  a  political  subdivision 
of  the  State.  Obhgations  issued  in  payment  for  such  im- 
provement, although  guaranteed  by  a  county,  municipality, 
or  other  poHtical  subdivision  of  the  State,  are  not  the 
obligations  of  the  State  or  of  any  political  subdivision 
thereof;  but  are  rather  the  obligations  of  the  benefited 
property  upon  which  they  constitute  a  lien.  Hence,  the 
income  derived  from  obligations,  which  are  a  direct  charge 
against  or  lien  upon  benefited  property,  is  not  exempt  from 
these  taxes,  and  must  be  returned  as  income  of  the  recipient. 
—Treasury  Decision  1946.— Art.  84,  Reg.  33,  Revised. 

211 


INDIVIDUALS— Continued  INCOME— Tax  Exempt 

If  89 — Obligations  of  the  United  States. 

Section  213  of  the  Revenue  Act  of  1918  exempts  from 
the  tax  interest  on  the  obligations  of  the  United  States 
issued  after  September  1,  1917,  only  if  and  to  the  extent 
provided  in  the  Acts  authorizing  their  issue 

^  90 — United  States  Bonds  and  Certificates  Issued  Under 
the  Act  of  September  24,  1917. 

Said  Act  provides  that  bonds  and  certificates  issued  there- 
under shall  be  exempt  from  all  taxes  except  estate  or  in- 
heritance taxes,  additional  income  taxes,  commonly  known 
as  surtaxes,  and  excess  or  war  profits  taxes — Art.  85,  Reg. 
33,  Revised. 

The  exemption  of  interest  received  after  January  1,  1918, 
upon  Liberty  bonds  is  as  follows : 

Interest  upon  the  first  issue  of  31/2S  is  totally  exempt.  If 
bonds  of  the  first  non-taxable  issue  have  been  converted 
into  the  second,  third  or  fourth  issues,  they  then  have  the 
status  of  "obligations  of  the  United  States  issued  after  Sept. 
1,  1917"  and  the  interest  received  upon  the  converted  bonds 
and  the  bonds  of  the  second,  third  and  fourth  issues  is  ex- 
empt from  taxation  to  the  following  extent:  If  the  tax- 
payer holds  no  bonds  of  the  fourth  issue,  the  interest  on  an 
aggregate  amount  of  the  second  and  third  issues,  not  ex- 
ceeding $5,000  of  principal,  is  exempt. 

As  an  example,  assume  the  taxpayer  has  $10,000  of  the 
second  issue  upon  which  he  receives  $400  interest  and  $10,- 
000  of  the  third  issue  upon  which  he  receives  $425 ;  the  in- 
terest upon  a  total  of  $5,000  of  the  entire  holding  of  the  first 
and  second  issues  or  $206.25  of  the  total  of  $825  interest  re- 
ceived would  be  exempt. 

If  the  taxpayer  holds  any  of  the  fourth  issue,  then  the 
interest  on  an  amount  of  bonds  of  this  issue,  the  principal 
of  which  does  not  exceed  $30,000,  is  exempt  from  tax.  The 
interest  on  bonds  of  the  second  and  third  issues,  either  con- 
verted or  unconverted,  is  exempt  up  to  one  and  one-half 
times  the  amount  of  the  bonds  of  the  fourth  issue  originally 
subscribed  for  and  held  by  the  taxpayer  at  the  time  of 
making  his  income  tax  return,  not  to  exceed  an  aggregate 
principal  amount  of  $45,000. 

212 


INDIVIDUALS— Continued  INCOME— Tax  Exempt 

Upon  bonds  of  the  first  issue  of  3i/^s  which  have  been 
converted  into  the  fourth  issue  for  the  purpose  of  securing 
any  of  the  exemption  privileges  arising  out  of  the  owner- 
ship of  bonds  of  the  fourth  issue,  the  interest  is  exempt 
from  taxation  to  an  amount  of  principal  not  exceeding 
$30,000. 

The  above  exemptions  are  in  addition  to  the  exemption 
of  an  aggregate  amount  of  $5,000  of  principal  of  the  second, 
third  and  fourth  issues,  which  is  provided  for  in  the  Acts 
authorizing  the  respective  issues. 

These  privileges  will  remain  in  effect  until  two  years 
after  the  date  of  the  termination  of  the  present  war  with 
Germany  as  fixed  by  proclamation  of  the  President  and  are 
accorded  to  all  taxpayers  whether  individuals,  partnerships, 
associations  or  corporations. 

As  set  forth  in  the  above  explanation,  it  is  possible  for  a 
taxpayer  to  secure  exemptions  on  Liberty  bonds  to  a  total 
of  $110,000  principal  amount,  as  follows : 

Fourth  issue $30,000 

Second  and  Third 45,000 

First  converted  into  Fourth 30,000 

Original  exemption  on  Second,  Third,  Fourth 5,000 

Total   $110,000 

If  the  owner  of  the  bonds  holds  less  than  $30,000  worth 
of  the  fourth  issue,  the  amount  of  the  second  and  third 
issues  exempt  is  one  and  one-half  times  the  amount  of  the 
fourth  issue  held,  plus  the  further  privileges  as  outlined 
above. 

^  91  — Dividends,  Federal  Reserve  Bank. 

The  Federal  Reserve  Statute,  Section  3,  of  the  Act  of 
October  22,  1914,  provides  that  Federal  reserve  banks  and 
the  capital  stock  and  surplus  therein,  are  exempt  from 
taxation. 

Under  this  provision  of  law  the  exemption  provided  for 
in  the  Federal  Reserve  Act  attaches  to  and  follows  the  in- 
come derived  from  dividends  on  stock  of  Federal  reserve 
banks  into  the  hands  of  stockholders,  that  is  to  say,  the  divi- 

213 


INDIVIDUALS— Continued         •     INCOME— Tax  Exempt 

dends  received  on  the  stock  of  Federal  reserve  banks  are  ex- 
empt from  the  taxes  imposed  by  the  Acts  of  September  8, 
1916,  as  amended,  and  of  October  3,  1917. 

This  ruhng  does  not  contemplate,  however,  that  dividends 
paid  by  member  banks  are  exempt  from  the  2  per  cent,  tax 
imposed  by  this  title,  but  such  dividends,  in  so  far  as  they 
may  be  received  by  other  corporations,  may  be  treated  as 
a  credit  against  net  income  in  computing  the  war  income  tax 
imposed  by  Title  I  of  the  Act  of  October  3,  1917.— Art.  86, 
Reg.  33,  Revised. 

^  92 — Federal  Farm  Loan  Act. 

Interest  on  securities  issued  under  provisions  of  Federal 
Farm  Loan  Act,  July  17,  1916,  is  exempt  from  tax. — Art.  5, 
Reg.  33,  Revised. 

^  93— Christmas  Gifts. 

Christmas  gifts  are  not  income  within  the  meaning  of 
the  law. — Treasury  Decision  2090. 

^  94 — Expense — Reimbursement  of. 

Amounts  received  from  a  railway  company  by  way  of 
reimbursement  for  expenses  incident  to  an  accident  are  not 
subject  to  the  income  tax. — Treasury  Decision  2153. 

H  95— Government  Officers  and  Employes. 

Treasury  Decision  2079  holds  that  the  amount  received 
for,  or  the  money  equivalent  of.  Quarters ;  Heat  and  Light ; 
Mileage;  and  Per  diem  allowance  in  lieu  of  subsistence,  is 
taxable  income  to  the  recipient,  except  that  the  actual  cost 
of  a  journey  should  be  deducted  from  "Mileage"  and  the 
actual  amount  expended  for  subsistence  while  traveling 
should  be  deducted  from  "Per  diem." 

Section  213  of  the  Revenue  Act  of  1918  modifies  the  above 
and  provides  that  so  much  of  the  salary  or  compensation  re- 
ceived during  the  present  war  for  active  service  in  the 
military  or  naval  forces  of  the  United  States  as  does  not 
exceed  $3,500  shall  be  exempt  from  income  tax. 

214 


INDIVIDUALS— Continued  INCOME— Tax  Exempt 

If  96 — Income  from  Exempt  Securities. 

Where  the  entire  income  of  an  individual  is  from  tax- 
exempt  bonds  and  where  the  amount  of  income  other  than 
that  from  tax-exempt  securities  is  less-^than  the  amount  of 
income  for  which  a  return  is  required,  no  return  of  income 
is  to  be  made.  Interest  from  securities  which  is  exempt 
from  tax  under  the  Income  Tax  Law  is  not  to  be  included 
in  returns  of  income. — Art.  26,  Reg.  33,  Revised. 

U  97 — Annuity. 

The  amount  paid  under  a  life  insurance,  endowment  or 
annuity  contract  is  not  income  when  returned  to  the  person 
making  the  contract,  either  upon  the  maturity  or  surrender 
of  the  contract ;  but  the  amount  by  which  the  sum  received 
exceeds  the  sum  paid  and  coming  into  the  hands  of  the 
person  making  the  contract  and  payment,  is  income. — Treas- 
ury Decision  2152. 

^  98 — Dividends  Paid  on  Life  Insurance  Policies. 

Dividends  paid  on  life  insurance  policies  that  have  not 
matured  are  not  taxable  income.  Dividends  from  paid-up 
policies  must  be  included  as  income. — Treasury  Decision 
2137. 

II  99 — Stock  Dividends  Declared  from  Special  Surplus. 

Stock  dividends  declared  from  a  surplus  created  from  the 
revaluation  of  capital  assets  or  a  value  placed  upon  trade- 
mark, good  will,  etc.,  do  not  represent  a  distribution  of  earn- 
ings or  profits  subject  to  tax  in  the  hands  of  the  recipient 
shareholder.  The  entire  proceeds  derived  by  a  shareholder 
from  the  sale  of  such  stock  is  income  subject  to  both  the 
normal  and  additional  tax  and  shall  be  accounted  for  in 
the  shareholder's  return  rendered  for  the  year  in  which 
sold. — Art.  4,  Reg.  33,  Revised. 

HlOO—Salary  Paid  After  Death. 

Salary  of  an  officer  or  employe  paid  for  a  limited  period 
after  his  death  to  his  widow  in  recognition  of  the  services 
rendered  by  her  husband,  no  services  being  rendered  by  the 
widow,  it  is  held  that  such  payment  is  a  gratuity  and 

215 


INDIVIDUALS— Continued  DEDUCTIONS— Credits 

exempt  from  taxation  under  the  Income  Tax  Law.  Such  a 
payment  would  not,  however,  be  an  allowable  deduction  as 
an  expense  of  carrying  on  business  in  the  return  of  the 
person,  firm,  or  corporation  paying  same. — Treasury  Deci- 
sion 2090. 

If  101 — State  or  Political  Subdivision — Expenses  in  Con- 
nection with  Salary  Received  from,  Not  Allowable 
Deduction. 

Expenses  incurred  in  earning  income  which  is  not  subject 
to  tax  under  the  Income  Tax  Law  do  not  constitute  allowable 
deductions  in  computing  net  income  from  other  sources 
which  are  taxable  under  the  law. — Treasury  Decision  2137. 

DEDUCTIONS,  EXEMPTIONS  AND  CREDITS 
T[102—  ALLOWED. 

In  computing  taxable  income  for  purposes  of  the  normal 
tax  the  following  exemptions  and  deductions  are  allowed. 

If  103— Deductions. 

For  the  purpose  of  the  normal  tax  the  law  allows  deduc- 
tions for  expenses,  interest  on  indebtedness,  taxes,  losses, 
depreciation,  contributions,  etc.  These  items  are  defined 
under  the  head  of  "Deductions  from  Income  Allowed." — 
See  If  S6  (4),  90,  106. 

^  1 04—  CREDITS  ALLOWED. 

Income  in  a  personal  return  for  the  normal  tax  shall  be 
credited  with  amounts  received  as  dividends  from  a  corpora- 
tion which  is  taxable  upon  its  net  income  and  amounts  re- 
ceived as  dividends  from  personal  service  corporations  out 
of  earnings  or  profits  upon  which  income  tax  has  been  im- 
posed by  Act  of  Congress. 

The  amount  received  as  interest  upon  obligations  of 
the  United  States  and  upon  bonds  issued  by  the  War 
Finance  Corporation,  which  is  included  in  gross  income  un- 
der Section  213.— See  If  86  (4),  90,  106,;  see  also  Law, 
page  60,  lines  10-48. 

216 


INDIVIDUALS— Continued         DEDUCTIONS—Expenses 

If  105—  PERSONAL  EXEMPTION. 

The  law  allows  an  exemption'  in  the  nature  of  a  deduction 
from  the  taxable  income  the  sum  of  $1,000  plus  $1,000  addi- 
tional if  the  person  making  the  return  be  the  head  of  the 
family  or  a  married  person  living  with  husband  or  wife, 
and  $200  additional  for  each  dependent  person. — See  |f  216. 

11 106— 

DEDUCTIONS  FROM  INCOME  ALLOWED. 

(See  Law,  page  62,  line  8.) 
(For  deductions  allowed  non-resident  aliens,  see  T[  455.) 
In  computing  net  income  in  the  case  of  a  citizen  or  resi- 
dent of  the  United  States  for  the  purpose  of  the  tax  there 
shall  be  allowed  as  deductions. 

^107—  EXPENSES. 

All  the  ordinary  and  necessary  expenses  paid  or  incurred 
during  the  taxable  year  in  carrying  on  any  trade  or 
business,  including  a  reasonable  allowance  for  salaries  or 
other  compensation  for  personal  services  actually  rendered, 
and  including  rentals  or  other  payments  required  to  be 
made  as  a  condition  to  the  continued  use  or  possession,  for 
purposes  of  the  trade  or  business,  of  property  to  which  the 
taxpayer  has  not  taken  or  is  not  taking  title  or  in  which  he 
has  no  equity. 

11108- 

This  includes  all  amounts  actually  paid  by  a  farmer  for 
labor  in  preparing  his  land  for  a  crop  and  the  cultivation, 
harvesting,  and  marketing  of  the  crop ;  the  cost  of  the  seed 
and  fertilizer  used ;  the  amounts  expended  for  labor  used  in 
caring  for  live  stock  and  the  cost  of  the  feed;  the  cost  of 
stock  purchased  for  the  purpose  of  resale.  (It  should  be 
understood,  however,  that  if  such  cost  is  claimed  as  a  deduc- 
tion, the  entire  proceeds  received  upon  a  sale  of  the  stock 
is  to  be  returned  as  income.)  The  amounts  actually  paid 
in  making  repairs  to  farm  buildings,  but  not  the  dwelling 
house;  repairs  to  fences,  farm  machinery,  etc.;  the  cost  of 
materials  for  immediate  use  and  farm  tools  which  are  used 
in  the  course  of  a  year  or  two,  such  as  binding  twine,  stock 

217 


INDIVIDUALS— Continued  DEDUCTIONS—Expenses 

powders,  pitchforks,  spades,  etc.;  and  the  amount  of  rent 
paid  for  a  farm  may  also  be  claimed.  The  amounts  paid  for 
live  stock  which  is  to  be  used  for  breeding  purposes  are 
held  to  represent  investment  of  capital  and  are  not  allow- 
able as  deductions. 

If  109— 

A  merchant  may  claim  as  deductions  the  amounts  paid 
for  advertising,  hire  of  clerks,  and  other  employes ;  the  cost 
of  the  light,  fuel,  water,  telephones,  etc.,  used  in  or  at  his 
place  of  business;  drayage  and  freight  bills;  the  cost  of 
operating  delivery  wagons,  trucks,  and  repairs  to  same. 

Tfiio— 

A  physician  may  claim  as  deductions  the  cost  of  medi- 
cines and  medical  supplies  used  by  him  in  the  practice  of  his 
profession,  expenses  paid  in  the  operation  and  repair  of  an 
automobile  used  in  making  professional  calls,  dues  to  med- 
ical societies  and  subscriptions  to  medical  journals,  the  ex- 
penses of  attending  medical  conventions,  the  rent  paid  for 
office  rooms  and  the  hire  of  office  assistants,  the  cost  of  the 
fuel,  light,  water,  telephone,  etc.,  used  in  such  office  rooms. 
Amounts  expended  for  books,  medical  supplies,  and  surgical 
instruments  of  a  permanent  character  are  not  allowable  as 
deductions. 

This  in  a  general  way  outlines  the  ordinary  and  usual  ex- 
penses incurred  by  a  farmer,  a  merchant,  or  a  professional 
man,  which  may  be  claimed  as  deductions,  and  the  principles 
underlying  these  allowances  are  equally  applicable  in  the 
case  of  anyone  engaged  in  a  business,  trade,  or  profession. 
In  short,  all  expenses  connected  directly  and  solely  with  the 
conduct  of  an  income-producing  business,  trade,  profession, 
or  vocation  are  allowable. 

IfllZ- 

Items  of  personal  expense  or  items  connected  in  any  way 
with  the  support,  maintenance,  and  well-being  of  a  family 
are  not  allowed;  neither  are  the  amounts  paid  for  tools. 

218 


INDIVIDUALS— Continued  DEDUCTIONS— Expenses 

implements,  vehicles,  machinery,  or  surgical  instruments 
which  are  more  or  less  permanent  in  character,  nor  the  cost 
of  medical,  law,  or  other  professional  books,  nor  are  the 
amounts  expended  in  making  permanent  improvements  or 
betterments  of  any  kind  whatsoever,  allowable  as  deduc- 
tions. These  latter  items  are  held  to  be  investments  of  cap- 
ital upon  which  depreciation  may  be  claimed. — Primer, 
Question  59. 

11 11 3— Alimony. 

Alimony  is  a  personal  expense  and  as  such  is  not  deduct- 
able  by  the  payor  and  is  not  an  item  of  income  to  the  re- 
cipient. This  was  decided  by  the  United  States  Supreme 
Court  in  the  case  of  Gould  vs.  Gould,  dated  Nov.  19,  1917. 

^11 4 — Orchards  and  Ranches. 

Amounts  expended  in  the  development  of  orchards  and 
ranches  prior  to  the  time  when  the  productive  stage  is 
reached  constitute  investments  of  capital. — Art.  4,  Reg.  33, 
Revised. 

T[  1 1 5 — Administration  of  Estates,  Expenses  of. 

Referring  to  the  difference  between  the  expenses  of  ad- 
ministration of  estates,  set  forth  as  not  allowable  deduc- 
tions in  Treasury  Decision  2090,  and  the  expenses  itemized 
as  allowable  deductions  on  Form  1041,  Revised,  the  distinc- 
tion is  sought  to  be  made  between  such  first  expenses  as  are 
properly  chargeable  against  an  estate  as  an  entity,  and  such 
other  expenses  incident  to  administration  as  may  arise  from 
the  nature  of  the  properties  and  the  details  of  business  man- 
agement.— Treasury  Decision  2135. 

Tl  110 — Allowances  to  Minor  Children. 

The  father  is  legally  entitled  to  the  service  of  his  minor 
children.  As  a  rule,  allowances  which  he  gives  them, 
whether  said  to  be  in  consideration  of  service  or  otherwise, 
are  not  allowable  deductions,  in  his  return  of  income  nor  are 
they  income  to  the  children. — Art.  8,  Reg.  33,  Revised. 

If  a  taxpayer  employs  a  minor  son  or  daughter  to  assist 
him  in  his  business  or  trade  and  pays  them  a  salary  or  wage 

219 


INDIVIDUALS— Continued  DEDUCTIONS— Expenses 

for  such  assistance,  the  amount  paid  them  does  not  consti- 
tute an  allowable  deduction  in  his  return.  If,  however,  the 
son  or  daughter  has  attained  his  or  her  majority,  the 
amount  of  compensation  paid  for  his  or  her  services  may  be 
so  claimed. — Primer,  Question  61. 

Note:  As  the  ruling  was  made  under  the  Revenue  Act  of 
1916,  as  amended  by  the  Revenue  Act  of  1917,  when  a  minor 
child  was  not  required  to  make  a  return  of  net  income,  it 
would  seem  to  follow  that  as  the  Revenue  Act  of  1918  re- 
quires a  minor  child  to  make  a  return,  the  parent  will  be 
allowed  to  deduct  these  amounts  paid,  and  the  minor  re- 
quired to  pay  a  tax  thereon  if  the  sum  is  in  excess  of  $1,000. 

]f  1 1 7 — Army  Officers — Expenditures  From  Allowances. 

The  pay  and  allowance  of  Army  officers  are  based  on  the 
obligation  of  an  officer  to  provide  equipment  and  mounts  as 
a  personal  expense.  The  cost  of  mounts  and  equipment  is 
not  therefore  a  deductible  expense. — Art.  8,  Reg.  33,  Re- 
vised. 

The  Revenue  Act  of  1918  provides  that  so  much  of  the 
amount  received  during  the  present  war  by  a  person  in  the 
military  or  naval  forces  of  the  United  States  as  salary  or 
compensation  in  any  form  from  the  United  States  for  active 
service  in  such  forces  as  does  not  exceed  $3,500,  shall  not  be 
included  in  income  or  be  taxed  to  the  recipient. 

U 1 1 8 — Business  Insurance. 

Premiums  paid  in  advance,  covering  a  period  of  several 
years,  are  to  be  taken  as  a  deduction  on  the  basis  of  one  of 
two  methods :  When  the  books  are  kept  on  a  cash  basis,  the 
entire  amount  is  deductible  in  the  year  in  which  the  prem- 
ium is  paid.  Where  the  books  are  kept  on  an  accrual  basis 
the  premium  is  to  be  prorated  over  the  period  covered  by 
the  insurance. — Art.  8,  Reg.  33,  Revised. 

|[  1 1 9 — Commission  Paid  to  Real  Estate  Agent. 

A  commission  paid  to  a  real  estate  agent  for  collecting 
rents  and  management  of  property  is  a  legitimate  business 
expense  and  constitutes  an  allowable  deduction  in  computing 
net  income. — Treasury  Decision  2090. 

220 


INDIVIDUALS— Continued  DEDUCTIONS— Expenses 

^1 120 — Commissions  Paid  Salesmen. 

Commissions  paid  salesmen  as  a  part  of  the  expense  of 
conducting  business  are  allov/able  deductions  to  the  payer  of 
the  commission.  Such  commissions,  however,  are  income 
and  should  be  accounted  for  in  the  return  of  the  person  re- 
ceiving them. 

^121 — Lobbying  or  Campaign  Expenses — Not  Deductible. 

Sums  of  money  expended  for  lobbying  purposes,  the  pro- 
motion or  defeat  of  legislation,  the  exploitation  of  propa- 
ganda, and  contributions  for  campaign  expenses  are  held  not 
to  be  an  ordinary  and  necessary  expense  in  the  operation 
and  maintenance  of  the  business  of  a  corporation,"  and  are 
therefore  not  deductible  from  gross  income  in  arriving  at 
the  net  income  upon  which  the  income  tax  is  computed. — • 
Treasury  Decision  2137 ;  also  Art.  143,  Reg.  33,  Revised. 

^  1 22^ — Assessments  for  Reorganization. 

Amounts  to  be  assessed  and  paid  under  a  mutual  agree- 
ment between  bondholders  or  stockholders  of  a  corporation, 
to  be  used  in  reorganization  of  a  corporation,  are  held  to  be 
investments  of  capital  and  not  deductible  for  any  purpose  in 
a  return  of  income. — Art.  8,  Reg.  33,  Revised. 

^  1 23 — Expenses  Incurred  in  Earning  Income  Subject  to 
Tax. 

Amounts  paid  from  a  salary  received  for  all  services  ren- 
dered, are  deductible  in  returns  of  income  as  business  ex- 
penses, when  the  expenditures  are  occasioned  by  the  service 
in  respect  of  which  the  salary  is  paid. — Art.  8,  Reg.  33, 
Revised. 

^  1 24 — Expense — Architect's  Services  a  Capital 
Investment. 

The  amount  expended  for  architect's  services  is  part  of 
the  cost  of  the  building  and  not  a  deductible  business  ex- 
pense.— Art.  8,  Reg.  33,  Revised. 

If  1 25— Expense — Commissions  Paid. 

Commissions  paid  in  purchasing  and  selling  securities  are 
a  part  of  the  cost  or  selling  price  of  the  securities  and  not 

221 


INDIVIDUALS— Continued  DEDUCTIONS— Expenses 

otherwise  deductible.    They  do  not  constitute  expense  de- 
ductions in  a  return  of  income. — Art.  8,  Reg.  33,  Revised. 

11120 — Expenses  Incurred  in  Earning  Income  Not  Subject 
to  Tax. 

Expenses  incurred  in  earning  income,  which  is  not  subject 
to  income  tax  do  not  constitute  allowable  deductions  in  com- 
puting net  income  from  other  sources  which  are  taxable 
under  the  law. — Treasury  Decision  2137. 

I1 127 — Expense  Incurred  Entertaining  Prospective 
Customers. 

Amounts  expended  by  a  business  man  in  entertaining  out- 
of-town  customers  or  prospective  customers,  can  be  claimed 
as  deductions  if  the  sole  purpose  of  the  business  man  in  mak- 
ing such  expenditures  is  to  cultivate  the  good  will  of  his 
customers  and  secure  an  increase  in  trade. — Primer,  Ques- 
tion 63. 

If  128— Farm. 

Cost  of  stock  purchased  for  resale  is  an  allowable  deduc- 
tion under  the  item  of  expense,  but  money  expended  for 
stock  for  breeding  purposes  is  regarded  as  capital  invested, 
and  amounts  so  expended  do  not  constitute  allowable  deduc- 
tions, except  as  hereinafter  stated. — Art.  4,  Reg.  33,  Re- 
vised. 

11128(a)- 

A  person  cultivating  or  operating  a  farm  for  recreation 
or  pleasure,  on  a  basis  other  than  the  recognized  principles 
of  commercial  farming,  the  result  of  which  is  a  continual 
loss  from  year  to  year,  is  not  regarded  as  a  farmer.  In  such 
cases  if  the  expenses  incurred  in  connection  with  the  farm 
are  in  excess  of  the  receipts  therefrom,  the  entire  receipts 
from  the  sale  of  products  may  be  ignored  in  rendering  a  re- 
turn of  income,  and  the  expenses  incurred  being  regarded 
as  personal  expenses,  will  not  constitute  allowable  deduc- 
tions in  the  return  of  income  derived  from  other  sources. — 
Art.  4,  Reg.  33,  Revised. 


INDIVIDUALS— Continued  DEDUCTIONS— Expenses 

11128(b)- 

Amounts  expended  for  the  purpose  of  making  a  farm 
which  is  purchased  in  a  run-down  condition  a  profit-paying 
property,  cannot  be  claimed  as  deductions,  as  the  amounts  so 
expended  are  held  to  be  investments  of  capital,  the  result  of 
which  is  an  improvement  or  betterment,  and  until  the  farm 
becomes  a  paying  proposition,  no  portion  of  the  gross  re- 
ceipts is  to  be  reported  as  income  and  no  portion  of  the  ex- 
penses can  be  claimed  as  a  deduction,  either  under  the  head 
of  "Business  Expenses"  or  under  the  head  of  "Losses." — 
Primer,  Question  86. 

11128(c)- 

If  a  crop  which  is  ready  to  be  harvested,  but  has  not  been 
sold,  is  destroyed  by  storm,  flood,  or  fire,  the  value  of  that 
crop  cannot  be  claimed  as  a  deduction,  but  it  is  understood, 
of  course,  that  the  actual  cost  of  producing  or  harvesting  a 
crop  which  has  been  so  destroyed  may  be  claimed  as  a  deduc- 
tion under  the  head  of  "Business  Expense." — Primer,  Ques- 
tion 89. 

1[  1 29 — Farm  Employes  Compensation. 

Where  a  taxpayer  employs  a  man  to  assist  in  operating  a 
farm  and  a  woman  to  assist  about  the  house,  the  amount  paid 
to  the  male  employe  is  allowed  as  a  deduction  in  his  return, 
but  a  line  is  drawn  as  to  the  amount  paid  to  the  female  em- 
ploye. If  her  time  is  employed  entirely  in  taking  care  of 
milk  and  cream  produced  for  sale,  in  the  production  of  but- 
ter, cheese,  etc.,  the  care  of  milk  cans  and  churns,  or,  if  a 
separate  table  is  maintained  for  laborers  employed  on  the 
farm  and  her  services  are  used  entirely  in  the  preparation 
and  serving  of  the  meals  furnished  the  laborers  and  in  car- 
ing for  their  rooms,  the  compensation  paid  her  constitutes  an 
allowable  deduction.  If,  however,  she  is  employed  to  assist 
in  caring  for  the  farmer's  own  household,  no  deduction  can 
be  claimed. — Primer,  Question  60. 

K  130— Farm  Machinery. 

The  cost  of  farm  machinery  is  not  an  allowable  deduction 
as  an  item  of  expense,  but  the  cost  of  ordinary  tools  may  be 
included  under  this  item. — Art.  4,  Reg.  33,  Revised. 

223 


INDIVIDUALS— Continued  DEDUCTIONS—Expenses 

Tf  130(a) — Farm  Repair  Expenses  on  a  Rental  Basis. 

Items  of  expense  incurred  and  paid  by  a  taxpayer  during 
the  calendar  year  in  connection  with  a  farm  which  is  leased 
to  another  on  a  cash  or  crop-share  rental  basis,  such  as  re- 
pairs to  fences,  farm  buildings,  etc.,  are  allowable  as  deduc- 
tions.— Primer,  Question  66. 

If  131 —Farm  Stock. 

An  individual  engaged  in  raising  and  selling  stock  (cattle, 
sheep,  horses,  etc.),  is  not  entitled  to  claim  as  a  loss  the 
value  of  such  animals  raised  which  die.  The  cost  of  raising 
will  have  been  taken  as  an  expense  deduction.  In  the  case 
of  animals  purchased,  which  die,  the  amount  of  purchase 
money  will  be  an  allowable  deduction,  if  not  previously  de- 
ducted as  a  business  expense. 

In  case  of  sale  the  total  amount  received  for  stock  raised 
and  for  stock  purchased  for  resale  is  to  be  accounted  for  as 
income. — Art.  4,  Reg.  33,  Revised. 

^  132— Fees  Earned,  But  Not  Paid. 

A  professional  man  earning  a  fee  in  1917,  which  was 
never  paid  him,  cannot  claim  such  an  amount  as  a  deduction 
for  the  reason  that  it  was  never  returned  as  income. — 
Primer,  Question  96. 

^  1 33 — Income  Tax — Amount  Paid  Not  Deductible.     * 

The  Income  Tax  Law  states  that  income  taxes  are  not  al- 
lowable as  deductions.  Under  this  provision  income  tax 
paid  in  1918  on  income  received  in  1917  or  any  previous  year 
cannot  be  deducted. — Primer,  Question  79. 

Tj  1 34 — Copyright  and  Plates — Investment  of  Capital  in. 

Amounts  expended  for  securing  copyright  and  plates 
which  remain  in  possession  of  and  as  property  of  the  person 
making  the  payments,  are  investments  of  capital  and  can 
not  be  allowed  as  deductions  in  returns  of  income. — Art.  8, 
Reg.  33,  Revised. 

^  1 35 — Titles  to  Property — Investment  of  Capital  in. 

Cost  of  defending  title  or  perfecting  title  to  property,  con- 
stitutes a  part  of  the  cost  of  the  property  and  is  not  a  busi- 
ness expense. — Art.  8,  Reg.  33,  Revised. 

224 


INDIVIDUALS— Continued  DEDUCTIONS—Expenses 

If  1 36 — Partnerships,  As  Such,  Are  Not  Taxable. 

For  explanation,  see  "Partnerships"  (see  H  368.) 

^  1 37 — Premium  on  Fidelity  Bond. 

Where  an  employe  is  required  to  furnish  bond  and  pay 
the  premium  on  such  bond  as  a  necessary  incident  of  his 
employment,  the  premium  on  the  bond  will  constitute  an 
allowable  deduction  in  computing  net  income. — Treasury 
Decision  2090. 

I1 1 38— Premiums  on  Life  and  Fire  Insurance. 

Premiums  paid  for  insurance  on  property  which  is  not 
occupied  by  the  owner  as  a  dwelling,  but  is  rented  or  leased 
to  secure  an  income,  constitute  allowable  deductions  in  com- 
puting net  income. 

Premiums  paid  on  life  insurance  policies  by  the  insured  do 
not  constitute  allowable  deductions  under  the  Income  Tax 
Law. — Treasury  Decision  2090. 

If  1 39 — Rent  or  Capital  Investment. 

Where  a  leasehold  is  sold  for  a  specified  sum,  the  pur- 
chaser may  take  as  a  deduction  in  his  return  an  aliquot  part 
of  such  sum,  each  year,  based  on  the  number  of  years  the 
lease  has  to  run. 

^  1 40 — Rent  for  Residential  Property. 

In  the  case  of  a  professional  man  who  rents  a  property 
for  residential  purposes  but  receives  there,  clients,  patients, 
or  callers  in  connection  with  his  professional  work  (the 
place  of  business  being  elsewhere),  no  part  of  the  rent 
is  deductible  as  business  expense. 

^141 — Residential  Property  Used  for  Business  Purposes. 

Where  a  physician,  or  other  professional  or  business  man 
rents  a  home  and  uses  a  portion  of  same  for  professional  or 
business  purposes,  the  proportion  of  the  rent  paid  which  is 
properly  chargeable  to  the  number  of  rooms  so  used  may  be 
claimed  as  a  deduction. — Primer,  Question  72. 

Tf  1 42^ — Salary  in  Conjunction  With  Room  and  Board. 

If  an  employer  agrees  to  pay  an  employe  a  certain  stipu- 
lated salary  and  furnish  him  with  room  and  board,  a  fair 

225 


INDIVIDUALS— Continued  DEDUCTIONS— Interest 

rental  value  is  to  be  placed  upon  the  room  and  upon  the 
meals  furnished,  and  their  amounts  reported  as  income  by 
the  employe.  If  the  services  of  the  employe  are  used  in  the 
employer's  business  or  trade,  the  latter  may  claim  the  rent 
paid  by  him  for  the  room,  if  any,  and  the  actual  cost  of  the 
meals  so  furnished  as  a  deduction  under  the  head  of  "Busi- 
ness Expenses." — Primer,  Question  23. 

^  143 — Taxes  Paid  by  Tenant  to  Landlord. 

Taxes  paid  by  a  tenant  to  a  landlord  are  considered  as 
additional  payment  for  rent  and  are  deductible  as  an  expense 
of  carrying  on  business. — Treasury  Decision  2090. 

^  1 44 — Special  Compensation  to  Employes. 

Special  compensation  to  employes  may  be  deducted  from 
gross  income  if  clearly  shown  that  such  payment  is  made  for 
services  rendered  and  is  paid  in  pursuance  of  a  contract  ex- 
pressed or  implied.  Not  deductible  if  so-called  compensa- 
tion is  a  gratuity  or  voluntary  payment. — Treasury  Decision 
2152.     See  If  38. 

^  1 45 — Wages  or  Salary  Drawn  From  Own  Business. 

Wages  or  salary  drawn  by  a  taxpayer  from  his  own  busi- 
ness are  more  in  the  nature  of  a  charge  out  of  profits  than  a 
charge  against  profits  and  therefore  does  not  constitute  an 
allowable  deduction.  If  such  could  be  deducted  it  would 
merely  be  added  to  his  income,  the  effect  of  which  would  be 
to  take  money  out  of  one  pocket  and  put  it  in  another. — 
Primer,  Question  62. 

11146—  INTEREST. 

All  interest  paid  or  accrued  within  the  taxable  year  on 
indebtedness,  except  on  indebtedness  incurred  or  continued 
to  purchase  or  carry  obligations  or  securities  (other  than 
obligations  of  the  United  States  issued  after  September  24, 
1917) ,  the  interest  upon  which  is  wholly  exempt  from  taxa- 
tion under  this  title  as  income,  is  deductible. — Law, 
page  62,  Lines  8-20. 


INDIVIDUALS— Continued  DEDUCTIONS— Taxes 

14e(a)       TAXES  IMPOSED  BY  UNITED  STATES,  ITS 
POSSESSIONS  AND  FOREIGN  COUNTRIES 

Following  is  a  digest  of  the  provisions  of  the  provisions 
of  the  law  and  a  summary  of  paragraphs  147  to  152,  which 
follow : 

(1)  Taxes  imposed  on  citizens  or  residents  of  the  United  States  by 
authority  of  the  United  States,  Porto  Rico  and  the  Philippine  Islands 
(EXCEPT  INCOME,  WAR-PROFITS  AND  EXCESS-PROFITS  TAXES), 
are  proper  deductions  from  gross  income. 

(2)  Taxes  assessed  against  local  benefits  are  not  proper  deductions. 

(3)  Taxes  paid  to  a  foreign  government  by  a  citizen  or  resident  of 
the  United  States  (except  income,  war-profits  and  excess-profits  taxes), 
are  proper  deductions  against  gross  income. 

(4)  Income,  war-profits  and  excess-profits  taxes  paid  by  a  citizen  of 
the  United  States  to  a  foreign  country,  Porto  Rico  or  the  Philippine 
Islands  may  be  deducted  from  the  amount  of  income  taxes  for  which  he 
is  liable  under  the  Act. 

(5)  Subjects  of  foreign  countries  residing  in  the  United  States  may  use 
as  a  credit  income,  war -profits  and  excess-profits  taxes  paid  to  Porto 
Rico  and  the  Philippine  Islands. 

(6)  Subjects  of  foreign  countries  residing  in  the  United  States  may 
deduct  as  a  credit  against  taxes  due  in  the  United  States  income^  war- 
profits  and  excess-profits  taxes  providing  the  foreign  country  of  which 
the  resident  is  a  subject  allows  citizens  of  the  United  States  residing  in 
such  foreign  country  to  deduct  a  similar  credit. 

If  147— Taxes. 

Under  the  Revenue  Act  of  1918  the  allowable  deductions 
from  gross  income  as  taxes  are  as  follows: 

^  1 48 — Taxes  Imposed  by  Authority  of  the  United  States. 

(a)  Taxes  paid  or  accrued  within  the  taxable  year  im- 
posed by  the  authority  of  the  United  States,  except  income, 
war-profits  and  excess-profits  taxes. 

|]  1 49 — Taxes  Imposed  by  Authority  of  Porto  Rico  and 
Philippine  Islands. 

(b)  With  the  exception  of  income,  war-profits  and  excess- 
profits  taxes,  the  amount  of  all  taxes  paid  or  accrued  within 
the  taxable  year  imposed  by  the  authority  of  the  govern- 
ments of  Porto  Rico  and  the  Philippine  Islands,  or  by  any 
foreign  government,  are  deductible  from  gross  income. 

227 


INDIVIDUALS— Continued  DEDUCTIONS— Taxes 

11149(a)- 

A  member  of  a  partnership  or  a  beneficiary  of  an  estate 
or  trust  may  deduct  as  a  credit  his  proportionate  share  of 
such  taxes  so  paid  during  the  taxable  year  by  the  partner- 
ship or  by  the  estate  or  trust. 

^  149(b)— 

It  is  important  to  emphasize  that  the  income,  excess- 
profits  and  war-profits  taxes  paid  by  a  citizen  or  resident  to 
a  foreign  country,  or  to  Porto  Rico  or  the  Philippine  Islands, 
are  deductible  as  a  credit,  not  from  gross  income,  but  from 
the  total  amount  of  income  tax,  computed  under  the  pro- 
visions of  the  law  for  which  a  citizen  or  resident  may  be 
liable— See  T[  151. 

Thus,  John  Doe,  who  has  paid  an  income  or  excess-profits 
tax  to  a  foreign  country  of  $500,  computes  his  total  Federal 
(U.  S.)  income  taxes  under  the  Revenue  Act  of  1918,  at 
$3,000.  Under  the  provisions  of  Section  222  (Credit  for 
Taxes)  he  may  deduct  the  $500  paid  to  a  foreign  country 
from  the  $3,000  taxes  so  computed,  leaving  his  net  tax 
liability  $2,500. 

K  1 50— Taxes  Imposed  by  the  Authority  of  a  State, 
Territory  or  Taxing  Subdivision  Thereof. 

(c)  Taxes  paid  or  accrued  within  the  taxable  year  im- 
posed by  the  authority  of  any  State  or  Territory  or  county, 
school  district,  municipality,  or  other  taxing  subdivision  of 
any  State  or  Territory  are  deductible  from  income.  Such 
deductible  taxes,  however,  do  not  include  those  assessed 
against  local  benefits.    See  U  157,  158. 

jf  1 51  — Taxes  Paid  to  a  Foreign  Government. 

(d)  Taxes  paid  or  accrued  within  the  year  imposed  upon 
a  citizen  or  resident  of  the  United  States  by  the  authority  of 
any  foreign  country  are  deductible  from  gross  income  ex- 
cept the  amount  of  income,  war-profits  and  excess-profits 
taxes  paid  to  any  foreign  country,  the  amount  of  which  may 
be  deducted  by  a  citizen  or  resident  from  the  amount  of 
income  taxes  for  which  he  is  liable  under  the  Act.  See 
II  149  and  149(b). 


INDIVIDUALS— Continued  DEDUCTIONS— Taxes 

H  1 52 — Foreign  Taxes. 

In  the  case  of  a  citizen  of  the  United  States,  the  amount 
of  any  income,  war-profits  and  excess-profits  taxes  paid 
during  the  taxable  year  (See  H  151)  to  any  foreign  country, 
upon  income  derived  from  sources  therein,  or  to  any  pos- 
session of  the  United  States ;  and  in  the  case  of  a  resident 
of  the  United  States,  the  amount  of  any  such  taxes  paid  dur- 
ing the  taxable  year  to  any  possession  of  the  United  States. 

^  1 53 — Resident  Aliens. 

In  the  case  af  an  ahen  resident  of  the  United  States  who  is 
a  citizen  or  subject  of  a  foreign  country,  the  amount  of  any 
such  taxes  (income,  war-profits  and  excess-profits  taxes) 
paid  during  the  year  to  such  country,  upon  income  derived 
from  sources  therein,  may  be  deducted  from  the  total 
amount  of  his  taxes  due  to  the  United  States,  if  such  coun- 
try in  imposing  taxes  allows  a  similar  credit  to  citizens  of  the 
United  States  residing  in  such  country;  and  in  the  case  of 
any  such  individual  who  is  a  member  of  a  partnership  or  a 
beneficiary  of  an  estate  or  trust,  his  proportionate  share 
of  such  taxes  paid  during  the  taxable  year  by  the  partner- 
ship or  by  the  estate  or  trust  to  a  foreign  country  or  to  any 
possession  of  the  United  States,  as  the  case  may  be. 

—EXAMPLE. 

A  resident  alien  of  the  United  States  who  is  a  subject  of  England  owns 
considerable  real  estate  in  the  City  of  London  and  pays  real  estate  taxes. 
These  taxes  are  a  proper  deduction  against  gross  income  received  from  the 
United  States  and  England.  In  addition  to  the  real  estate  taxes  he  would 
the  income  derived  from  his  real  estate  holdings,  and  this  income  and 
be  obliged  to  pay  to  his  own  countiy  income  and  excess -profits  taxes  on 
excess-profits  tax  imposed  by  England  could  not  be  deducted  as  a  credit 
against  his  taxes  due  in  the  United  States  unless  England  allowed  cit- 
izens of  the  United  States  residing  in  England  to  charge  off  a  like  credit 
for  income  and  excess -profits  taxes  imposed  by  the  United  States. 

T1 1 54 — Partnerships. 

In  the  case  of  a  member   of   a   partnership  where  the 
partnership  has  already  given  credit  to  the  partner  for 

239 


INDIVIDUALS— Continued  DEDUCTIONS—Taxes 

the  amount  of  any  taxes  so  paid  in  his  behalf  and  the  part- 
ner only  accounts  for  the  net  amount  received  from  the 
partnership,  the  partner  must  not  again  take  credit  for  the 
taxes  so  paid  as  this  would  result  in  the  taxpayers'  having 
taken  a  double  deduction. 

^  1 55 — Custom  Duties. 

Custom  duties  paid  during  the  year  by  an  individual  are 
allowable  deductions  as  taxes  or  as  part  of  the  cost  price,  if 
the  individual  is  engaged  in  the  importation  of  goods  and 
merchandise. 

U  156 — Inheritance  Taxes. 

Inheritance  taxes  levied  under  the  laws  of  a  State  and 
being  a  charge  against  the  corpus  of  the  estate  are  not  allow- 
able as  a  deduction  from  income  either  to  the  estate  or  a 
beneficiary  thereof. 

]\  1 57 — Local  Benefits,  Taxes  Assessed  Against. 

Taxes  paid  pursuant  to  assessments  levied  by  special  dis- 
tricts, such  as  irrigation,  reclamation,  drainage  districts, 
etc.,  for  sidewalks  in  cities,  street  extension,  grading,  pav- 
ing, etc.,  are  held  to  be  "taxes  assessed  against  local  bene- 
fits." Such  taxes  are  not  allowable  deductions  in  a  return  of 
annual  net  income. — Treasury  Decision  2090.  See  Law, 
page,  62,  line  48. 

^f  1 58 — Tax  Assessments  for  Property  Improvements. 

Taxes  assessed  against  an  individual  on  property  owned 
by  him  to  pay  for  the  paving  of  a  street  contiguous  to  his 
property,  the  construction  of  a  sewer,  sidewalk,  etc.,  the 
sprinkling  or  oiling  of  a  street  in  front  of  his  home,  the  con- 
struction  of  levees  to  protect,  or  ditches  to  drain  property 
owned  by  him,  cannot  be  claimed  as  deductions.  In  short, 
such  taxes  as  are  not  general  in  nature  and  are  levied  on  ac- 
count of  some  work  or  privilege  the  benefit  of  which  accrues 
to  a  limited  number  of  property  owners,  of  which  the  tax- 
payer is  one,  are  not  allowable  deductions. — Primer,  Ques- 
tion 78. 

230 


INDIVIDUALS— Continued  DEDUCTIONS— Taxes 

U 1 59 — State  Tax  Assessed  on  Capital  Stock  of  Banks. 

Taxes  on  bank  stock  paid  under  legal  requirement  by  the 
bank  for  its  stockholders  are  deductible  by  the  stockholders 
and  not  by  the  bank.  Such  payments  are  regarded  as  in  the 
nature  of  additional  dividends  and  a  proportionate  amount 
should  be  included  by  the  stockholder  in  his  dividends  re- 
ceived and  then  claimed  as  a  deduction  under  the  heading  of 
"Taxes."— Primer,  Question  44;  also  Ar.t  8,  Reg.  33,  Re- 
vised. 

Where  bank  stock  is  sold  and  transferred  between  date 
of  assessment  and  payment  of  the  tax,  in  the  absence  of 
statute  governing,  the  stockholder  Hable  for  the  tax  (if  the 
tax  was  actually  paid)  will  have  the  benefit  of  the  tax  deduc- 
tion in  return  of  income.  This  is  a  question  of  fact  and 
to  be  determined  as  such.— Art.  8,  Reg.  33,  Revised. 


^  leO— Taxes  Paid  by  Tenant  to  Landlord. 

Taxes  paid  by  tenant  to  a  landlord  are  considered  an  ad- 
ditional payment  for  rent  and  are  deductible  as  an  expense 
of  carrying  on  business. — Treasury  Decision  2090. 


1)161— Taxes  (Other  Than  Excess-Profits)  Deductible. 

AH  taxes  levied  by  the  general  taxing  authority,  levied 
and  paid  on  all  taxable  subjects,  including  tax  imposed  and 
paid  under  the  Revenue  Act  of  1917,  except  war-excess 
profits,  income  taxes,  and  taxes  assessed  against  local  bene- 
fits, are  allowable  deductions  to  the  party  paying  the  same. 
Although  excess-profits  tax  paid  is  not  an  allowable  deduc- 
tion in  ascertaining  the  net  income,  the  net  income  shown 
on  any  return  will  be  credited  with  the  amount  of  excess- 
profits  tax  for  which  the  taxpayer  will  be  liable  for  the  same 
year,  in  order  to  determine  the  amount  of  income-tax 
liability. 

In  the  case  of  business,  excise,  license,  or  privilege  taxes, 
they  may  be  deducted  either  as  taxes  or  items  of  expense, 
but  not  under  both  heads. — Art.  8,  Reg.  33,  Revised. 

231 


INDIVIDUALS— Continued  DEDUCTIONS—Losses 

LOSSES. 
T1 1 82 — All  Losses  Deductible. 

Losses  sustained  during  the  taxable  year,  if  not  compen- 
sated by  insurance  or  otherwise,  are  proper  deductions  in 
arriving  at  net  income  for  the  purposes  of  the  tax  whether 
such  losses  were  incurred  in  the  taxpayer's  regular  trade 
or  business  or  whether  they  were  incurred  in  transactions 
entered  into  for  profit  though  not  connected  with  the  tax- 
payer's regular  trade  or  business;  also  losses  of  property 
whether  or  not  such  property  is  connected  with  the  tax- 
payer's regular  trade  or  business. 

This  is  of  especial  interest  to  investors  and  brokers  who 
have  sustained  losses  in  investment  or  speculative  accounts. 

Non-resident  aliens  are  allowed  to  deduct  losses  on  trans- 
actions entered  into  for  profit  and  not  connected  with  trade 
or  business  only  as  to  such  transactions  within  the  United 
States. 

ff  163— -Losses  Defined. 

The  Revenue  Act  of  1918  defines  deductible  losses  as  fol- 
lows: 

(a)  Losses  sustained  during  the  taxable  year  and  not 
compensated  for  by  insurance  or  otherwsie,  if  incurred  in 
trade  or  business. 

(b)  Losses  sustained  during  the  taxable  year  and  not 
compensated  for  by  insurance  or  otherwise,  if  incurred  in 
any  transaction  entered  into  for  profit,  though  not  connected 
with  trade  or  business.  In  the  case  of  a  non-resident  ahen 
individual,  such  loss  is  deductible  only  as  to  transactions 
within  the  United  States. 

(c)  Losses  sustained  during  the  taxable  year  of  property 
not  connected  with  the  trade  or  business  if  arising  from 
fires,  storms,  shipwreck  or  other  casualty,  or  from  theft, 
and  if  not  compensated  by  insurance  or  otherwise.  In  the 
case  of  a  non-resident  alien  individual,  such  loss  is  deduct- 
ible only  on  property  within  the  United  States. 


INDIVIDUALS— Continued  DEDUCTIONS— Losses 

^  1 64 — Losses  of  Property  or  From  Sale  of  Property. 

For  the  purpose  of  ascertaining  the  loss  sustained  from 
the  sale  or  loss  of  property,  real,  personal,  or  mixed,  ac- 
quired before  March  1,  1913,  the  fair  market  price  or  value 
of  such  property  as  of  March  1,  1913,  shall  be  the  basis  for 
determining  the  amount  of  such  loss  sustained. 

Losses  not  compensated  for  by  insurance  or  otherwise,  are 
easily  ascertained,  and  there  would  not  appear  to  be  any 
chance  of  erroneous  construction  as  to  these. 

^1 1 65— Losses  by  Fire  in  Standing  Timber. 

The  actual  amount  of  capital  invested  in  standing  timber, 
if  acquired  on  or  after  March  1,  1913,  and  later  destroyed  by 
fire,  may  be  claimed  as  a  deduction  if  not  reimbursed  by  in- 
surance or  otherwise.  If  the  timber  was  acquired  prior  to 
March  1,  1913,  its  fair  market  price  or  value  as  of  that  date 
may  be  claimed.  To  illustrate  the  methods  to  be  employed 
in  computing  the  amount  of  loss  allowable  as  a  deduction  the 
following  is  submitted :  A  tract  of  land  was  acquired  prior 
to  March  1, 1913,  and  the  estimated  amount  of  timber  stand- 
ing on  that  tract  on  that  date  was  1,000,000  feet,  board 
measure,  the  fair  market  price  or  value  per  1,000  feet,  estab- 
lished by  the  current  prices  prevailing  in  the  locality  of  the 
tract  in  question  as  of  March  1,  1913,  being  $4.  During  the 
year  1917,  400,000  feet  of  this  timber  was  destroyed  by  fire. 
In  this  case  $1,600  is  the  amount  which  may  be  claimed  as 
a  deduction. — Primer,  Question  87. 

Tj  1 66 — Loss  From  Reduction  in  Value  of  Inventory — 
Rebates. 

(a)  At  the  time  of  filing  return  for  the  taxable  year  1918 
a  taxpayer  may  file  a  claim  in  abatement  based  on  the  fact 
that  he  has  sustained  a  substantial  loss  (whether  or  not 
actually  reahzed  by  sale  or  other  disposition)  resulting  from 
any  material  reduction  (not  due  to  temporary  fluctuation) 
of  the  value  of  the  inventory  for  such  taxable  year,  or  from 
the  actual  payment  after  the  close  of  such  taxable  year  of 
rebates  in  pursuance  of  contracts  entered  into  during  such 
year  upon  sales  made  during  such  year.  In  such  case  pay- 
ment of  the  amount  of  the  tax  covered  by  such  claim  shall 

233 


INDIVIDUALS— Continued  DEDUCTIONS— Losses 

not  be  required  until  the  claim  is  decided,  but  the  taxpayer 
shall  accompany  his  claim,  with  a  bond  in  double  the  amount 
of  the  tax  covered  by  the  claim,  with  sureties  satisfactory 
to  the  Commissioner,  conditioned  for  the  payment  of  any 
part  of  such  tax  found  to  be  due,  with  interest.  If  any  part 
of  such  claim  is  disallowed  then  the  remainder  of  the  tax  due 
shall  on  notice  and  demand  by  the  collector  be  paid  by  the 
taxpayer  with  interest  at  the  rate  of  1  per  centum  per 
month  from  the  time  the  tax  would  have  been  due  had  no 
such  claim  been  filed.  If  it  is  shown  to  the  satisfaction  of 
the  Commissioner  that  such  substantial  loss  has  been  sus- 
tained, then  in  computing  the  tax  imposed  by  this  title  the 
amount  of  such  loss  shall  be  deducted  from  the  net  income. 

(b)  If  no  such  claim  is  filed,  but  it  is  shown  to  the  satisfac- 
tion of  the  Commissioner  that  during  the  taxable  year  1919 
the  taxpayer  has  sustained  a  substantial  loss  of  the  charac- 
ter above  described,  then  the  amount  of  such  loss  shall  be 
deducted  from  the  net  income  from  the  taxable  year  1918 
and  the  tax  imposed  by  this  title  for  such  year  shall  be  re- 
determined accordingly.  Any  amount  found  to  be  due  to  the 
taxpayer  upon  the  basis  of  such  redetermination  shall  be 
credited  or  refunded  to  the  taxpayer  in  accordance  with  the 
provisions  of  Section  252. — See  Law,  page  85,  line  55. 

^  1 68 — Loss  Does  Not  Include  Any  Element  of  Depreciation. 

In  determining  the  amount  of  deductible  losses  allowable 
to  individuals  and  foreign  and  domestic  corporations,  the 
loss  considered  has  in  it  no  element  of  "depreciation"  or  "al- 
lowance for  wear  and  tear,"  or  "compensation  from  insur- 
ance or  otherwise."  It  is  to  be  such  loss  as  is  absolute  and 
complete  and  which  has  been  actually  sustained. — Treasury 
Decision  2005. 

11169 — Depreciation. 

Depreciation  to  cover  exhaustion,  wear  and  tear,  and  obso- 
lescence, as  an  allowable  deduction  has  been  separately  pro- 
vided for,  and  is  not  to  be  confused  with  loss. — See  U  185. 

234 


INDIVIDUALS— Continued  DEDUCTIONS— Losses 

If  1 70 — Bonds  and  Similar  Securities  Written  Off  at  the 
Direction  of  the  Comptroller  of  the  Currency. 

The  fact  that  bonds  or  similar  securities  were  written  off 
at  the  direction  of  the  Comptroller  of  the  Currency  or  State 
banking  department  is  not  material.  A  mere  book  entry 
does  not  constitute  either  a  loss  or  a  gain  for  the  purpose  of 
the  income  tax.  The  fact  that  bonds  were  written  off  does 
not  necessarily  imply  that  they  are  a  total  loss,  nor  is  this 
act  conclusive  proof  that  any  loss  occurred  during  the  year 
for  which  return  was  made. 

Losses  of  this  character  are  only  ascertainable  when  the 
securities  mature,  are  disposed  of,  or  cancelled. — Art.  148, 
Reg.  33,  Revised. 

]f  1 71  — Loss    or    Depreciation   Through   Amortization   of 
Bonds. 

This  item  is  covered  by  H  204. 

^  1 7Z — Losses  on  District  Irrigation  Bonds. 

District  irrigation  bonds,  as  a  rule,  if  not  always,  are  a 
lien  upon  the  real  estate  affected  by  the  irrigation  project, 
and  until  the  corporation  has  taken  such  steps  as  are  neces- 
sary to  protect  its  rights  and  enforce  the  collection  of  the 
bonds,  it  does  not  appear  that  the  corporation  would  be  war- 
ranted in  writing  out  of  its  assets  and  deducting  from  in- 
come, as  a  loss,  the  face  value  or  any  other  arbitrarily 
ascertained  amount  representing  a  loss  or  shrinkage  in  value 
of  such  bonds. 

^  1 73 — Assessment  on  Stock. 

Assessments  made  by  a  corporation  on  its  capital  stock 
are  regarded  as  further  investments  of  capital  and  do  not 
constitute  an  allowable  deduction  in  the  return  of  the  indi- 
vidual. But  in  the  case  of  a  shareholder  in  an  irrigation 
company  where  the  purpose  of  the  assessment  is  merely  to 
raise  funds  to  keep  the  irrigation  system  in  usable  condition 
and  not  to  make  extensions  or  betterments,  the  amount  as- 
sessed against  each  shareholder  may  be  claimed  as  deduc- 
tion.— Primer,  Questions  70  and  71. 

235 


INDIVIDUALS— Continued  DEDUCTIONS— Losses 

If  174— Loss— Good  Will. 

Good  will  does  not  represent  a  value  attaching  to  physical 
property.  It  is  held  to  be  an  intangible  asset  whose  value, 
separate  and  apart  from  the  business  with  which  it  is  con- 
nected, is  not  acapable  of  determination.  For  the  purpose  of 
income  tax  it  is  capable  of  neither  appreciation  nor  deprecia- 
tion. An  amount  claimed  to  represent  its  decline  in  value  is 
not  an  allowable  deduction  from  gross  income  in  computing 
the  tax  liability  of  an  individual  or  corporation. — Art.  8, 
Reg.  33,  Revised. 

T1 1 75 — Inventories. 

Whenever  in  the  opinion  of  the  Commissioner  the  use  of 
inventories  is  necessary  in  order  clearly  to  determine  the 
income  of  any  taxpayer,  inventories  shall  be  taken  by  such 
taxpayer  upon  such  basis  as  the  Commissioner,  with  the 
approval  of  the  Secretary,  may  prescribe  as  conforming 
as  nearly  as  may  be  to  the  best  accounting  practice  in  the 
trade  or  business  and  as  most  clearly  reflecting  the  income. 

11176— Bad  Debts. 

(Law,  page  54,  line  51.) 

There  may  be  deducted  from  income  all  debts  due  to  the 
taxpayer  actually  ascertained  to  be  worthless  and  charged 
off  within  the  taxable  year. — Law,  page  63,  line  9. 

In  order  that  a  debt  may  be  claimed  as  a  deduction,  it 
must  be  (a)  a  bona  fide  debt,  (b)  definitely  ascertained  to  be 
worthless  and  uncollectible  during  the  year  for  which  the 
deduction  is  claimed,  and  (c)  if  books  are  kept  it  must  be 
charged  off  within  the  year  for  which  the  deduction  is 
claimed  and  no  longer  considered  an  asset  or  carried  as  such 
on  the  books. — Primer,  Question  90. 

\\  1 77 — Bad  Debts — Compromise. 

Where  an  indebtedness  is  claimed  and  contested  and  a 
settlement  is  had  by  way  of  compromise  whereby  an 
amount,  less  than  the  debt  claimed,  is  accepted  in  full  pay- 
ment and  satisfaction  of  the  debt,  the  difference  between  the 
amount  paid  and  that  claimed  is  not  allowable  as  a  deduction 
for  bad  debts.    Where  the  settlement  in  compromise  con- 

236 


INDIVIDUALS— Continued  DEDUCTIONS— Losses 

sists  of  a  promise  to  pay  an  amount  less  than  the  debt 
claimed,  the  amount  promised  to  be  paid  forms  the  basis  of 
a  new  transaction,  and  upon  failure  to  make  good  this  prom.- 
ise  the  question  will  arise  as  to  the  deductibility  of  the  new 
amount  only. 

|[  178— Bad  Debts— Further  Definition. 

Where  all  of  the  surrounding  and  attendant  circumstances 
indicate  that  a  debt  is  worthless  and  uncollectible  and  that 
legal  action  to  enforce  payment  would  in  all  probability  not 
result  in  the  satisfaction  of  execution  on  a  judgment,  a 
showing  of  these  facts  will  be  sufficient  showing  of  the 
worthlessness  of  the  debt  for  purposes  of  deduction. 

In  a  case  where  "  A  "  indorses  a  note  for  "  B  "  and  the 
latter  has  departed  for  parts  unknown  when  the  note  be- 
comes due  in  1918  and  "  A  "  is  required  to  make  good  his 
indorsement,  if  he  has  no  knowledge  of  "  B*s ''  present 
whereabouts  and  has  good  reason  to  believe  that  he  is  pos- 
sessed of  no  assets  and  that  it  is  his  intention  never  to  make 
payment,  the  amount  so  paid  by  "  A  "  may  be  considered  a 
bad  debt  due  him  from  "  B  ". — Primer,  Question  93. 

In  the  case  where  a  taxpayer  advances  a  certain  sum  to  a 
needy  friend  or  relative  with  good  reasons  for  believing  that 
the  advance  will  never  be  returned,  such  amount  cannot  be 
claimed  as  a  deduction;  partaking  as  it  does  somewhat  of 
the  nature  of  a  philanthropic  donation  or  a  goodwill  offering, 
it  is  not  held  to  constitute  a  bona  fide  debt. — Primer,  Ques- 
tion 94. 

^  1 79— Bad  Debts  Arising  From  Unpaid  Wages,  Salaries, 
Rents,  Etc. 

Debts  arising  from  unpaid  wages,  salaries,  rents,  and 
items  of  similar  taxable  income  will  not  be  allowed  as  a  de- 
duction, unless  the  income  they  represent  has  been  included 
in  the  return  of  gross  income  for  the  year  in  which  the  de- 
duction as  a  bad  debt  is  sought  to  be  made,  or  in  a  previous 
year,  and  the  debts  themselves  have  been  actually  ascer- 
tained to  be  worthless  and  charged  off. 

237 


INDIVIDUALS— Continued  DEDUCTIONS— Losses 

If  180 — Bad  Debts — Bankruptcy. 

Bankruptcy  may  or  may  not  be  an  indication  of  worth- 
lessness  of  a  debt.  Actual  determination  of  worthlessness 
in  such  cases  is  possible  only  when  settlement  in  bankruptcy 
shall  have  been  had.  Only  the  difference  between  the 
amount  received  in  distribution  of  assets  of  the  bankrupt 
and  the  amount  of  proved  claim  may  be  considered  for  the 
purpose  of  deduction  as  a  bad  debt. 

An  amount  loaned  to  a  corporation  or  firm  which  has  be- 
come bankrupt  cannot  be  claimed  as  a  deduction  unless  the 
affairs  of  the  debtor  have  been  fully  adjusted,  its  assets  sold 
for  the  benefit  of,  or  distributed  to,  its  creditors,  and  its  re- 
ceiver in  bankruptcy  discharged.  If  all  this  has  occurred 
during  the  year  1918,  so  much  of  the  debt  as  remains  un- 
paid after  the  receiver  is  discharged  may  be  claimed  as  a 
deduction  for  the  year  1918.  But  it  is  not  necessary  that  a 
corporation  or  firm  be  declared  a  bankrupt  before  the 
amount  is  claimed  as  a  deduction.  If  the  debtor  corporation 
has  no  assets  whatsoever,  and  it  is  definitely  known  that 
nothing  whatsoever  can  be  collected  from  debtor  itself  or 
any  person  connected  with  it,  a  creditor  need  not  go  to  the 
expense  of  instituting  bankruptcy  proceedings  in  order  to  es- 
tablish his  right  to  claim  the  worthless  debt  as  a  deduction. 
— Primer,  Questions  91  and  92. 


^  1 81  — Bad  Debts — ^Foreclosure  Sale  on  a  Mortgage. 

Where,  under  foreclosure,  a  mortgagee  buys  in  the  mort- 
gaged property  and  credits  the  indebtedness  with  the  pur- 
chase price,  the  difference  between  purchase  price  and  the 
indebtedness  will  not  be  allowable  as  a  deduction  for  bad 
debt — the  property  which  was  security  for  the  debt  being 
in  possession  and  ownership  of  the  mortgagee  is,  for  the  pur- 
poses of  income  tax,  held  to  be  sufficient  to  justify  a  disal- 
lowance of  a  claim  for  bad  debt. 

Only  where  purchaser  for  less  than  debt  is  another  than 
mortgagee  may  the  difference  between  debt  and  net  from 
sale  credited  be  deducted  as  bad  debt. — Art.  8,  Reg.  33, 
Revised. 

238 


INDIVIDUALS— Cont'd  DEDUCTIONS— Depreciation 

I1 182— Debts  Due  Prior  to  March  1,  1913. 

All  debts  representing  amounts  that  became  due  and 
payable  prior  to  March  1,  1913,  and  not  ascertained  to  be 
worthless  prior  to  that  date,  whether  representing  income 
or  a  return  of  capital,  are  held  to  be  allowable  deductions 
.  .  .  in  a  return  of  income  for  the  year  in  which  they  are 
actually  ascertained  to  be  worthless  and  are  charged  off. — 
Treasury  Decision  2224. 

1(183- Bad  Debts— Income  if  Collected. 

Bad  debts  which  have  been  claimed  and  allowed  as  a  de- 
duction in  prior  returns  are  considered  income  if  subse- 
quently collected. — Art.  4,  Reg.  33,  Revised. 

Where  a  taxpayer  in  rendering  his  1914  return  claimed 
a  deduction  to  cover  a  debt  then  believed  to  be  absolutely 
worthless  and  in  1918  the  debtor  has  discharged  part  of  his 
obligation,  the  amount  should  be  considered  as  an  item  of 
income  and  included  under  "  Gross  Income  **  in  the  1918  re- 
turn.— Primer,  Question  95. 

Tf  1 84 — Default  on  Installment  Payments. 

See  n  44,  45,  46. 

^85- 
DEPRECIATION,  DEPLETION  AND  AMORTIZATION. 

A  reasonable  deduction  may  be  made  for  the  exhaustion, 
wear  and  tear,  and  obsolescence,  of  property  arising  out  of 
its  use  or  employment  in  the  business  or  trade. — Law, 
page  63,  line  11. 

As  the  rate  at  which  depreciation  may  be  claimed  is  de- 
pendent, in  a  greater  or  less  extent,  upon  local  conditions, 
the  use  to  which  the  property  is  put,  and  its  probable  life- 
time under  normal  business  conditions,  no  specific  rates  at 
which  it  may  be  claimed  have  ever  been  established.  The 
law  states  that  a  "  reasonable  allowance  "  may  be  claimed 
and  it  is  for  the  taxpayer  to  determine  what  constitutes  a 
"  reasonable  allowance."  To  compute  the  amount  which 
may  be  claimed,  a  taxpayer  should  determine  the  probable 
lifetime  of  the  property,  then  divide  its  cost  to  him  by  the 

239 


INDIVIDUALS— Con^d  DEDUCTIONS— Depreciation 

number  of  years  it  will  be  usable  in  a  business  in  which 
employed,  and  the  result  thus  obtained  will  represent  the 
amount  which  may  be  claimed  each  year  as  a  deduction, 
e.  g.,  a  frame  building,  the  probable  lifetime  of  which,  with- 
out repair  or  replacement,  is  25  years,  cost  $5,000.  Divide 
$5,000  by  25  and  claim  $200  each  year  as  depreciation. 

Tjise- 

While  each  taxpayer  must  determine  the  probable  lifetime 
of  his  property  without  regard  to  the  following  figures,  it 
has  been  estimated  that  the  average  usable  lifetime  of  a 
frame  building  is  25  years;  a  brick  building,  35  years;  a 
stone  building  or  a  steel  and  concrete  building,  50  to  100 
years.  The  estimated  lifetime  of  ordinary  machinery  is  10 
years;  that  of  automobiles  used  for  business  or  farm  pur- 
poses and  farm  tractors,  4  to  5  years. 

11187- 

If  a  taxpayer  wishes  to  claim  the  full  amount  of  depreci- 
ation estimated  to  have  occurred  in  the  value  of  a  building, 
or  other  property  used  for  business  or  trade  purposes,  he 
may  do  so,  but  this  precludes  his  claiming  a  deduction  to 
cover  any  amount  expended  during  the  same  year  in  making 
repairs.  If  he  wishes  to  claim  a  deduction  on  account  of  re- 
pairs, their  cost  must  be  deducted  from  the  full  amount  of 
depreciation,  and  the  balance  may  then  be  claimed  as  a 
deduction  under  the  heading  of  "  Depreciation  " ;  that  is,  if  a 
taxpayer  expends  $100  in  making  repairs  to  a  building  which 
will  depreciate  in  value  $200  during  the  calendar  year  he 
may  claim  $100  as  a  business  expense  and  $100  as  depreci- 
ation, or  he  may  claim  $200  as  depreciation  and  nothing  for 
repairs.  In  short,  the  aggregate  deductions  claimed  on  ac- 
count of  repairs  and  depreciation  must  not  exceed  the  full 
amount  of  depreciation  estimated  to  hav(B  occurred. 

(Note. — The  repairs  referred  to  in  the  above  paragraph 
are  such  as  are  general  in  character,  representing  replace- 
ments, etc.  Small  items,  such  as  replacement  of  broken 
window  panes,  papering,  minor  repairs,  etc.,  are  allowable, 
even  though  full  amount  of  depreciation  ha^  been  claimed.) 

240 


INDIVIDUALS— Cont'd  DEDUCTIONS—Depreciation 

11188- 

In  claiming  depreciation  the  following  fundamental  prin- 
ciples must  be  taken  into  consideration : 

11189- 

(a)  Only  such  depreciation  as  results  from  exhaustion, 
wear  and  tear,  and  obsolescence,  of  property,  arising  out  of 
its  use  or  employment  in  business  or  trade,  can  be  claimed. 
Depreciation  in  the  value  of  a  home  or  any  article  of  prop- 
erty, such  as  automobiles,  used  for  personal  pleasure  or  con- 
venience, cannot  be  claimed ;  the  property  must  be  used  for 
the  purpose  of  producing  income. 

11190- 

(b)  Depreciation  other  than  that  arising  from  wear  and 
tear,  such  as  a  lessening  of  values  due  to  changes  in  the  so- 
cial or  business  conditions  in  the  neighborhood  in  which  a 
property  is  located,  changes  of  street  grade,  of  fluctuations 
in  market  values,  etc.,  cannot  be  claimed. 

11191- 

(c)  Depreciation  in  the  value  of  land,  whether  improved 
or  unimproved,  due  to  ordinary  erosion,  exhaustion,  or  any 
other  cause  cannot  be  claimed. 

11192- 

(d)  Where  the  value  of  a  piece  of  machinery  or  any  other 
asset  is  lessened  by  reason  of  the  production  of  an  improved 
machine  or  article,  that  depreciation  cannot  be  claimed,  as  it 
does  not  result  from  exhaustion,  v/ear  and  tear. 

(e)  Where,  in  the  course  of  years,  the  owner  of  property 
has  claimed  its  full  cost  as  depreciation  in  his  income  tax 
returns,  no  further  claim  will  be  allowed. 

11194- 

(f )  The  value  to  be  cared  for  by  depreciation  is  the  actual 
amount  invested  in  the  property  and  not  the  value  which 
may  be  ai'bitrarily  or  otherwise  fixed. — Primer,  Question  99. 

241 


INDIVIDUALS— Cont'd  DEDUCTIONS— Depreciation 

Losses  due  to  the  voluntary  removal  or  destruction  of 
buildings,  etc.,  incident  to  improvements  are  either  a  proper 
charge  to  the  cost  of  new  additions  or  to  depreciation  already 
provided,  as  the  facts  may  indicate,  but  in  no  case  is  it  a 
proper  deduction  in  determining  net  income.  If,  however, 
a  building  is  destroyed  prior  to  the  close  of  its  lifetime,  as 
estimated  for  the  purposes  of  making  depreciation  charges, 
that  portion  of  its  cost  which  is  properly  chargeable  to  the 
period  it  might  have  remained  in  a  usable  condition  may  be 
considered  a  part  of  the  cost  of  the  new  building  when  com- 
puting the  amount  of  the  gain  or  profit  derived  from  a  sale 
of  the  latter. — Prim.er,  Question  100. 

11196- 

If  the  authorities  of  a  municipality  declare  that  a  building 
is  unsanitary  or  unsafe  for  the  purposes  to  which  put  and 
its  destruction  is  ordered,  the  losses  sustained  by  the  owner 
cannot  be  claimed  either  as  a  loss  or  as  depreciation. — 
Primer,  Question  101. 

I1 1 97 — Amortization. 

In  the  case  of  buildings,  machinery,  equipment,  or  other 
facilities,  constructed,  erected,  installed,  or  acquired,  on 
or  after  April  6,  1917,  for  the  production  of  articles  con- 
tributing to  the  prosecution  of  the  present  war,  and  in  the 
case  of  vessels  constructed  or  acquired  on  or  after  such  date 
for  the  transportation  of  articles  or  men  contributing  to 
the  prosecution  of  the  present  war,  there  shall  be  allowed  a 
reasonable  deduction  for  the  amortization  of  such  part  of 
the  cost  of  such  f  acihties  or  vessels  as  has  been  borne  by  the 
taxpayer,  but  not  again  including  any  amount  otherwise 
allowed  under  this  title  or  previous  Acts  of  Congress  as  a 
deduction  in  computing  net  income.  At  any  time  within 
three  years  after  the  termination  of  the  present  war  the 
Commissioner  may,  and  at  the  request  of  the  taxpayer 
shall,  re-examine  the  return,  and  if  he  then  finds  as  a  re- 
sult of  an  appraisal  or  from  other  evidence  that  the  deduc- 

243 


INDIVIDUALS— Cont'd  DEDUCTIONS— Depreciation 

tion  originally  allowed  was  incorrect,  the  taxes  imposed  by 
this  title  and  by  Title  III  for  the'  year  or  years  affected  shall 
be  redetermined ;  and  the  amount  of  tax  due  upon  such  re- 
determination, if  any,  shall  be  paid  upon  notice  and  demand 
by  the  collector,  or  the  amount  of  tax  overpaid,  if  any,  shall 
be  credited  or  refunded  to  the  taxpayer  in  accordance  with 
the  provisions  of  Section  252. 

If  1 98 — Oil  and  Gas  Wells,  Mines,  Other  Natural  Deposits 
and  Timber — Depletion  and  Depreciation  of. 

In  the  case  of  mines,  oil  and  gas  wells,  other  natural  de- 
posits, and  timber,  a  reasonable  allowance  for  depletion  and 
for  depreciation  of  improvements,  according  to  the  peculiar 
conditions  in  each  case,  based  upon  cost  including  cost  of 
development  not  otherwise  deducted,  is  allowed.  In  de- 
termining cost,  the  fair  market  value  as  of  March  1,  1913, 
will  be  representative  for  property  acquired  prior  to  that 
date  and  the  actual  cost  if  acquired  subsequent  to  March  1, 
1913.  Mines,  oil  and  gas  wells,  discovered  by  the  taxpayer 
by  prospecting  and  exploration  after  March  1,  1913,  the 
fair  market  value  of  which  is  materially  disproportionate 
to  the  actual  cost,  the  depletion  allowance  shall  be  based  on 
the  fair  market  value  of  the  property  at  the  date  of  dis- 
covery, or  within  30  days  thereafter. 

The  deductions  provided  in  the  above  paragraph  must  be 
computed  under  regulations  prescribed  by  the  Commissioner 
of  Internal  Revenue.  In  the  case  of  leases,  the  deduction 
shall  be  equitably  apportioned  between  the  lessor  and  lessee. 

![i9a— 

The  value  of  mines  as  of  March  1,  1913,  must  be  deter- 
mined upon  the  salable  value  en  bloc. 

11200— 

This  value  (en  bloc)  having  been  ascertained,  the  num- 
ber of  units  (tons,  pounds,  etc.)  should  be  made.  The  en 
bloc  value,  divided  by  the  estimated  number  of  units  in  the 
mine,  will  determine  the  per  unit  value,  which,  multiplied  by 
the  number  of  units  mined  and  sold  during  any  one  year, 

243 


INDIVIDUALS— Cont^d  DEDUCTIONS—Depreciation 

will  determine  the  sum  which  will  constitute  an  allowable 
deduction  from  the  gross  income  of  that  year  on  account  of 
depletion. — Treasury  Decision  2446. 

11201  — 

The  value  to  be  cared  for  by  depreciation  is  the  actual 
amount  invested  in  the  property  and  not  the  value  which 
may  be  arbitrarily  or  otherwise  fixed. — Art.  8,  Reg.  33, 
Revised. 

If  202 — Depreciation  Not  to  Be  Confused  with  Loss. 

Depreciation  as  an  allowable  deduction  in  ascertaining  net 
income  is  not  to  be  confused  with  loss. 

^  203 — Book  Values  Not  a  Basis  for  Determining 
Depreciation. 

Book  values  which  reflect  a  shrinkage  in  the  value  of 
assets  are  not  a  basis  for  determining  taxable  income. — 
Treasury  Decision  2090. 

Likewise  and  conversely  any  appreciation  in  the  value 
of  assets  due  to  an  adjustment  or  appraisal  and  entered 
upon  the  books  of  the  individual  or  corporation  is  held  not  to 
be  income  until  such  increase  in  value  has  been  converted 
into  cash  or  its  equivalent.  Hence  in  the  preparation  of  re- 
turns mere  book  entries  of  appreciation  in  the  value  of  cap- 
ital assets  will  be  disregarded. — See  also  T[  205. 

jf  204 — Amortization  of  Bonds. 

The  original  regulations  (Art.  135)  were  revised  and  par- 
tially revoked  by  Treasury  Decision  2005,  which  holds,  in 
effect,  that  neither  increase  nor  shrinkage  in  book  values, 
due  to  market  fluctuations  or  otherwise,  is  to  be  taken  into 
account  in  making  returns  of  annual  net  income.  By  the 
amended  ruling  (Treasury  Decision  2161)  corporations  hold- 
ing bonds  which  were  purchased  above  ,  ar  and  proportion- 
ately reducing  the  value  of  those  bon^^s  each  year,  are  no 
longer  permitted  to  deduct  such  depreciation  in  a  return  of 
income.  In  the  case,  however,  of  corporations  selling  their 
own  bonds  at  a  discount,  such  discount,  under  conditions 
shown  in  Art.  135,  as  revised,  may  be  prorated  over  the  life 

^       244 


INDIVIDUALS— Cont^d  DEDUCTIONS— Depreciation 

of  the  bonds  and  an  aliquot  part  deducted  from  gross  income 
each  year. 

H  205 — Depreciation  in  Book  Values  of  Securities. 

Depreciation  in  book  values  of  bonds  and  similar  securities 
written  down  at  direction  of  Comptroller  of  Currency  are 
not  allowable,  but  Section  203  of  the  present  Act  provides 
that,  whenever  in  the  opinion  of  the  Commissioner  of  In- 
ternal Revenue  it  is  considered  necessary  in  order  to  reflect 
the  true  income,  the  taxpayer  must  take  an  inventory  under 
rules  and  regulations  prescribed  by  the  Commissioner,  and 
in  such  a  manner  as  conforms  as  nearly  as  possible  to  the 
best  accounting  practice  in  the  trade  or  business  most 
clearly  disclosing  the  correct  income. 

This  section  provides  further  that  if  the  taxpayer  con- 
siders that  he  has  sustained  a  loss  resulting  from  a  reduc- 
tion in  the  value  of  the  inventory  for  the  taxable  year, 
either  before  the  time  of  filing  or  subsequently,  he  may 
present  a  claim  for  abatement  or  refund  in  the  amount  of 
such  loss ;  and  if  the  evidence  submitted  proves  satisfactory 
to  the  Commissioner  the  amount  of  the  loss  so  claimed 
shall  be  credited  or  refunded. 

Under  the  previous  Act  the  Commissioner  ruled,  with  the 
approval  of  the  Attorney  General,  that  dealers  in  securities 
were  allowed  the  privilege  of  inventorying  securities  either 
at  cost  or  market  value  whichever  was  lowest.  It  is  problem- 
atical whether  this  ruling  will  be  made  applicable  to  the 
present  Act  on  account  of  the  unusual  fluctuation  of  market 
values  due  to  the  termination  of  the  present  war. 

^  206 — Depreciation  in  Value  of  Patents. 

If  a  taxpayer  buys  a  patent  for  $5,000  which,  under  the 
patent  laws  of  the  United  States,  had  five  years  yet  to  run, 
and  the  value  of  this  patent  depreciates  each  year  on  account 
of  the  exhaustion  of  the  patent  period,  the  cost  of  the  patent 
divided  by  the  number  of  years  it  has  yet  to  run  yields  an 
amount  which  may  be  claimed  each  year  as  depreciation.  In 
this  case  the  amount  is  $1,000. — Primer,  Question  102. 

245 


INDIVIDUALS— Cont'd  DEDUCTIONS— Depreciation 

II  207 — Depreciation  in  Value  of  Stage  Costumes. 

If  costumes  purchased  by  actors  and  actresses  are  used 
exclusively  in  the  production  of  a  play,  and  are  not  adapted 
for  occasional  personal  use  and  are  not  so  used,  a  deduction 
may  be  claimed  on  account  of  such  depreciation  in  their 
value  as  occurs  during  the  year  on  account  of  wear  and  tear 
arising  from  their  use  in  the  productions  of  the  play  or  to 
their  becoming  obselete  at  the  close  of  the  production. — 
Treasury  Decision  2090. 

TI  208 — Depreciation — Farm  Buildings. 

Provision  is  made  for  "a  reasonable  allowance  for  the  ex- 
haustion, wear  and  tear  of  property  arising  out  of  its  use  or 
employment  *  *  *,"  there  may  be  claimed  a  reasonable 
allowance  for  depreciation  on  farm  buildings  (other  than  a 
dwelling  occupied  by  the  owner) ,  farm  machinery,  and  other 
physical  property,  including  stock  purchased  for  breeding 
purposes,  but  no  claim  for  depreciation  on  stock  raised  or 
purchased  for  resale  will  be  allowed. 

II 209 — Depreciation — Real  Estate. 

Real  estate,  as  such,  and  as  distinct  from  the  improve- 
ments thereon,  is  not  reduced  in  value  by  reason  of  wear  and 
tear,  and  it  therefore  follows  that  the  "allowance"  contem- 
plated by  depreciation  in  the  case  of  real  estate  corporations 
does  not  apply  to  the  ground,  but  is  intended  to  measure 
the  decline  in  the  measure  of  improvements,  which  decline 
in  value  is  due  to  wear  and  tear  of  such  improvements. — 
Treasury  Decision  2137. 

11  21 0 — Fiduciary — Depreciation. 

Depreciation  is  not  allowed  fiduciaries  as  a  deduction 
from  gross  income  in  cases  where  no  depreciation  reserve  is 
maintained,  but  the  amount  claimed  as  a  deduction  is  paid 
to  the  beneficiary  as  income. — ^Treasury  Decision  2267. 

H  211.— Depreciation  of  Good  Will. 

Capable  neither  of  appreciation  nor  depreciation.  Amount 
claimed  as  decline  in  value  of,  not  allowable  to  either  indi- 
vidual or  corporation. — Treasury  Decision  2131.  See  1[  174. 

246 


INDIVIDUALS— Continued  DEDUCTIONS 

fl  212 — Contributions. 

Contributions  or  gifts  made  within  the  taxable  year  to 
corporations  organized  and  operated  exclusively  for  religi- 
ous, charitable,  scientific,  or  educational  purposes,  or  for  the 
prevention  of  cruelty  to  children  or  animals,  no  part  of  the 
net  earnings  of  which  inures  to  the  benefit  of  any  private 
stockholder  or  individual,  or  to  the  special  fund  for  voca- 
tional rehabilitation  as  authorized  by  Section  7  of  the  Voca- 
tional Rehabilitation  Act,  to  an  amount  not  in  excess  of  15 
per  centum  of  the  taxpayer's  net  income  as  computed  with- 
out the  benefit  of  this  paragraph.  Such  contributions  or 
gifts  shall  be  allowable  as  deductions  only  if  verified  under 
rules  and  regulations  prescribed  by  the  Commissioner,  with 
the  approval  of  the  Secretary.  In  the  case  of  a  non-resident 
alien  individual,  this  deduction  shall  be  allowed  only  as  to 
contributions  or  gifts  made  to  domestic  corporations  or  to 
such  vocational  rehabilitation  fund. — Law — page  64,  line  4, 

^  Contributions  made  by  individuals  to  such  organizations 
as  the  American  Red  Cross,  Knights  of  Columbus,  Y.  M. 
C.  A.,  Salvation  Army  and  similar  organizations  are  de- 
ductible under  the  provisions  of  Section  214  (11). 

There  is  much  doubt,  however,  if,  under  the  Act,  corpora- 
tions are  permitted  to  deduct  the  amount  of  such  contribu- 
tions. They  were  not  permitted  to  do  so  under  the  previous 
law. 

This  doubt  will  likely  soon  be  cleared  up  by  a  Treasury 
ruling. 

In  connection  with  claim  for  the  above  deduction  of  con- 
tributions on  returns  of  income  there  shall  be  stated : 

(a)  The  name  and  address  of  each  organization  to  which 
a  gift  was  made. 

(b)  The  date  and  amount  of  the  gift  in  each  case. 

Where  the  gift  is  other  than  money,  the  basis  for  calcula- 
tion of  the  value  of  the  gift  shall  be  the  fair  market  value  of 
the  property  the  subject  of  gift  at  the  time  of  the  gift. — 
Art.  8,  Reg.  33,  Revised. 

247 


INDIVIDUALS— Cont'd  PERSONAL  EXEMPTION 

^  21 3 — Amounts  Received  as  Dividends. 

For  the  purpose  of  the  normal  tax  only,  the  income 
embraced  in  a  personal  return  shall  be  credited  with  the 
amount  received  as  dividends  upon  the  stock  or  from  the  net 
earnings  of  any  corporation,  joint-stock  company  or  associa- 
tion, trustee,  or  insurance  company,  which  is  taxable  upon 
its  net  income  as  hereinafter  provided,  and  with  the  amount 
received  as  dividends  from  a  personal  service  corporation 
out  of  earnings  or  profits  upon  which  income  tax  has  been 
imposed  by  Act  of  Congress — Law,  page  65,  line  30. 

|[214 — Dividends — State  Taxes  on  Bank  Stock. 

State  taxes  on  capital  stock  of  banks,  paid  by  banks  are 
assessed  against  the  individual  stockholder  and  constitute 
an  allowable  deduction  in  the  return  of  such  individual. 
The  individual  should  include  his  proportionate  share  of 
such  taxes  in  his  return  as  income  and  then  claim  the 
amount  as  a  deduction  under  the  heading  "Taxes." — Primer, 
Question  44 ;  also  Art.  8,  Reg.  33,  Revised. 

^  21 5 — Amounts  Received  as  Interest. 

The  amount  received  as  interest  upon  obligations  of  the 
United  States,  and  upon  bonds  issued  by  the  War  Finance 
Corporation  is  exempt  from  normal  tax. 

11216—  PERSONAL  EXEMPTION. 

For  the  purpose  of  the  normal  tax  only  the  law  allows  as 
an  exemption  in  the  nature  of  a  deduction  from  net  income 
the  sum  of  $1,000  for  an  unmarried  person  not  the  head  of  a 
family,  and  $1,000  additional,  or  $2,000  in  the  case  of 

1.  The  head  of  a  family,  whether  married  or  not. 

2.  A  married  man  with  wife  living  with  him. 

3.  A  married  woman  with  husband  living  with  her. 

11217- 

(4)  $200  for  each  person  (other  than  husband  or  wife) 
dependent  upon  and  receiving  his  chief  support  from  the 
taxpayer,  if  such  dependent  person  is  under  18  years  of 

248 


INDIVIDUALS— Cont'd  PERSONAL  EXEMPTION 

age  or  is  incapable  of  self-support  because  mentally  or  phys- 
ically defective. 

For  further  explanation  of  the  status  of  husband  and  wife 
under  the  law,  see  H  226  to  H  242. 

11218- 

A  citizen  or  resident  of  the  United  States  may  secure  the 
benefit  of  personal  exemption  to  which  he  is  entitled  when 
receiving  a  payment  of  Interest  on  bonds  containing  so- 
called  "  tax-free  "  or  "  no-deduction  "  clause  by  attaching  to 
the  interest  coupons  an  income-tax  exemption  certificate, 
Form  1001,  Revised.  If  exemption  is  not  desired,  Form 
1000,  Revised,  should  be  used. — Primer,  Question  129. 

If  219 — Head  of  a  Family — Definition. 

The  head  of  a  family  is  held  to  be  a  person  who  is  the  chief 
support  of  one  or  more  individuals  who  are  closely  con- 
nected with  him  by  blood  relationship,  relationship  by  mar- 
riage or  by  adoption  and  whose  right  to  exercise  family 
control  and  provide  for  these  dependent  individuals  is  based 
upon  some  moral  or  legal  obligation. 

The  head  of  a  family  shall  be  allowed  an  additional  ex- 
emption of  $200  for  each  person  (other  than  husband  or 
wife)  dependent  upon  and  receiving  his  chief  support  from 
the  taxpayer,  if  such  dependent  person  is  under  18  years  of 
age  or  is  incapable  of  self-support  because  mentally  or  phys- 
ically defective. 

^  220 — Guardians  and  Trustees. 

Guardians  or  trustees  are  allowed  to  make  this  personal 
exemption  as  to  income  derived  from  the  property  of  which 
such  guardian  or  trustee  has  charge  in  favor  of  each  ward  or 
cestui  que  trust. 

In  no  event  shall  a  ward  or  cestui  que  trust  be  allowed  a 
greater  personal  exemption  than  a  single  individual. 

11221 — Estates  of  Deceased  Persons. 

There  shall  be  allowed  an  exemption  from  the  amount  of 
net  income  of  estates  of  deceased  citizens  or  residents  of  the 
United  States  during  the  period  of  administration  or  settle- 

249 


INDIVIDUALS— Continued 

ment,  and  of  trust  or  other  estates  of  citizens  or  residents 
of  the  United  States,  the  income  of  which  is  not  distributed 
annually  or  regularly,  the  sum  of  $1,000,  including  such  de- 
ductions as  allowed. 

ff  222—Husband  and  Wife. 

See  H's  226  to  242  for  further  information  as  to  the 
status  of  husband  and  wife  under  the  law. 

For  the  year  1913  the  tax  was  computed  from  March  1, 
when  the  Act  became  effective,  to  December  31.  Ten- 
twelfths  of  the  specific  exemptions  and  deductions  were 
allowed. 


tf  223— Intent  of  the  Law. 

The  intent  and  purpose  of  the  Income  Tax  Law  is  that  all 
gains,  profits,  and  income  of  a  taxable  class  shall  be  charged 
and  assessed  with  the  corresponding  income  tax,  normal  and 
additional,  and  such  tax  shall  be  paid  by  the  owner  of  such 
income  or  the  proper  representative  thereof  having  the  re- 
ceipt, custody,  control,  or  disposal  of  the  same.  In  any  case 
where  the  conditions  which  obtain  do  not  appear  to  fall 
within  the  law  and  regulations  for  the  assessment  and  col- 
lection of  the  income  tax,  the  proper  tax  shall  be  assessed  in 
the  particular  case  by  the  Commissioner  of  Internal  Revenue 
upon  his  findings  concerning  the  same.  Ownership  of  in- 
come and  liability  for  tax  thereon  shall  be  determined  as  of 
the  year  for  which  the  return  is  required  to  be  rendered. — 
Art.  49,  Reg.  33,  Revised. 

Tf  224— Record  to  be  Kept. 

Every  individual,  partnership,  corporation,  or  association 
liable  to  any  tax  imposed  under  the  internal  revenue  laws  of 
the  United  States  or  for  the  collection  thereof,  shall  keep 
such  records  and  render  such  statements  and  return,  under 
oath,  as  shall  be  prescribed  by  the  Commissioner  of  Internal 
Revenue. — Art.  50,  Reg.  33,  Revised. 

Tl  225 — Tax  Withheld  at  Source  Credit  Against  Income  Tax. 

Income  upon  which  any  tax  is  required  to  be  withheld  at 
the  source  under  this  section  shall  be  included  in  the  return 

250 


INDIVIDUALS— Continued  HUSBAND  AND  WIFE 

of  the  recipient  of  such  income,  but  any  amount  of  tax  so 
withheld  shall  be  credited  against  the  amount  of  income 
tax  as  computed  in  such  return. 


If  226—  HUSBAND  AND  WIFE. 

If  the  combined  income  of  husband  and  wife,  living  to- 
gether, and  dependent  children  equaled  or  exceeded  $2,000, 
all  such  income  must  be  reported,  either  on  one  return  or 
on  separate  returns.  Husband  and  wife  should  make  sepa- 
rate returns  if  either  is  subject  to  the  surtax.  The  addi- 
tional or  surtax  imposed  by  the  act  will  be  computed  on 
the  basis  of  the  separate  income  of  each  individual;  that 
is,  on  the  amount  of  each  individual's  income  in  excess  of 
the  minimum  amount  upon  which  the  surtax  at  the  grad- 
uated rates  is  to  be  calculated. 

^  227 — When  Exemption  Exceeds  Net  Income. 

Personal  exemptions  from  tax  are  granted  in  respect  of 
the  normal  income  tax  only.  Where  the  total  of  allowable 
exemptions  and  credits  exceeds  the  amount  of  net  income, 
the  excess  of  such  exemptions  may  not  be  availed  of  as 
against  the  additional  tax. — Art.  14,  Reg.  33,  Revised. 

II  228 — When  Living  Apart. 

Every  single  person  and  every  married  person  not  living 
with  husband  or  wife  in  the  sense  below  defined,  who  has 
a  net  income  exceeeding  $1,000  per  annum,  is  liable  to  pay 
the  normal  tax  under  the  law,  but  in  making  return  for  such 
tax  such  person  may  claim  an  exemption  of  $1,000  from  his 
or  her  total  net  income. 

U  229 — When  Living  Together. 

Husband  and  wife  living  together  are  entitled  to  an  ex- 
emption of  $2,000  and  $200  additional  for  each  person  (other 
than  husband  or  wife)  dependent  upon  and  receiving  his 
chief  support  from  the  taxpayer,  if  such  dependent  person 

351 


INDIVIDUALS— Continued  HUSBAND  AND  WIFE 

is  under  eighteen  years  of  age  or  is  incapable  of  self -support 
because  mentally  or  physically  defective. 

^  230 — ^When  Separated  and  Living  Apart. 

However,  when  the  husband  and  wife  are  separated  and 
living  permanently  apart  from  each  other  each  shall  be  en- 
titled to  an  exemption  of  $1,000. 

11  231 — Husband  and  Wife  Filing  Separate  Returns. 

Where  husband  and  wife  file  separate  returns  of  income, 
one  of  them  being  filed  in  time  and  the  other  delinquent, 
such  returns  are  not  supplemental  of  each  other  and  de- 
linquency must  be  answered  for  by  the  one  in  connection 
with  whose  return  it  occurred. — Art.  26,  Reg.  33,  Revised. 

If  232 — Living  Apart — Exemption. 

A  husband  who  has  a  wife  and  children  whom  he  sup- 
ports, but  who  is  living  apart  from  his  wife  under  an  agree- 
ment to  do  so,  there  being  no  judicial  decree  of  separation, 
is  entitled  only  to  the  specific  exemption  of  $1,000. — Treas- 
ury Decision  2692: 

TI  233 — When  Nnt  Living  Apart,  But  Having  Separate 
Estates. 

If  the  husband  and  wife  not  living  apart  have  separate 
estates,  the  income  from  both  may  be  made  on  one  return, 
but  the  amount  of  income  of  each,  and  the  full  name  and 
address  of  both,  must  be  shown  in  such  return. 

II  234— Husband  Should  Make  Return  for  Both. 

The  husband,  as  the  head  and  legal  representative  of  the 
household  and  general  custodian  of  its  income,  should  make 
and  render  the  return  of  the  aggregate  income  of  himself 
and  wife,  and  for  the  purpose  of  levying  the  income  tax  it 
is  assumed  that  he  can  ascertain  the  total  amount  of  said 
income. 

H  235— When  Wife  Has  Separate  Estate  Managed  by 
Herself. 

If  a  wife  has  a  separate  estate  managed  by  herself  as  her 
own  separate  property  and  receives  an  income  of  $1,000  or 


INDIVIDUALS—Continued  HUSBAND  AND  WIFE 

over,  she  may  make  return  of  her  own  income,  and  if  the 
husband  has  other  net  income,  making  the  aggregate  of 
both  incomes  more  than  $2,000,  the  wife's  return  should  be 
attached  to  the  return  of  her  husband,  or  his  income  should 
be  included  in  her  return,  in  order  that  a  deduction  of  $2,000 
may  be  made  from  the  aggregate  of  both  incomes.  The 
tax  in  such  case,  however,  will  be  imposed  only  upon  so 
much  of  the  aggregate  income  of  both  as  shall  exceed  $2,000. 

If  236— When  Either  Has  an  Income  of  $1,000  or  Over. 

If  either  husband  or  wife  separately  has  an  income  equal 
to  or  in  excess  of  $1,000,  a  return  of  annual  net  income  is 
required  under  the  law,  and  such  return  must  include  the 
income  of  both,  and  in  such  case  the  return  must  be  made, 
even  though  the  combined  income  of  both  be  less  than 
$2,000. 

^  237— When  Income  of  Both  Is  in  Excess  of  $2,000. 

If  the  aggregate  net  income  of  both  exceeds  $2,000,  an 
annual  returji  of  their  combined  incomes  must  be  made  in 
the  manner  stated,  although  neither  one  separately  may 
have  an  income  of  $2,000  per  annum.  They  are  jointly  and 
separately  liable  for  such  return  and  for  the  payment  of 
the  tax. 

^  23d — When  Either  Dies  During  the  Year. 

Where  either  dies  during  the  year  having  a  net  taxable 
income  of  $1,000  or  more,  a  return  should  be  made  by  the 
executor  or  administrator  of  the  deceased  as  of  the  date 
of  his  death,  and  the  executor  or  administrator  may  claim  an 
exemption  of  $2,000.  The  survivor,  when  making  a  return 
at  the  end  of  the  year  for  the  entire  year,  will  be  allowed 
the  applicable  exemption  for  the  single  or  married  status 
existing  at  the  close  of  the  year. — ^Treasury  Decision  2090. 

^  239 — Deceased  Husband — Amount  of  Specific  Exemption 
Allowed. 

If  the  income  of  a  deceased  husband  during  the  taxable 
year  in  which  he  died  necessitates  the  filing  of  a  return  the 
specific  exemption  of  $2,000  should  be  claimed. 

253 


INDIVIDUALS— Continued  RETURNS 

^  240 — Income  of  Wife  From  Sale  of  Special  (Magazine) 
Articles. 

Unless  the  wife  has  a  separate  estate  which  requires  her 
to  file  a  separate  return  of  income  or  to  join  with  her  hus- 
band in  a  return  which  shall  set  forth  her  income  separately, 
a  husband  having  a  taxable  income  of  his  own  should  in- 
clude in  his  return  the  income  accruing  to  his  wife  from  the 
sale  of  special  magazine  articles.  If  neither  has  an  income 
of  $1,000  or  more,  but  together  they  have  an  aggregate  in- 
come exceeding  $2,000,  a  return  of  the  joint  income  is  re- 
quired to  be  filed  by  either  the  husband  or  wife,  and  the 
income  derived  by  the  wife  as  above  set  forth  should  be 
included  in  such  return.  The  actual  proceeds  coming  into 
the  wife's  possession  during  the  tax  year  constitute  the 
income  to  be  included,  and  not  the  amounts  estimated  prior 
to  publication  and  payment. — Treasury  Decision  2135. 

^241 — Single  or  Married  Status — When  Determined. 

The  single  or  married  status  of  the  person  claiming  the 
specific  exemption  shall  be  determined  as  of  the  time  of 
claiming  such  exemption  if  such  claim  be  made  within  the 
year  for  which  return  is  made,  otherwise  the  status  at  the 
close  of  the  year. 

If  242 — ^When  an  American  Woman  Marries  a  Foreigner. 

An  American  woman  who  marries  a  foreigner  takes  the 
nationality  of  her  husband  and  cannot  claim  personal 
exemption. — Treasury  Decision  2090. 

ANNUAL  RETURNS  OF  INDIVIDUALS. 

11  243— Who  Shall  Make  Returns  and  When  Returns  Shall 
Be  Made. 

Every  person  having  a  net  income  for  the  taxable  year  of 
$1,000  or  over,  if  single,  or  if  married  and  not  living  with 
husband  or  wife ;  or  of  $2,000  or  over  if  married  and  living 
with  husband  or  wife,  shall  make  under  oath  a  return  on 
or  before  March  15,  1919,  for  the  year  1918,  stating  specfi- 
cally  the  items  of  his  gross  income  and  the  deductions  and 
credits  allowed  by  this  title.    If  a  husband  and  wife  living 

854 


INDIVIDUALS— Continued  '  RETURNS 

together  have  an  aggregate  net  income  of  $2,000  or  over, 
each  shall  make  such  a  return  on  or  before  March  15,  1919, 
for  the  year  1918,  unless  the  income  of  each  is  included  in  a 
single  joint  return.  Returns  filed  on  the  basis  of  a  fiscal 
year  shall  be  made  on  or  before  the  fifteenth  day  of  the 
third  month  following  the  close  of  the  fiscal  year. 

If  the  taxpayer  is  unable  to  make  his  own  return,  the  re- 
turn shall  be  made  by  a  duly  authorized  agent  or  by  the 
guardian  or  other  person  charged  with  the  care  of  the  per- 
son or  property  of  such  taxpayer. 

If  by  reason  of  illness,  absence,  or  non-residence  a  tax- 
payer is  unable  personally  to  render  his  return,  he  may 
appoint  an  agent  to  act  for  him,  and  the  return  executed  by 
the  agent  will  be  accepted  if  he  makes  affidavit  that  he  has 
sufficient  knowledge  to  make  a  complete  and  accurate  re- 
turn for  his  principal  and  assumes  responsibility  for  making 
the  return  and  incurring  the  penalties  provided  for  a  de- 
linquent, erroneous,  false,  or  fraudulent  return. — Primer, 
Question  6. 

11243(a)— 

Forms  of  returns  are  provided  by  the  Commissioner  of 
Internal  Revenue,  and  are  to  be  had  from  the  collectors  of 
internal  revenue  of  the  several  collection  districts. — ^Art. 
23,  Reg.  33,  Revised. 

[The  various  forms  of  return  prescribed  for  the  present 
Act  will  be  treated  in  a  supplement  to  this  book  as  soon  as 
they  become  available.] 

If  244 — Return  Made  and  Mailed  in  Time. 

If  a  return  is  made  and  placed  in  the  United  States  mail, 
properly  addressed,  and  postage  paid,  in  ample  time,  in  due 
course  of  mail,  to  reach  the  office  of  the  collector  or  deputy 
collector  on  or  before  the  last  due  date,  no  penalty  will  be 
held  to  attach  should  the  return  not  be  actually  received 
by  such  officer  until  subsequent  to  that  date. — Art.  52,  Reg. 
33,  Revised. 

H  245 — Dividends  to  Be  Included  in  Annual  Return. 

In  every  return  shall  be  included  the  income  derived  from 
dividends  on  the  capital  stock,  or  from  the  net  earnings  of 

255 


INDIVIDUALS— Continued  RETURNS 

any  corporation,  etc.,  except  that  in  the  case  of  non-resident 
aliens,  such  income  derived  from  sources  without  the  United 
States  shall  not  be  included. 

Tf  246 — Period  Covered  by  Return. 

Jan.  1  to  Dec.  31, 1918,  and  each  calendar  year  thereafter, 
unless  fiscal  year  has  been  designated. 

Tf  247 — Changing  from  Fiscal  Year  to  Calendar  Year. 

If  a  taxpayer,  with  the  approval  of  the  Commissioner, 
changes  the  basis  of  computing  net  income  from  fiscal  year 
to  calendar  year,  a  separate  return  shall  be  made  for  the 
period  between  the  close  of  the  last  fiscal  year  for  which  the 
return  was  made  and  the  following  December  31st.  Law, 
page  72,  line  43. 

H  248 — Change  from  Calendar  Year  to  Fiscal  Year. 

If  the  change  is  from  calendar  year  to  fiscal  year,  a  sepa- 
rate return  shall  be  made  for  the  period  between  the  close 
of  last  calendar  year  for  which  the  return  was  made  and 
the  date  designated  as  the  close  of  the  fiscal  year. 

^  249 — Change  from  One  Fiscal  Year  to  Another  Fiscal 
Year. 

If  the  change  is  from  one  fiscal  year  to  another  fiscal  year, 
a  separate  return  shall  be  made  for  the  period  between  the 
close  of  the  former  fiscal  year  and  the  date  designated  as 
the  close  of  the  new  fiscal  year. 

T[250 — First  Return  on  Fiscal  Year  Basis. 

If  a  taxpayer  making  his  first  return  for  income  tax  keeps 
his  accounts  on  the  basis  of  a  fiscal  year,  he  shall  make  a 
separate  return  for  the  period  between  the  beginning  of 
the  calendar  year  in  which  such  fiscal  year  ends  and  the 
end  of  such  fiscal  year. 

^  251 — Computation  of  Net  Income  (First  Year). 

In  all  the  above  cases  the  net  income  shall  be  computed  on 
the  basis  of  such  period  for  which  separate  return  is  made 
and  the  tax  shall  be  paid  thereon  at  the  rate  for  the  cal- 
endar year  in  which  such  period  is  included ;  and  the  credits 

256 


INDIVIDUALS— Continued  RETURNS 

provided  in  subdivisions  (c)  (exemptions  of  $1,000  and 
$2,000)  and  (d)  ($200  additional  for  dependent  person)  of 
Section  216  shall  be  reduced  respectively  to  amounts  which 
bear  the  same  ratio  to  the  full  credits  provided  in  such  sub- 
divisions as  the  number  of  months  in  such  period  bears  to 
twelve  months. 

H  252— Where  Returns  Shall  Be  Filed. 

Returns  shall  be  made  to  the  collector  for  the  district  in 
which  is  located  the  legal  residence  or  principal  place  of 
business  of  the  person  making  the  return,  or,  if  he  has  no 
legal  residence  or  principal  place  of  business  in  the  United 
States,  then  to  the  collector  at  Baltimore,  Maryland. 

Persons  in  the  military  or  naval  service  of  the  United 
States  may  file  their  returns  of  income  with  the  collector  of 
internal  revenue  of  the  district  in  which  they  have  a  legal 
residence,  or  with  the  collector  of  internal  revenue  at  Balti- 
more, Md. — ^Art.  26,  Reg.  33,  Revised. 

^  253 — By  An  Individual  Residing  in  a  Foreign  Country. 

In  the  case  of  an  individual  having  no  legal  residence  or 
place  of  business  in  the  United  States,  the  return  should  be 
filed  with  the  collector  of  internal  revenue  at  Baltimore,  Md. 

11254 — Form  of  Return— What  to  Contain. 

The  required  return  will  be  made  on  Form  1040  Revised 
in  accordance  with  the  instructions  printed  thereon,  and  will 
specifically  set  forth — 

1.  All  income  received  from  each  specific  source  and  the 
total  thereof. 

2.  All  the  separate  items  of  deduction  claimed. 

3.  The  amount  of  specific  personal  exemption  claimed. 

4.  All  amounts  of  income  upon  which  tax  has  been  with- 
held at  source  by  withholding  agent  or  agents  on  tax-free 
bonds. 

H  255 — Amended  Returns. 

Amended  returns  are  not  required  when  individuals,  fidu- 
ciaries, or  withholding  agents  are  found  subject  to  a  further 
tax.— I.  T.  Mim.  1232. 

257 


INDIVIDUALS—Continued  RETURNS 

Return  may  be  made  on  a  basis  other  than  that  of  actual 
receipts  and  disbursements. 

^  256 — Adjustment  of  Tax  By  Commissioner. 

As  soon  as  practicable  after  the  return  is  filed,  the  Com- 
missioner shall  examine  it.  If  it  then  appears  that  the  cor- 
rect amount  of  the  tax  is  greater  or  less  than  that  shown  in 
the  return,  installments  shall  be  recomputed.  If  the 
amount  already  paid  exceeds  that  which  should  have  been 
paid  on  the  basis  of  the  installments  as  recomputed,  the 
excess  so  paid  shall  be  credited  against  the  next  install- 
ments so  due,  and  if  the  amount  already  paid  exceeds  the 
correct  amount  of  the  tax,  the  excess  shall  be  credited  or  re- 
funded to  the  taxpayer  in  accordance  with  the  provisions  of 
the  Income  Tax  Law.  If  the  amount  already  paid  is  less 
than  that  which  should  have  been  paid,  the  difference  shall, 
to  the  extent  not  covered  by  any  credits  then  due  to  the  tax- 
payer under  Section  252,  be  paid  upon  notice  and  demand  by 
the  collector.  In  such  case,  if  the  return  is  made  in  good 
faith  and  the  understatement  of  the  amount  in  the  return 
is  not  due  to  any  fault  of  the  taxpayer,  there  shall  be  no 
penalty  because  of  such  understatement. 

^  257 — Returns  Under  Section  3176  of  Revised  Statutes. 

If  a  return  is  made  pursuant  to  Section  3176,  Revised 
Statutes,  as  amended,  the  amount  of  tax  determined  to  be 
due  under  such  return  shall  be  paid  upon  notice  and  demand 
by  the  collector.  Section  3176  provides  that  the  collector 
is  to  file  returns  in  case  of  failure  to  file,  or  of  fraudulent  re- 
turns.— See  Law,  page  169,  line  17. 

If  258— When  Tax  Shall  Be  Paid. 

The  tax  shall  be  paid  in  four  equal  installments — ^the  first 
at  the  time  fixed  by  law  for  fihng  the  return,  the  second  on 
the  fifteenth  day  of  the  third  month  thereafter  (June  15), 
the  third  on  the  fifteenth  day  of  the  sixth  month  thereafter 
(September  15),  and  the  fourth  on  the  fifteenth  day  of  the 
ninth  month  thereafter  (December  15). 

258 


INDIVIDUALS— Continued  RETURNS 

^  259 — Payment  Where  Extension  Is  Granted. 

"Inhere  an  extension  of  time  for  filing  a  return  is  granted 
the  time  for  payment  of  the  first  installment  shall  be  post- 
poned until  the  date  of  the  expiration  of  the  period  of  the 
extension,  but  the  time  for  payment  of  the  other  install- 
ments shall  not  be  postponed  unless  the  Commissioner  so 
provides  in  granting  the  extension. 

In  any  case  in  which  the  time  for  the  payment  of  any 
installment  is  at  the  request  of  the  taxpayer  thus  postponed 
there  shall  be  added  as  part  of  such  installment  interest 
thereon  at  the  rate  of  one-half  of  1  per  cent,  per  month 
from  the  time  it  would  have  been  due  if  no  extension  had 
been  granted,  until  paid. 

If  any  installment  is  not  paid  when  due,  the  whole  amount 
of  the  tax  unpaid  shall  become  due  and  payable  upon  notice 
and  demand  by  the  collector. 

If  260 — Payment  Optional. 

The  tax  may,  at  the  option  of  the  taxpayer,  be  paid  in  a 
single  payment  instead  of  in  installments,  in  which  case  the 
total  amount  shall  be  paid  on  or  before  the  time  fixed  by 
law  for  filing  the  return  (March  15th) ,  or  where  an  exten- 
sion of  time  for  fihng  the  return  has  been  granted,  on  or 
before  the  expiration  of  the  period  of  such  extension. 

II 261 — Beneficiary  Under  Trust  Etate  or  Otherwise  to 
Make  His  Own  Return. 

Unless  the  beneficiary  is  under  some  disability  which  re- 
quires the  fiduciary  to  act,  the  beneficiary  will  make  his  own 
return  and  account  for  the  tax  upon  his  entire  income. — 
Treasury  Decision  2090. 

If  such  fiduciary  is  legally  authorized  to  act  for  such  bene- 
ficiary as  agent  or  attorney  in  fact,  he  may  in  such  case, 
in  addition  to  his  return  as  fiduciary,  make  the  personal 
return  for  the  beneficiary  on  Form  1040,  Revised. 

^  262 — Executor  or  Administrator  to  Make  Return  in  Case 
of  Death. 

In  the  case  of  the  death  of  a  person  whose  net  income 
from  Jan.  1  of  the  year  in  which  he  died  was  $1,000  or 

259 


INDIVIDUALS—Continued  RETURNS 

$2,000  according  to  the  marital  status  of  the  decedent.  A 
return  for  such  decedent  must  be  made  by  the  executor  or 
administrator  of  the  estate  of  the  deceased,  on  Form  1040, 
Revised,  and  in  computing  the  taxable  income  of  such 
estate  there  shall  be  allowed  the  specific  exemption  pro- 
vided by  law. — Treasury  Decision  2090. 

^  263 — Notice  of  Failure  to  File  Return  to  Be  Served  on 
Guardian  or  Agent  of  Non-resident  Alien. 

When  the  required  return  has  not  been  made  by  a  person 
acting  as  guardian,  agent  of  a  non-resident  alien,  or  by  one 
acting  in  any  other  capacity  in  which  the  law  makes  it  a 
duty  for  him  to  represent  the  individual,  notice  of  failure  to 
make  such  return  will  be  served  upon  such  guardian  or 
agent. 

If  264 — Returns  to  Be  Prepared  by  Collector  in  Certain 
Cases. 

If  any  person  liable  to  pay  an  income  tax  for  himself  or 
others  shall  fail  to  make  and  deliver  the  return  required 
by  law,  but  shall  consent  to  disclose  the  particulars  of  any 
business  or  occupation  hable  to  pay  such  tax,  it  shall  be  the 
duty  of  the  collector  or  deputy  collector  to  make  such  list 
or  return,  which  being  distinctly  read  and  consented  to, 
signed  and  verified  by  oath  or  affirmation  by  the  person 
liable  to  make  such  return,  the  same  may  be  received  as  the 
Hst  or  return  of  such  person. — Sec.  3173  R.  S. 

If  264(a) — Refusal  or  Neglect  to  Make  Return. 

If  any  person,  corporation,  company,  or  association  fails 
to  make  and  file  a  return  or  list  at  the  time  prescribed  by 
law,  or  by  regulations  made  under  authority  of  law,  or 
makes,  wilfully  or  otherwise,  a  false  or  fraudulent  return 
or  list,  the  collector  or  deputy  collector  shall  make  the 
return  or  list  from  his  own  knowledge  and  from  such  in- 
formation as  he  can  obtain  through  testimony  or  other- 
wise. In  any  such  case  the  Commissioner  may,  from  his 
own  knowledge  and  from  such  information  as  he  can  obtain 
through  testimony  or  otherwise,  make  a  return  or  amend 
any  return  made  by  a  collector  or  deputy  collector.    Any 

260 


INDIVIDUALS— Continued  RETURNS 

return  or  list  so  made  and  subscribed  by  the  Commissioner, 
or  by  a  collector  or  deputy  collector  and  approved  by  the 
Commissioner,  shall  be  prima  facie  good  and  sufficient  for 
all  legal  purposes.* 


♦For  method  of  procedure  in  such  cases,  see  Section  3173  (page  167). 

If  265 — False  Returns. 

There  is  no  necessity  to  construe  the  word  "false"  where 
it  is  used  with  reference  to  the  time  in  which  Commissioner 
shall  act,  to  mean  fraudulently  false. — Treasury  Decision 
2198. 

^  266 — Refund  Portions  of  Amounts  Paid  as  Penalties  for 
Failure  to  File  Return  for  the  Year  1913. 

On  March  4,  1915,  Congress  authorized  the  refundment 
to  individuals  of  all  amounts  paid  as  penalties  for  failure  to 
file  returns  for  the  tax-year  1913,  in  excess  of  $5.  For 
further  particulars,  see  Treasury  Decision  2175. 

H  267—25  Per  Cent.  Penalty. 

Where  taxpayers  make  application  for  blanks  disclosing 
their  liability  in  time  no  25  per  cent,  penalty  accrues,  pro- 
vided said  return  is  filed  within  30  days  after  receipt  of 
necessary  blanks. 

T[  26a— 50  Per  Cent.  Penalty. 

If  a  party  liable  to  tax  for  entire  year  falsely  states  that 
he  is  liable  for  only  portion  of  year,  return  so  made  is  false 
and  50  per  cent,  penalty  applies  in  full. 

^  266 — Liability  of  Individuals  to — 

Specific  penalties  provided  by  the  income  tax  are  held  to 
attach  to  the  person  and  in  case  of  death  of  such  person  are 
non-enforceable. 

Ad  valorem  penalties  (those  measured  by  income)  attach 
to  income  and  are  to  be  enforced  regardless  of  the  death  of 
the  owner  of  the  income  by  which  the  penalty  is  measured. 

^  270 — ^Waiver  After  Expiration  of  Time  Limit  for 
Assessment. 

Where  the  Hmitation  of  the  statute  as  to  assessment  has 
run  and  a  written  waiver  of  exemption  from  assessment  is 

361 


INDIVIDUALS— Continued  RETURNS 

given  by  the  taxpayer,  the  ad  valorem  penalties  of  25  per 
cent,  addition  to  tax,  is  not  to  be  assessed  for  delinquency 
in  filing  return. 

If  271— Returns  to  Be  Verified  by  Oath. 

The  annual  return  must  be  verified  by  oath  of  the  person 
making  the  same.  Collectors  are  directed  by  law  to  require 
every  return  to  be  so  verified  by  the  person  rendering  it. 
The  affidavit  may  be  made  before  the  collector  for  the  dis- 
trict or  before  any  officer  authorized  by  law  to  administer 
oaths. 

TI  272— Oaths. 

(1)  A  return  of  income  rendered  by  an  individual  residing 
abroad  may  be  acknowledged  before  any  duly  appointed  offi- 
cer of  the  country  in  which  he  resides  authorized  to  ad- 
minister oaths  and  use  an  official  seal. 

(2)  If  a  return  is  executed  in  a  State  before  a  notary 
who  is  not  required  by  the  laws  of  the  State  to  use  a  seal, 
and  none  is  used,  the  notary  should  file  with  the  Com- 
missioner of  Internal  Revenue  the  certificate  of  an  officer 
possessing  a  seal,  showing  that  he  is  duly  commissioned  and 
authorized  to  administer  oaths;  otherwise  the  certificate 
will  not  be  recognized. 

(3)  Returns  acknowledged  before  commanding  officers  of 
naval  vessels  while  at  sea  or  in  foreign  ports  will  be 
accepted. 

(4)  Returns  executed  before  a  summary  court  officer, 
United  States  Army,  will  not  be  accepted. — Treasury  De- 
cision 2090. 

(5)  May  be  made  before  Justice  of  Peace  or  any  officer 
authorized  by  law  to  administer  oaths. — Treasury  Decision 
2174. 

11273- 

Persons  in  the  naval  or  military  service  of  the  United 
States  may  verify  their  returns  before  any  official  of  those 
services  authorized  to  administer  oaths  for  the  purposes  of 
those  services. 

262 


INDIVIDUALS— Continued  RETURNS 

Income  tax  returns  executed  abroad  may  be  attested  free 
of  charge  before  United  States  consular  officers. 

Where  a  foreign  notary  or  other  official  having  no  seal 
shall  act  as  attesting  officer,  the  authority  of  such  attest- 
ing officer  should  be  certified  to  by  some  judicial  official  or 
other  proper  officer  having  knowledge  of  the  appointment 
and  official  character  of  the  attesting  officer. — Art.  26,  Reg. 
33,  Revised. 

Tf  274 — Extension  of  Time  to  File  Return  May  Be  Granted 
by  Collector. 

When  the  return  is  not  filed  within  the  required  time  by 
reason  of  sickness  or  absence  of  the  individual,  an  extension 
of  time,  not  exceeding  30  days  from  March  15,  within  which 
to  file  such  return  may  be  granted  by  the  collector,  provided 
a  written  application  therefor  is  made  by  the  individual 
within  the  period  for  which  such  extension  is  desired. 

If  275 — Extension  of  Time  by  Commissioner. 

The  Commissioner  may  grant  a  reasonable  extension  of 
time  for  filing  returns  wherever  in  his  judgment  good 
cause  exists  and  he  shall  keep  a  record  of  every  such  exten- 
sion and  reason  therefor,  except  in  the  case  of  taxpayers 
who  are  abroad,  no  such  extension  shall  be  for  more  than 
six  months. 

^  27G — Extension  to  Citizens  of  the  United  States, 

Non-resident  Individuals  and  Corporations  Abroad. 

An  extension  of  time  has  been  granted  to  non-resident 
alien  individuals  and  corporations  and  American  citizens  re- 
siding abroad  who  because  of  war  conditions  cannot  file  re- 
turns, up  to  and  including  ninety  days  after  the  proclama- 
tion of  the  President  of  the  United  States  announcing  the 
close  of  the  war  v/ith  Germany. — Treasury  Decision  2581. 

If  277 — Returns — Five-Year  Limitation. 

Except  in  the  case  of  false  or  fraudulent  returns,  the 
amount  of  tax  due  under  any  return  shall  be  determined 
and  assessed  by  the  Commissioner  within  five  years  after 
the  return  was  due  or  was  made  and  no  suit  or  proceed- 

263 


INDIVIDUALS— Continued  RETURNS 

ings  for  the  collection  of  any  tax  shall  be  begun  after  the 
expiration  of  five  years  after  the  return  was  due  or  was 
made. 

11278 — Reasonable  Cause. 

Section  3176,  Revised  Statutes,  as  amended  by  Revenue 
Act  of  1918,  provides  that  if  after  delinquency  has  ensued, 
the  delinquent  individual  or  corporation  shall  have  filed 
with  the  collector  of  internal  revenue  a  return  and  shall 
accompany  such  return  with  a  showing  "that  the  failure  to 
file  it  (in  time)  was  due  to  a  reasonable  cause  and  not  to 
wilful  neglect,  no  such  addition  shall  be  made  to  the  tax." 

"Reasonable  cause,"  for  the  purpose  of  this  article  of  the 
regulations,  is  held  to  be  such  a  condition  of  fact  as  had  the 
taxpayer  in  default  exercised  ordinary  business  care  and 
prudence  it  would  have  been  impracticable  or  impossible  for 
him  to  have  filed  return  on  the  prescribed  time. — Art.  54, 
Reg.  33,  Revised. 

If  279 — Receipts  for  Taxes. 

Every  collector  to  whom  any  payment  of  any  tax  is  made 
under  the  provisions  of  this  title  shall  upon  request  give  to 
the  person  making  such  payment  a  full  written  or  printed 
receipt,  stating  the  amount  paid  and  the  particular  account 
for  which  such  payment  was  made;  and  whenever  any 
debtor  pays  taxes  on  account  of  payments  made  or  to  be 
made  by  him  to  separate  creditors,  the  collector  shall,  if  re- 
quested by  such  debtor,  give  a  separate  receipt  for  the  tax 
paid  on  account  of  each  creditor  in  such  form  that  the 
debtor  can  conveniently  produce  such  receipts  separately  to 
his  several  creditors  in  satisfaction  of  their  respective  de- 
mands up  to  the  amounts  stated  in  the  receipts;  and  such 
receipts  shall  be  sufficient  evidence  in  favor  of  such  debtor 
to  justify  him  in  withholding  from  his  next  payment  to  his 
creditor  the  amount  therein  stated;  but  the  creditor  may, 
upon  giving  to  his  debtor  a  full  written  receipt  acknowledg- 
ing the  payment  to  him  of  any  sum  actually  paid  and  accept- 
ing the  amount  of  tax  paid  as  aforesaid  (specifying  the 

264 


INDIVIDUALS— Continued  RETURNS 

same)  as  a  further  satisfaction  of  the  debt  to  that  amount, 
require  the  surrender  to  him  of  such  collector's  receipt. 

H  280 — Penalty  and  Interest. 

If  upon  review  of  a  return  by  the  Commissioner  of  In- 
ternal Revenue,  an  understatement  is  found  to  be  due  to 
negligence  on  the  part  of  a  taxpayer,  but  without  intent  to 
defraud,  there  shall  be  added  as  part  of  the  tax  5  per  cent,  of 
the  total  amount  of  the  deficiency  plus  interest  at  the  rate  of 
1  per  cent,  per  month  on  the  amount  of  the  deficiency  of 
each  installment  from  the  time  the  installment  was  due. 

If  281 -—Payment  of  Taxes. 

An  excess  payment  of  tax  in  one  year  can  be  offset  against 
an  assessment  of  tax  for  a  subsequent  year. 

In  the  payment  of  income  tax  a  fractional  part  of  a  cent 
shall  be  disregarded  unless  it  amounts  to  a  half-cent  or 
more,  in  which  case  the  fraction  shall  be  increased  to  1  cent. 
—Art.  41,  Reg.  33,  Revised. 

H  282— -Status  of  Income  Tax. 

Tax  due  on  income  has  the  status  of  a  debt  due  to  the 
United  States.  Persons  receiving  property  charged  with 
such  indebtedness  must  answer  for  the  debt. — Art.  39,  Reg. 
33,  Revised. 

If  283— Penalty— Failure  to  File  Return. 

Any  individual,  corporation,  or  partnership  required  un- 
der this  title  to  pay  or  collect  any  tax,  to  make  a  return  or 
to  supply  information,  who  fails  to  pay  or  collect  such  tax, 
to  make  such  return  or  to  supply  such  information  at  the 
time  or  times  required  under  the  Revenue  Act  of  1918  shall 
be  liable  to  a  penalty  of  not  more  than  $1,000.  (This  is  in 
addition  to  the  25  per  cent,  penalty  which  will  be  assessed 
for  failure  to  file  return  within  the  time  required  by  law.) 

Every  person  having  a  net  income  of  $1,000,  or  $2,000, 
according  to  marital  status  for  the  calendar  year  is  required 
to  render  a  return,  and  the  penalty  provided  by  law  for 
refusal  or  neglect  to  file  a  return  will  be  enforced  regardless 
of  the  fact  that  the  net  income  may  be  less  than  the  exemp- 

265 


INDIVIDUALS— Continued  RETURNS 

tion  to  which  the  individual  is  entitled. — Treasury  Deci- 
sion 2090. 

fl  284 — False  or  Fraudulent  Understatements. 

If  the  understatement  is  false  or  fraudulent  and  with  in- 
tent to  evade  the  tax,  then  in  addition  to  the  other  penalties 
provided  by  law  for  false  and  fraudulent  returns,  there  shall 
be  added  as  part  of  the  tax  50  per  cent,  of  the  amount  of  the 
deficiency.  In  these  cases  the  amount  of  tax  due  may  be  de- 
termined at  any  time  after  the  return  is  filed  and  the  tax 
may  be  collected  at  any  time  after  it  becomes  due. 

II  285— Penalty— Wilful  Attempt  to  Evade  Tax  or  File 
Return. 

Any  individual,  corporation,  or  partnership,  or  any  officer 
or  employe  of  any  corporation,  or  member  or  employe  of 
a  partnership,  who  wilfully  refuses  to  pay  or  collect  such 
tax,  to  make  such  return  or  to  supply  such  information  at 
the  time  or  times  required  under  this  title,  or  who  wilfully 
attempts  in  any  manner  to  defeat  or  evade  the  tax  imposed 
by  the  Revenue  Act  of  1918  shall  be  guilty  of  a  misdemeanor 
and  shall  be  fined  not  more  than  $10,000  or  imprisoned  for 
not  more  than  one  year,  or  both,  together  with  the  cost  of 
prosecution. 

H  286— Failure  to  Pay  Tax. 

If  any  tax  remains  unpaid  after  the  date  when  it  is  due 
and  for  ten  days  after  notice  and  demand  by  the  Collector, 
then,  except  in  the  case  of  the  estates  of  insane,  deceased 
or  insolvent  persons,  there  shall  be  added  as  part  of  the  tax 
the  sum  of  5  per  cent,  on  the  amount  due  but  unpaid  plus 
interest  at  the  rate  of  1  per  cent,  per  month  upon  such 
amount  from  the  date  it  became  due. 

T[  287— Abatement  of  Taxes. 

Nothing  in  the  law  or  the  regulations  shall  be  construed 
to  release  a  taxable  person  from  liability  for  income  tax,  nor 
shall  any  contract  entered  into  after  the  Act  of  October  3, 
1913  took  effect  be  valid  in  regard  to  any  Federal  income 
tax  imposed  upon  a  person  liable  to  such  payment. 

266 


INDIVIDUALS— Continued  RETURNS 

fl  288 — Income  Tax  Law^ — Constitutionality — Injunction 
to  Prevent  Collection. 

The  courts  have  persistently  refused  an  injunction  or 
other  extraordinary  process  of  law  to  aid  taxpayers  in 
attempting  to  defeat  collection  of  the  tax.  The  question  of 
constitutionality  of  the  law  can  be  considered  in  a  suit  to 
recover  the  tax,  but  not  in  a  proceeding  to  enjoin  collection 
■—Treasury  Decision  2142. 

^28d — Taxes  Illegally  Assessed — Jurisdiction  of  Suits  to 
Recover. 

Suit  to  recover  taxes  alleged  to  have  been  illegally 
assessed  and  collected  may  be  brought  directly  against  the 
United  States  in  the  U.  S.  District  Court. — Treasury  De- 
cision 2188. 

^  290 — Claims  for  Abatement  of  Tax. 

Claims  for  abatement  of  taxes  erroneously  assessed 
(Form  47),  or  which  are  excessive  in  amount,  may,  prior  to 
collection  thereof,  be  filed  under  the  provisions  of  said  Sec- 
tion 3220,  Revised  Statutes. 

Form  47  for  Claiming  Abatement  may  be  had  upon  appli- 
cation to  the  collector. 

II  290(a)--Return  Filed  on  Behalf  of  Persons  Due  to 
Sickness. 

If  such  person,  owing  to  serious  illness,  is  unable  to  make 
the  return  and  application  above  provided  for,  the  return 
and  appHcation  may  be  made  by  an  agent,  he  making  oath 
on  certificate  (Form  1040,  Revised)  that  he  has  sufficient 
knowledge  of  the  affairs  and  property  of  the  non-resident 
alien  to  enable  him  to  make  a  full  and  complete  return  for 
him  or  her,  and  that  the  return  and  application  made  by 
him  are  full  and  complete. 
II  290(b)— Claims  for  Refund  Tax. 

When  tax  is  collected  in  excess,  recourse  may  be  had  only 
on  presentation  of  a  claim  for  refund  (on  Form  46)  under 
the  provisions  of  Section  3220,  Revised  Statutes. 

Section  3220,  Revised  Statutes,  prescribes  that  the  Com- 
missioner of  Internal  Revenue,  subject  to  regulations  pre- 
scribed by  the  Secretary  of  the  Treasury,  is  authorized,  on 
appeal  to  him  made,  to  remit,  refund,  and  pay  all  back  taxes 

267 


INDIVIDUALS— Cont'd         WITHHOLDING  AT  SOURCE 

erroneously  or  illegally  assessed  or  collected,  all  penalties 
collected  without  authority,  and  all  taxes  that  appear  to  be 
unjustly  assessed  or  excessive  in  amount,  or  in  any  manner 
wrongfully  collected ;  also  to  repay  to  any  collector  or  deputy 
collector  the  full  amount  of  such  sums  of  money  as  may  be 
recovered  against  him  in  any  court,  etc. 

Tf  290(c) — Statute  of  Limitations  Removed  from  Certain 
Claims  for  Refund. 

Claims  can  now  be  made  for  refund  of  taxes  paid  under 
the  Act  of  August  5,  1909  (excise  tax),  Act  of  October  3, 
1913  (income  tax),  Act  of  September  8,  1916  (income  tax) 
and  Act  of  October  3,  1917  (income  tax  and  excess-profits 
tax)  if  the  question  involves  a  review  of  the  return. 


WITHHOLDING  AND  PAYMENT  OF  TAX  AT 
THE  SOURCE. 

If  291 — Withholding  Provisions  of  the  Law. 

CITIZENS  AND  RESIDENT  INDIVIDUALS. 
The  withholding  provisions  of  the  law  in  respect  to  citi- 
zens and  residents  applies  only  to  income  from  bonds  con- 
taining a  tax-free  covenant. — See  Law,  page  69,  line  748. 

11  291  (a)— NON-RESIDENT  ALIEN  INDIVIDUALS 

The  law  provides  that  all  persons,  firms  and  corporations 
having  control,  receipt  or  payment  of  any  income,  of  a  non- 
resident individual  (other  than  dividends  from  corporations 
which  is  taxable  under  the  law  on  its  net  income)  shall  with- 
hold and  pay  the  government  a  tax  of  8%  on  such  income, 
except  in  the  case  of  income  derived  from  bonds  containing 
a  tax-free  covenant,  when  the  amount  of  tax  to  be  withheld 
and  paid  is  2%. — See  Law,  page  69,  line  27-48. 

The  Commissioner,  however,  may  authorize  the  deduction 
and  withholding  of  a  tax  on  income  from  any  securities  at 
the  rate  of  8%  where  the  owners  of  such  income  are  not 
known. 
TI  291  (b)— NON-RESIDENT  ALIEN  CORPORATIONS. 

In  the  case  of  income  of  foreign  corporations  not  having 
an  office  or  place  of  business  in  the  United  States,  there 

268 


INDIVIDUALS— Cont'd         WITHHOLDING  AT  SOURCE 

shall  be  withheld  and  paid  a  tax  of  10%  (exclusive  of  divi- 
dends from  corporations  whose  net  income  is  taxable)  ex- 
cept in  the  case  of  income  derived  from  bonds  or  other  obli- 
gations containing  a  tax-free  clause,  withholding  will  be  at 
the  rate  of  2%. — See  Law,  page  79,  line  55. 

Foreign  corporations  having  an  office  or  place  of  business 
in  the  United  States  have  the  status  of  domestic  corpora- 
tions, and  are  not  subject  to  withholding  of  tax  at  the 
source. 

Tf  292— "Debtors"  or  Withholding  Agents. 

All  persons,  firms,  etc.,  mentioned  in  the  above  paragraph 
are  referred  to  in  the  regulations  as  "debtors"  or  "with- 
holding agents,"  and  the  word  "source"  is  to  apply  to  the 
place  where  the  income  originated  and  is  payable. 

^  293 — Exempt  Organizations  Are  Subject  to  Provisions  of 
the  Law  as  Withholding  Agents. 

By  a  revised  ruling  of  the  Commissioner  of  Internal 
Revenue,  organizations  exempted  by  law  from  payment  of 
tax  are  now  subject  to  the  withholding  provisions  of  the 
present  law. — Art.  81,  Reg.  33,  Revised.  Also  Treasury  De- 
cision 2407. 

^  294— Individual  Income  from  Which  the  Tax  Is  NOT  to 
Be  Withheld— Dividends. 

In  the  case  of  non-resident  alien  individuals,  there  shall 
not  be  withheld  any  tax  on  dividends  on  capital  stock  or 
from  the  net  earnings  of  corporations  and  joint-stock  com- 
panies or  associations  and  insurance  companies  subject  to 
like  tax. 

^295 — Dividends  Declared  and  Paid  by  Foreign 

Corporations  from  Earnings  in  United  States. 

Dividends  declared  by  a  foreign  corporation  which  de- 
rives its  entire  income  from  business  transacted  in  the 
United  States  should  be  treated  in  the  same  manner  as 
dividends  from  domestic  corporations. 

TI  299— *  Forms  and  Certificates. 

Tax  withheld  from  income  other  than  bond  interest  will 
be  accounted  for  on  Income  Tax  Form  1042,  and  separate 


*  The  forms  here  referred  to  are  old  forms. 

269 


INDIVIDUALS— Cont'd         WITHHOLDING  AT  SOURCE 

reports  of  the  payments  entered  on  Form  1042  will  be  made 
on  Form  1098.  Tax  withheld  from  bond  interest  will  be 
accounted  for  monthly  on  Income  Tax  Form  1012,  and  an 
annual  summary  of  these  will  be  made  on  Income  Tax  Form 
1013.  The  annual  return  only  will  be  verified. — Art.  43, 
Reg.  33,  Revised. 

Ij  297 — Ownership  Certificates. 

The  owners  of  bonds  of  domestic  and  resident  corpora- 
tions shall,  when  presenting  interest  coupons  for  payment, 
file  a  certificate  of  ownership  for  each  issue  of  bonds,  show- 
ing the  name  and  address  of  the  debtor  corporation,  the 
name  and  address  of  the  owner  of  the  bonds,  whether  the 
payee  is  married  or  the  head  of  a  family,  and  the  amount 
of  interest.— Art.  43,  Reg.  33,  Revised.  See  If  309  (H) 
to  (J). 

^  298— Tax  to  Be  Paid  at  the  Source. 

The  forms  here  referred  to  are  old  forms. 

Form  1000,  Revised,  shall  be  used  (a)  when  no  personal 
exemption  is  claimed  against  interest  on  bonds  containing 
a  "tax-free"  covenant  by  citizens  or  residents  of  the  United 
States;  (b)  by  non-resident  alien  individuals,  foreign  cor- 
porations having  no  office  or  place  of  business  in  the  United 
States,  whether  or  not  such  bonds  contain  a  "tax-free" 
covenant;  and  (c)  in  the  case  where  coupons  are  received 
not  accompanied  by  certificates  of  ownership.  The  first 
bank  receiving  coupons  not  accompanied  by  ownership  cer- 
tificates will  make  a  certificate  crossing  out  "owner"  and  in- 
serting "payee"  and  will  enter  the  amount  of  interest  on 
line  4.— Art.  43,  Reg.  33,  Revised.    See  H  309  (H)  to  (J). 

If  299— Tax  Not  to  Be  Paid  at  the  Source. 

The  forms  here  referred  to  are  the  old  froms. 

Form  1001,  Revised,  shall  be  used  (a)  when  personal 
exemption  is  claimed  against  interest  on  bonds  containing  a 
"tax-free"  covenant  by  citizens  or  residents  of  the  United 
States,  also  when  presenting  coupons  from  bonds  not  con- 
taining a  "tax-free"  covenant;  (b)  by  domestic  partner- 
ships, corporations,  or  associations;  (c)  by  non-resident 
alien  partnerships ;  and  (d)  by  foreign  corporations  having 

270 


INDIVIDUALS— Cont'd         WITHHOLDING  AT  SOURCE 

an  office  or  place  of  business  in  the  United  States,  whether 
or  not  such  bonds  contain  a  "tax-free"  covenant. 

In  case  a  citizen  or  resident  individual  receives  interest  on 
bonds  containing  a  "tax-free"  covenant  in  excess  of  the 
amount  of  personal  exemption  which  the  individual  may- 
claim,  any  such  excess  must  be  reported  on  Form  1000,  Re- 
vised.—Art.  43,  Reg.  33,  Revised.    If  309  (H)  to  (J). 

The  department  will  furnish  blank  forms  of  certificates 
to  be  used  in  connection  with  the  collection  of  the  income 
tax  to  such  parties  as  may  make  application  for  the  same. 
Private  corporations  and  others  may  under  certain  condi- 
tions have  these  certificates  printed  for  their  own  use. — 
Treasury  Decision  1939. 

If  300,  301,  302,  303  Void— [Ed.] 

T[  304— When  Taxes  Withheld  Are  to  Be  Paid. 

In  the  monthly  list  returns  as  now  prescribed  a  space 
is  provided  to  show  the  amount  of  interest  paid  (tax-free 
bonds)  on  which  the  withholding  agent  will  be  held  liable  for 
the  tax.  The  withholding  agents  will  not,  however,  forward 
to  the  collector  the  tax  on  such  amounts  until  the  filing  of 
the  annual  return. 

If  305 — Filing  Annual  Returns. 

Withholding  agents  should  file  an  annual  return  on  Form 
1013  showing  amounts  of  tax  withheld  in  the  aggregate  for 
each  month  on  tax-free  bonds  as  reported  on  monthly  re- 
turns Form  1012  during  the  year. 

If  306 — Returns  to  Be  Made  to  Collector  of  Internal 
Revenue. 

Withholding  agents  who  are  required  to  make  monthly 
returns  will,  on  or  before  the  20th  day  of  each  month,  file 
with  the  collector  for  their  respective  districts  such  returns 
for  the  preceding  month,  accompanied  by  all  certificates  re- 
lating thereto;  on  or  before  the  1st  day  of  March  in  each 
year  said  withholding  agents  shall  likewise  file  their  annual 
returns  for  the  preceding  calendar  year. 

an 


INDIVIDUALS—Cont'd         WITHHOLDING  AT  SOURCE 

If  307 — Penalty  for  Giving  Information  from  Withholding 
Returns. 

The  law  is  specific  and  mandatory  with  regard  to  safe- 
guarding from  publicity  the  information  acquired  by  reason 
of  its  requirements  relative  to  annual  returns  of  income. 
The  law  imposes  the  penalty  of  "fine,  imprisonment,  dis- 
missal from  office,  and  discharge  from  employment,"  for 
making  known  in  any  manner  not  provided  by  law  the 
amount  or  source  of  income,  or  any  particular  thereof,  set 
forth  or  disclosed  in  any  income  return  by  any  person. 

^  308 — Amended  Returns. 

Amended  returns  not  required  when  individuals  or  fidu- 
ciaries are  found  subject  to  a  further  tax. — See  I.  T.  Mim. 
1232. 

Income  Derived  from  Interest  Upon  Bonds  and  Mortgages 

or  Deeds  of  Trust  or  Other  Similar  Obligations  of 

Corporations,  etc.,  Containing  a  Tax-Free  Covenant. 

]f  309— Tax  Withheld  on  Tax-Free  Bonds. 

In  any  case  where  bonds,  mortgages,  or  deeds  of  trust, 
or  other  similar  obligations  of  a  corporation  contain  a  con- 
tract or  provision  by  which  the  obligor  agrees  to  pay  any 
portion  of  the  tax  imposed  by  this  title  upon  the  obligee,  or 
to  reimburse  the  obligee  for  any  portion  of  the  tax,  or  to 
pay  the  interest  without  deduction  for  any  tax  which  the 
obligor  may  be  required  or  permitted  to  pay  thereon  or  to 
retain  therefrom  under  any  law  of  the  United  States,  the 
obligor  shall  deduct  and  withhold  a  tax  equal  to  2  per 
centum  of  the  interest  upon  such  bonds,  mortgages,  deeds 
of  trust  or  other  obligations,  whether  such  interest  is  pay- 
able annually  or  at  shorter  or  longer  periods  and  whether 
payable  to  a  non-resident  alien  individual  or  to  an  individual, 
citizen  or  resident  of  the  United  States  or  to  a  partnership. 

If309(a)« 

The  Commissioner  of  Internal  Revenue,  however,  may  au- 
thorize such  tax  to  be  deducted  and  withheld  in  the  case  of 
interest  upon  any  such  bonds,  mortgages,  deeds  of  trust  or 
other  obligations,  the  owners  of  which  are  not  known  to  the 
withholding  agents. 

27» 


INDIVIDUALS— Cont'd         WITHHOLDING  AT  SOURCE 

H  309(b)~ 

Such  deduction  and  withholding  shall  not  be  required  in 
the  case  of  a  citizen  or  resident  entitled  to  receive  such 
interest,  if  he  files  with  the  withholding  agent  on  or  before 
February  1,  a  signed  notice  in  writing  claiming  the  benefit 
of  the  credits  provided  in  subdivisions  (c)  and  (d)  of  Sec- 
tion 216  [see  page  66] ;  nor  in  the  case  of  a  non-resident 
alien  individual  if  so  provided  for  in  regulations  prescribed 
by  the  Commissioner  under  Section  217  (See  page  67). 

Every  individual,  corporation,  or  partnership  required  to 
deduct  and  withhold  any  tax  under  this  Section  shall  make 
return  thereof  on  or  before  March  1st  of  each  year  and 
shall  on  or  before  June  15th  pay  the  tax  to  the  official  of 
the  United  States  Government  authorized  to  receive  it. 
Every  such  individual,  corporation,  or  partnership  is  hereby 
made  liable  for  such  tax  and  is  hereby  idemnified  against 
the  claims  and  demands  of  any  individual,  corporation,  or 
partnership  for  the  amount  of  any  payments  made  in  ac- 
cordance with  the  provisions  of  this  Section. 

^  309(c) — Tax-Free  Covenant — Contract  Between  Issuing 
Corporation  and  Bondholder. 

The  Government  has  consistently  held  that  the  so-called 
tax-free  covenant  in  bonds  is  a  contract  between  the  issu- 
ing corporation  and  its  bondholders  with  which  the  Gov- 
ernment has  no  concern.  Inasmuch,  however,  as  the  great 
majority  of  the  tax-free  covenants  in  bonds  are  to  the  ef- 
fect that  the  issuing  corporation  "will  pay  coupons,  etc., 
without  deduction  for  any  Federal  income  taxes  which  the 
corporation  is  obliged  by  law  to  retain  and  pay"  the  pro- 
vision limiting  the  amount  to  be  retained  and  paid  at  the 
source  to  2  %  was  probably  designed  as  a  measure  of  rehef 
to  minimize*the  obhgation  of  the  issuing  corporation  to  its 
bondholders. 

11309(d)— 

The  2  %  tax  on  bond  interest  to  be  withheld  and  paid  at 
the  source  in  the  case  of  bonds  containing  a  tax-free  cove- 
nant is  only  a  part  of  the  tax  assessed  on  interest  from 
bonds,  the  bondholder  being  Hable  for  tax  on  such  interest 
at  the  full  normal  and  super-tax  rates  prescribed  by  law. 


INDIVIDUALS— Cont'd         WITHHOLDING  AT  SOURCE 

He  may,  however,  take  credit  for  the  2  %  tax  withheld 
in  his  behalf  in  his  annual  return  in  the  manner  indicated 
on  the  form  of  return. 

tf  309  (e)— Bonds  Which  Do  Not  Contain  a  Tax-Free 
Covenant. 

The  Commissioner  has  ruled  that  under  the  law,  a  cor- 
poration issuing  bonds  without  a  tax-free  covenant  is  not 
permitted  to  deduct  or  pay  tax  at  the  source  with  respect 
to  the  interest  thereon;  except  in  cases  where  bonds  are 
owned  by  a  non-resident  individual  or  corporation  not  hav- 
ing an  office  or  place  of  business  in  the  United  States. 

The  withholding  provisions  of  the  law  apply  to  the  nor- 
mal income  tax  derived  from  interest  payments  upon  bonds 
which  do  not  contain  a  tax-free  covenant  clause  only  in  cases 
where  the  bondholders  are  non-resident  alien  corporations 
or  individuals. 

If  interest  payments  are  made  to  citizens  or  residents  of 
the  United  States  from  bonds  which  are  not  tax-free,  such 
income  must  be  reported  on  Form  1001,*  Revised,  as  there 
is  no  provision  for  reporting  this  income  as  subject  to 
withholding. 

*0r  its  equivalent  under  any  new  regulations. 

Should  a  corporation  desire  to  reimburse  its  bondholders 
in  such  cases,  it  may  do  so,  as  this  is  a  matter  wholly  be- 
tween the  parties  concerned  and  one  in  which  the  Govern- 
ment is  not  interested.  However,  such  income  should  not 
be  reported  as  subject  to  withholding  and  this  office  will  not 
accept  tax  deducted  in  such  cases  by  the  withholding  agent. 

11309(f) — Tax-Free  Bonds — Important  Distinction  for 
Income  Tax  Purposes. 

Read  also  If  309(e).  The  method  of  reimbursing  the 
bondholder  for  a  specific  amount  of  the  tax  on  interest  as- 
sumed by  the  corporation  issuing  bonds  without  a  tax-free 
covenant  or  contract  is  a  matter  with  which  the  Govern- 
ment has  nothing  to  do.  In  these  circumstances  some 
corporations  issuing  bonds  without  such  covenant  but 
which  voluntarily  assume  a  tax  of,  say  2  per  cent.,  in  be- 
half of  the  bondholder,  may  use  the  simple  expedient  of 
paying  coupons  at  1 02  per  cent,  of  their  face  value. 

274 


INDIVIDUALS—Cont'd         WITHHOLDING  AT  SOURCE 

In  order  to  make  the  proper  certificates  of  ownership 
when  cashing  coupons  and  to  make  a  proper  return  of  in- 
come it  is  desirable  that  the  bondholder  inform  himself  not 
only  whether  his  bond  contains  a  tax-free  covenant,  but 
also  whether  the  issuing  corporation  interprets  such  cove- 
nant as  obliging  it  to  withhold  and  pay  the  tax. 

If  309(g)- 

Here  are  some  facts  based  upon  official  information: 

(1)  Not  all  corporations  issuing  bonds  with  a  so-called 
tax-free  covenant  are  observing  the  apparent  terms  of 
such  covenant. 

(2)  Many  corporations  issuing  bonds  without  a  tax-free 
covenant  are  reimbursing  the  holder  for  a  tax  of  2  per 
cent,  or  more. 

(3)  Some  corporations  issuing  bonds  with  a  tax-free 
covenant  are  assuming  more  than  the  2  per  cent,  tax  which 
by  law  they  are  required  to  retain  and  pay  in  behalf  of  the 
bondholder. 

(4)  Other  corporations  are  paying  coupons  without  de- 
duction of  the  2  per  cent,  tax  only  where  a  certificate  of 
ownership  is  filed  showing  that  the  holder  is  not  exempt 
from  the  tax. 

11309(h)— 

USE  OF  CERTIFICATES  OF  OWNERSHIP. 

The  regulations  provide  that  in  collecting  coupons  or  in- 
terest orders  the  bondholder  must  file  a  proper  certificate  of 
ownership  with  the  bank  or  collecting  agency.    See  If  297. 

BONDS  CONTAINING  TAX-FREE  COVENANT- 
EXEMPTION  CLAIMED. 

With  respect  to  bonds  which  contain  a  tax-free  covenant 
and  where  it  has  been  ascertained  that  the  corporation  will 
abide  by  the  apparent  terms  of  such  covenant,  the  holder 
should  file  Form  1001  (yellow  certificate)  if  he  claims  ex- 
emption from  the  tax.  In  this  case  his  coupons  will  be  paid 
at  face  value  and  the  corporation  need  not  withhold  and  pay 
the  tax  in  his  behalf.    See  H  299. 

875 


INDIVIDUALS— Contd         WITHHOLDING  AT  SOURCE 

ff309(i)- 

BONDS  CONTAINING  TAX-FREE  COVENANT- 
EXEMPTION  NOT  CLAIMED. 

Under  the  same  conditions  shown  in  the  preceding  para- 
graph, but  where  the  holder  does  not  claim  exemption,  he 
should  file  Form  1000  (white  certificate).  In  this  case  a 
tax  of  2  per  cent,  (read  jf  309(d))  will  be  withheld  and 
paid  by  the  issuing  corporation  in  his  behalf,  and  he  will 
receive  the  face  value  of  his  coupons.    See  TJ  298. 

!I308(j)— 

ALL    OTHER    BONDS— INCLUDING    BONDS   WHICH 
,     ARE  ^TAX-FREE"  BUT  ISSUED  WITHOUT  A 
SPECIFIC  TAX-FREE   COVENANT. 

[A  "tax-free"  bond  under  this  category  is  a  bond  a  cer- 
tain amount  of  tax  on  the  interest  from  which  has  been  vol- 
untarily assumed  by  the  issuing  corporation,  but  which 
does  not  contain  a  specific  tax-free  covenant  or  contract.] 

The  holder  of  these  bonds  should  file  Form  1001  (yel- 
low certificate)  filled  out  according  to  his  taxable  status 
under  the  law.    His  coupon  will  be  paid  at  face  value. 

See  H  297  and  298. 

If  31 0 — Investment  Certificates. 

Investment  securities  issued  by  a  corporation  for  a  term 
of  years  are  corporate  obligations  within  the  meaning  of 
the  income-tax  law. — Treasury  Decision  2090.     See  H  32. 

If  31 1  — Promissory  Note  of  Corporations. 

A  simple  promissory  note  not  exceeding  one  year  in  time 
is  not  "similar  to  bonds,  mortgages,  or  deeds  of  trust  of  cor- 
porations," but  the  interest  on  such  a  note  when  payable  to 
a  non-resident  alien,  is  subject  to  withholding  regardless  of 
the  amount  of  interest  payment. 

^312 — Scrip  Dividend — (Amending  Treasury  Decision 
2090). 

Scrip  certificates  issued  by  a  corporation  to  its  stockhold- 
ers in  lieu  of  dividends,  such  scrip  certificates  bearing  inter- 
est and  redeemable  at  a  specified  time  not  longer  than  one 


INDIVIDUALS— Cont'd         WITHHOLDING  AT  SOURCE 

year  from  date  of  issue,  are  not  corporate  obligations  similar 
to  bonds,  mortgages,  or  deeds  of  trust,  and  the  interest  pay- 
able thereon  will  be  considered  income.  Payment  in  scrip 
is  held  to  be  equivalent  to  payment  in  cash. 

\l  31 3— Income  from  Bonds  of  Exempt  Organizations. 

The  owner  of  bonds  issued  by  such  an  organization  is  not 
relieved  from  the  filing  of  certificates  of  ownership,  with 
coupons  detached  from  such  bonds  when  presenting  same  to 
a  bank  or  other  collecting  agency  for  collection  or  otherwise, 
or  to  a  debtor  corporation  or  its  duly  designated  paying 
agent  for  payment. 

^  31 4— Interest  on  State  and  Government  Obligations 
Exempt. 

Income  derived  from  the  interest  upon  the  obligations  of 
a  State ;  Territory ;  or  any  political  subdivision  thereof ;  the 
District  of  Columbia ;  securities  issued  under  the  provisions 
of  the  Federal  Farm  Loan  Act  of  July  17,  1916 ;  the  obliga- 
tions of  the  United  States  or  its  possessions ;  or  bonds  issued 
by  the  War  Finance  Corporation,  is  not  subject  to  the  in- 
come tax,  and  certificates  of  ownership  in  connection  with 
coupons  or  registered  interest  orders  for  such  interest  will 
not  be  required.  In  the  case  of  obHgations  of  the  United 
States  issued  after  September  1,  1917,  and  In  the  case  of 
bonds  issued  by  the  War  Finance  Corporation,  the  interest 
shall  be  exempt  only  if  and  to  the  extent  provided  in  the 
respective  Acts  authorizing  the  issue  thereof. — Law, 
page  60,  line  48. 

Tf  31 5 — Municipal  District  and  Local  Bonds — Special 
Assessment  Districts. 

Special  assemment  districts  created  under  the  laws  of  the 
several  States  for  public  purposes,  such  as  the  improvement 
of  streets  and  public  highways,  the  provision  for  sewerage, 
gas,  and  light,  and  the  reclamation,  drainage,  or  irrigation 
of  bodies  of  land,  and  levee  and  school  districts,  are  held  to 
be  political  subdivisions  of  a  State,  and  income  derived  from 
interest  upon  the  obligations  of  such  districts  shall  not  be 
included  in  computing  net  income. — Treasury  Decision  1946. 

277 


INDIVIDUALS— Cont'd         WITHHOLDING  AT  SOURCE 

The  requirement  of  law  for  information  at  the  source 
shall  not  apply  to  the  payment  of  interest  on  obligations  of 
the  United  States. — Art.  37,  Reg.  33,  Revised. 

1[316 — Public  Utility  Bonds  Acquired  by  a  Municipality. 

Bonds  of  a  public  utility  acquired  by  a  municipality  are 
not  an  obligation  of  the  municipahty  within  the  meaning 
of  the  law  and  income  from  such  bonds  is  not  exempt  from 
tax. 

11317— The  Term  "Debtor''— To  Whom  It  Applies. 

The  term  "debtor,"  as  hereinafter  used,  shall  apply  to  all 
corporations,  joint-stock  companies  or  associations,  and  in- 
surance companies;  and  such  "debtor"  may  appoint  with- 
holding and  paying  agents  to  act  for  it  in  matters  pertaining 
to  the  collection  of  this  tax,  upon  filing  with  the  collector 
of  internal  revenue  for  the  district  a  proper  notice  of  the 
appointment  of  such  agent  or  agents. 

This  notice  should  be  placed  on  file  in  the  office  of  the 
collector  of  internal  revenue  for  the  district  in  which  the 
debtor  corporation  is  located  or  has  its  principal  place  of 
business,  and  the  said  collector  shall  notify  the  collector  of 
internal  revenue  for  the  district  in  which  the  duly  au- 
thorized withholding  agent  is  located — Treasury  Decision 
2135. 

Where  such  withholding  agent  is  so  authorized  by  the 
debtor  corporation,  he  may  file  with  the  collector  of  his  dis- 
trict the  required  returns  and  accompanying  certificates,  in 
which  case  the  assessment  of  the  tax  withheld  by  him  will 
be  made  in  that  district.  Unless  such  authority  is  given, 
such  reports,  etc.,  will  be  furnished  by  the  debtor  corpora- 
tion to  the  collector  of  its  district  (i.  e.,  the  district  in  which 
its  principal  financial  or  business  office  is  located),  where, 
in  such  case,  assessment  will  be  made. 

^  31 8 — Non-Resident  Aliens — Tax  on  Income  from  Bonds 
to  Be  Deducted  and  Withheld  by  Debtor 
Corporation — Certificates  of  Ownershop  to 
Accompany  Interest  Coupons  for  Collection. 

For  the  purpose  of  collecting  the  tax  on  all  coupons  and 
registered  interest  originating  or  payable  in  the  United 

278 


INDIVIDUALS— Cont'd         WITHHOLDING  AT  SOURCE 

States  to  non-resident  aliens,  the  source  shall  be  the  debtor 
(or  its  withholding  and  paying  agent  in  the  United  States), 
who  shall  deduct  the  tax  when  same  is  to  be  withheld,  and 
no  other  bank,  trust  company,  banking  firm,  or  individual 
taking  coupons  or  interest  orders  for  collection  or  otherwise, 
shall  withhold  the  tax  thereon,  where  coupons  are  accom- 
panied by  certificates  of  ownership  signed  by  the  owners  of 
the  bonds  upon  which  the  interest  matured.  These  certifi- 
cates shall  be  made  on  the  prescribed  forms  and  shall  be 
made  out  by  each  owner  of  bonds  for  the  coupons  or  interest 
order  for  each  separate  issue  of  bonds  or  obligations  of  each 
debtor. 

^  31 9 — Sinking  Fund  and  Similar  Bonds  Retired  Within  an 
Interest  Period. 

Where  bonds,  under  contract  provisions  in  the  bonds,  are 
retired  within  an  interest  period  and  prior  to  the  expiration 
of  the  full  term  of  the  bond,  ownership  certificates  will  be 
required  and  should  cover  that  part  of  the  interest  period 
affected  between  the  beginning  of  such  period  and  the  date 
of  the  retirement  of  the  bonds. — Treasury  Decision  2090. 

^  320 — Registered  Bonds — Certificates  of  Ownership  Not 
Required  to  Accompany  Interest  Orders,  Checks,  Etc. 

Certificates  of  ownership  are  not  required  to  accompany 
interest  orders  or  checks  in  payment  of  interest  on  fully 
registered    bonds. — Treasury    Decision  .2006.      Also    see 

T1329. 

^  321  — Bonds  of  Foreign  Corporations. 

Bonds  of  foreign  corporations  payable  as  to  interest 
wholly  within  the  United  States,  or  within  or  without  the 
United  States  at  the  option  of  the  owner  of  the  bonds,  to 
be  treated,  for  income-tax  purposes,  as  domestic  bonds, 
when  accompanied  by  certificates  of  ownership  properly 
executed. 

In  the  case  of  items  (payable  in  the  United  States)  of 
interest  upon  bonds  of  foreign  countries  and  interest  upon 
bonds  and  dividends  from  stocks  of  foreign  corporations,  the 
fiscal  agent  in  the  United  States  will  be  the  source  for  pur- 

279 


INDIVIDUALS— Cont'd         WITHHOLDING  AT  SOURCE 

poses  of  information.  If  no  ownership  certificate  is  received 
with  the  item,  the  first  bank  or  collection  agent  receiving 
the  same  shall  execute  a  certificate,  Form  1001,  showing  the 
name  and  address  of  the  owner,  if  known,  or  the  person 
presenting  the  item,  which  certificate  shall  be  forwarded  to 
the  fiscal  agent  in  the  same  manner  as  if  the  certificate  had 
been  signed  by  the  owner. — Art  35,  Reg.  33,  Revised. 

^  322 — Coupon  Bonds — Substitute  Certificates,  When 
Permitted. 

Responsible  banks,  bankers,  and  collecting  agents  receiv- 
ing coupons  for  collection  with  the  aforesaid  certificates  of 
ownership  attached,  may  present  the  coupons  with  the 
attached  certificates  to  the  debtor  or  withholding  agent  for 
collection,  or  such  certificates  may  be  detached  and  for- 
warded direct  to  the  Commissioner  of  Internal  Revenue, 
provided  such  bank,  banker,  or  collecting  agent  shall  sub- 
stitute for  such  certificates  its  own  certificate,  and  shall 
keep  a  complete  record  of  each  transaction,  showing — 

1.  Serial  number  of  item  received. 

2.  Date  received. 

3.  Name  and  address  of  person  from  whom  received. 

4.  Name  of  debtor  corporation. 

5.  Class  of  bonds  from  which  coupons  were  cut. 

6.  Face  amount  of  coupons. 

The  substitute  certificates  above  referred  to  cannot  be 
used  when  the  owners  of  the  bonds  are  non-resident  aliens. 
In  all  such  cases  the  original  certificates  of  ownership  shall 
be  forwarded  to  the  debtor  corporation  without  substitu- 
tion.— Treasury  Decision  2589;  also,  Art.  43,  Reg.  33, 
Revised. 

For  the  purpose  of  identification,  such  substitute  certifi- 
cates should  be  numbered  consecutively,  and  corresponding 
numbers  given  the  original  certificates  of  ownership. — Art. 
43,  Reg.  33,  Revised. 

^  323 — Number  of  Bonds  Not  Required. 

Until  further  notice  the  regulations  requiring  the  filling 
in  of  the  numbers  of  bonds  on  certificates  are  waived. — 
Treasury  Decision  2022. 

880 


INDIVIDUALS— Cont'd         WITHHOLDING  AT  SOURCE 

If  324 — Revised  Certificates. 

Substitute  certificates  to  be  attached  to  interest  coupons 
when  collection  agent's  certificate  is  substitute  for  the  cer- 
tificate of  owner ; 

Exemption  claimed Form  1058 

Exemption  not  claimed Form  1059 

When  proper  certificate  is  filed  with  the  Commissioner  of 
Internal  Revenue  the  name  of  the  bank  or  collecting  agency 
and  the  fac-simile  signature  of  person  authorized  to  sign 
same  may  be  printed  or  stamped  on  certificates  1058  and 
1059.— Treasury  Decision  1986. 

Other  revised  certificates  will  be  found  under  proper  sub- 
jects. 

TI  325 — Execution  of  Ownership  Certificates  By  Banks  and 
Trust  Companies. 

Name  may  be  printed  or  stamped  and  fac-simile  of  person 
authorized  to  sign  may  be  used  under  provision  specified  in 
Treasury  Decision  2258. 

Tf32G — Privilege  of  Substituting  Certificates  Extended  to 
Foreign  Countries. 

The  permission  here  granted  will  extend  to  responsible 
banks,  bankers,  and  collecting  agents  in  foreign  countries, 
through  whom  collection  of  such  interest  coupons  is  made. 

^  327 — Normal  Tax  to  Be  Deducted  Before  Payment  of 
Interest. 

A  debtor  whose  bonds  may  be  registered,  both  as  to 
principal  and  interest,  shall  deduct  the  normal  tax  of  8  per 
cent,  from  the  accruing  interest  on  all  bonds  (excepting 
bonds  with  a  tax-free  covenant),  the  owners  of  which  are 
non-resident  alien  individuals,  before  sending  out  checks 
for  said  interest  to  registered  non-resident  owners  or  before 
paying  such  interest  upon  interest  orders  signed  by  the  reg- 
istered holders  of  said  bonds. 

^  328 — Certificates  of  Ownership  to  Specify  Bonds  and 
Amount  of  Interest  Due. 

The  certificates  of  ownership  shall  accompany  the  cou- 
pons, or,  v/ith  respect  to  the  interest  on  registered  bonds, 

281 


INDIVIDUALS— Cont'd         WITHHOLDING  AT  SOURCE 

shall  be  filed  with  payer  of  said  interest,  and  such  certifi- 
cates shall  describe  the  bonds  and  show  the  amount  of  cou- 
pons attached  or  the  amount  of  interest  due  such  owners 
on  registered  bonds  and  the  name  and  address  of  the  own- 
ers, and  if  registered  in  names  other  than  the  owners  such 
names  with  addresses  shall  also  be  given.  Certificates  must 
be  signed  by  the  claimants,  who  shall  use  their  ordinary 
business  signatures.  The  certificates  shall  also  show 
whether  or  not  the  claimant  is  single  or  married  or  the 
head  of  a  family,  the  post-office  and  street  address  of  the 
claimants,  the  internal-revenue  district,  and  the  date  when 
signed. 

^329 — Registered  Bonds — Certificates  of  Ownership  Not 
Required  to  Accompany  Interest  Orders — Principal 
and  Interest. 

Certificates  of  ownership  are  not  required  to  accompany 
interest  orders  or  checks  in  payment  of  interest  on  fully 
registered  bonds. 

As  information  to  ownership  of  such  bonds  will  be  fur- 
nished by  the  debtor  organizations,  and,  as  no  withholding 
occurs,  where  interest  is  paid  to  citizens  or  residents  of  the 
United  States  (except  where  the  bonds  are  guaranteed  tax- 
free),  it  will  be  necessary  to  file  proper  certificates  with 
debtors  for  information  purposes. 

Where  proper  certificates  are  filed,  the  said  debtors  shall 
stamp  or  write  on  the  interest  orders  or  checks,  as  the  case 
may  be,  "Certificate  filed  with  debtor,"  or,  if  the  bonds  are 
tax-free,  "Exemption  claimed  by  certificate  filed  with  debt- 
or," or  "Income  tax  withheld  by  debtor,"  if  certificate  is  filed 
not  claiming  exemption. 

^  330 — Certificates  May  Be  Signed  by  Duly  Authorized 
Agents,  Etc. 

Duly  authorized  agents  may  sign  such  certificates  for  the 
persons  for  whom  they  act,  also  ownership  certificates  may 
be  executed  for  non-resident  aliens  by  reputable  foreign 
banks  or  bankers. 


INDIVIDUALS— Cont'd         WITHHOLDING  AT  SOURCE 

^331 — Certificates  of  Corporations. 

Such  certificate  will  be  made  on  Form  1001  Revised,  and 
must  be  signed  in  the  name  of  the  firm  or  organization 
(stating  its  place  of  business)  by  the  president,  secretary, 
or  some  other  principal  officer  of  the  said  corporation  or 
organizations,  or  in  the  case  of  a  firm  or  co-partnership,  by 
a  person  duly  authorized  to  sign  same,  and  must  be  prop- 
erly dated. 

In  the  case  of  a  foreign  corporation  having  an  oflice  or 
place  of  business  in  the  United  States  the  certificate  to  be 
used  is  Form  1001  Revised. 

j[  332 — Certificates  of  Non-Resident  Aliens. 

Coupons,  or  orders  for  registered  interest,  payable  in  the 
United  States,  representing  the  interest  on  bonds  owned 
by  non-resident  alien  individuals,  must  be  accompanied  by 
the  prescribed  certificate.  Form  1000  Revised. 

(See  "Registered  Bonds,  H  329.) 

Foreign  corporations  having  an  office  or  place  of  business 
in  the  United  States  are  exempt  from  the  withholding  pro- 
visions of  the  law  and  may  file  a  certificate  (Form  1001) 
to  prevent  the  withholding  of  the  tax  at  the  source. 

The  income  of  foreign  corporations  having  no  office  or 
place  of  business  in  the  United  States  is  subject  to  the  with- 
holding provisions  of  the  law,  and  certificate  Form  1000 
should  be  used. 

This  form  may  be  executed  also  by  responsible  banks 
and  bankers  of  the  United  States  for  or  in  behalf  of  non- 
resident alien  owners  of  bonds  of  United  States  corpora- 
tions.— Treasury  Decision  1988. 

^  333^ — Foreign  Partnership  Composed  of  Non-Resident 
Foreigners  and  Citizens  of  United  States. 

Where  a  foreign  partnership  or  firm  is  composed  of  both 
non-resident  foreigners  and  citizens  of  the  United  States, 
or  foreigners  residing  in  the  United  States  or  its  posses- 
sions, the  certificate  of  ownership  shall  show  this  fact,  and 
the  name  and  legal  address  of  each  member  of  said  part- 
nership who  is  a  citizen  of  the  United  States,  or  who  is  a 


INDIVIDUALS— Cont'd         WITHHOLDING  AT  SOURCE 

foreigner  residing  in  the  United  States,  or  its  possessions, 
shall  be  given  on  the  back  of  said  certificate,  and  no  part  of 
said  income  shall  be  withheld. 

If  334 — Monthly  List  Return-— Withholding  Returns 

Required  of  Corporations  or  Their  Authorized 
Agents. 

A  corporation,  having  bonded  indebtedness,  which  has 
withheld  income  tax  during  the  preceding  month  on  tax-free 
bonds  is  required  to  file  a  monthly  list  return.  Form  1012, 
showing  the  amount  of  interest  paid.  Certificates  of  owner- 
ship in  which  exemption  is  claimed  to  the  extent  of  the 
amount  of  payment  need  not  be  listed,  and  if  this  is  the  only 
class  of  certificates  received  during  the  said  preceding 
month,  no  return  is  required.  However,  such  certificates 
should  be  forwarded  to  the  proper  collector  of  internal  rev- 
enue, together  with  a  letter  of  transmittal. 

11335— 

The  return  should  be  filed  with  the  collector  of  internal 
revenue  for  the  district  in  which  the  debtor  corporation  is 
located  or  has  its  principal  place  of  business,  provided  the 
said  debtor  corporation  has  not  filed  with  the  said  collector 
of  internal  revenue  a  notice  of  the  appointment  of  a  duly 
authorized  withholding  agent,  in  which  case  the  debtor  cor- 
poration is  not  required  to  file  a  monthly  list  return.  Form 
1012,  or  the  corresponding  annual  list  return.  Form  1013. 

TI33e— 

This  notice  of  appointment  should  be  placed  on  file  in  the 
office  of  the  collector  of  internal  revenue  for  the  district  in 
which  the  debtor  corporation  is  located  or  has  its  principal 
place  of  business,  and  the  said  collector  should  notify  the 
collector  of  internal  revenue  for  the  district  in  which  the 
duly  authorized  withholding  agent  is  located.  The  duly  au- 
thorized withholding  agent  is  required  to  file  its  return  with 
the  collector  of  internal  revenue  for  the  district  in  which  the 
said  withholding  agent  is  located,  and  is  not  required  to  file 
a  return  with  the  collector  for  the  district  in  which  the 
debtor  corporation  is  located. — Treasury  Decision  2135. 

284 


INDIVIDUALS— Cont^d         WITHHOLDING  AT  SOURCE 

H  337— 

Withholding  agents  are  required  to  file  in  duplicate  a 
monthly  list  return  (Form  1012)  giving  the  amount  of  tax 
withheld. 

Tf338— 

The  original  ownership  certificates,  accompanied  by  the 
monthly  list  returns  in  the  case  of  interest  on  bonds  of  do- 
mestic and  resident  corporations,  when  filed  with  the  Com- 
missioner of  Internal  Revenue  shall  constitute  and  be 
treated  as  returns  of  information. — Art.  35,  Reg.  33,  Re- 
vised. 

*|  33S — Substitute  Certificates  of  Ownership. 

All  substitute  certificates  (See  If  322),  of  collecting 
agents,  authorized  by  regulations,  that  are  received  by 
debtors  or  withholding  agents  will  be  considered  the  same 
as  certificates  of  owners,  and  in  entering  same  in  making 
monthly  list  returns  debtors  or  withholding  agents  will 
enter  the  name  and  address  of  the  collecting  agent  and  the 
number  of  the  substitute  certificate  issued  in  lieu  of  the 
original  certificate  containing  the  name  and  address  of  the 
owner  of  the  bonds. 

^  340 — Registered  Bonds— Interest  Orders. 

Responsible  banks,  bankers,  or  collecting  agents  receiving 
for  collection  interest  orders  or  checks  bearing  endorsement 
"Certificate  filed  with  debtor"  may  present  said  interest 
orders  or  checks  for  collection  without  requiring  that  cer- 
tificates of  ownership  be  filed  therewith. 

Registered  bonds  of  organizations  exempt  from  tax 
(If  320)  may  be  treated  in  same  manner  as  income  from 
domestic  corporation. 

See  If  329. 

If  341- 

Where  the  coupons  are  not  accompanied  by  certificates 
as  heretofore  prescribed,  the  first  bank,  trust  company, 
banking  firm,  or  individual,  or  collecting  agency  receiving 
the  coupons  for  collection  or  otherwise,  shall  attach  to  such 

285 


INDIVIDUALS—Cont'd         WITHHOLDING  AT  SOURCE 

coupons  crossing  out  the  word  "Owner"  and  inserting 
"Payee"  and  will  enter  the  amount  of  interest  on  line  4. 
(Form  1000  Revised.) 

^  342 — Execution  of  Ownership  Certificates  by  Banks 
and  Trust  Companies. 

Name  may  be  printed  or  stamped  and  fac-simile  of  signa- 
ture of  person  authorized  to  sign  may  be  used  under  pro- 
vision specified  in  Treasury  Decision  2258. 

^  343 — Identity  of  Persons  Presenting  Interest  Coupons  to 
Be  Established. 

Any  corporation,  collecting  agency,  or  person  first  re- 
ceiving from  the  owner  any  interest  coupons  *  ♦  * 
should  require  the  persons  tendering  such  coupons  to  satis- 
factorily establish  their  identity. 

^  344 — Monthly  and  Annual  List  Returns. 

Withholding  agents  receiving  coupons  not  accompanied 
by  certificates  of  owners  are  required  to  file  monthly  and 
annual  list  returns  in  duplicate. 

The  monthly  list  return  will  be  made  on  Form  prescribed 
by  the  Government. 

Monthly  list  returns  not  to  be  made  under  oath. — Treas- 
ury Decision  1997. 

An  annual  list  return  is  also  required  to  be  made  by  such 
withholding  agents,  showing  the  amount  of  tax  withheld  on 
tax-free  bonds  during  the  preceding  year  on  income  of  this 
character.  This  return  must  be  filed  on  or  before  the  1st 
day  of  March  of  each  calendar  year. 

The  monthly  Hst  returns  in  the  form  as  required  shall 
constitute  a  part  of  the  annual  list  return  to  be  made,  and 
the  withholding  agent  will  not  be  required,  in  making  an 
annual  list  return  of  the  tax  thus  withheld,  to  again  make 
an  itemized  list  of  the  amount  of  tax  withheld  from  each 
person,  but  will  give  in  the  annual  hst  return  the  totals  of 
the  monthly  list  returns  for  the  year  for  which  annual  Ust 
return  is  made. 

286 


INDIVIDUALS— Cont'd         WITHHOLDING  AT  SOURCE 

^  345 — Where  Person  Receiving  Payment  is  Not  Actual 
Owner. 

When  the  person  receiving  a  payment  falhng  within  the 
provisions  of  law  for  information  at  the  source  is  not  the 
actual  owner  of  the  income  received,  the  name  and  address 
of  the  actual  owner  shall  be  furnished  upon  demand  of  the 
person,  corporation,  partnership,  or  association  paying  the 
income,  and  in  default  of  a  compliance  with  such  demand 
the  payee  becomes  liable  to  a  penalty  of  not  less  than  $20 
nor  more  than  $1,000.— Art.  36,  Reg.  33,  Revised. 

H  346 — Exempt  Organizations  Are  Subject  to  Withholding 
Provisions  of  the  Law. 

Organizations  exempted  by  law  from  payment  of  tax 
(such  as  labor,  agricultural,  horticultural  organizations, 
mutual  savings  banks,  etc.)  are  subject  to  the  provisions  of 
the  law  as  withholding  agents  when  their  bonds  contain  a 
tax-free  clause,  or  if  interest  payments  are  made  to  non- 
resident aliens. 

^  347 — Tax  to  be  Withheld  by  Banks  on  Interest  Paid  on 
Deposits  Paid  to  Non-resident  Aliens. 

Banks,  bankers,  trust  companies,  and  other  banking  insti- 
tutions receiving  deposits  of  money,  are  required  to  with- 
hold at  the  source  the  normal  income  tax  of  8  per  cent,  on 
interest  paid,  or  accrued,  or  accruing  to  non-resident  ahens, 
whether  on  open  accounts  or  on  certificates  of  deposit. — 
Treasury  Decision  2627. 

H  348 — Tax  to  Be  Withheld  on  Payment  of  Interest  Notes, 
or  Notes  Given  for  Rent. 

When  a  note  shall  have  been  given  in  payment  of  interest, 
rents,  or  other  income,  the  maker  of  the  note,  as  the 
"debtor"  and  as  the  "source"  where  the  income  originates, 
is  required,  in  paying  such  note,  to  withhold  the  normal  tax 
of  8  per  cent,  on  the  entire  amount  of  the  note,  when  paid 
to  a  non-resident  alien. 

887 


INDIVIDUALS— Cont'd         INFORMATION  AT  SOURCE 

^  349 — Purchasers  of  Interest  Notes  on  Which  Tax  Has 
Not  Been  Withheld. 

If  any  person  who  has  purchased  or  discounted  any  such 
notes  omitted,  in  acquiring  them  from  previous  holder,  to 
make  a  deduction  or  allowance  for  said  tax,  when  the 
amount  is  paid  to  a  non-resident  alien  he  can  look  for  relief 
only  to  the  person  from  whom  the  notes  were  obtained,  as 
the  "debtor,"  the  maker  of  said  notes,  is  required  to  deduct, 
withhold,  and  to  pay  to  the  collector  of  internal  revenue,  the 
amount  of  the  normal  tax  of  8  per  cent,  which  may  be  due 
thereon. 

INFORMATION  AT  SOURCE. 
^  350 — Returns  Required  for  Information  Purposes. 

That  all  individuals,  corporations,  and  partnerships,  in 
whatever  capacity  acting,  including  lessees  or  mortgagors 
of  real  or  personal  property,  fiduciaries,  and  employers, 
making  payment  to  another  individual,  corporation,  or  part- 
nership, of  interest,  rent,  salaries,  wages,  premiums,  annui- 
ties, compensations,  remunerations,  emoluments,  or  other 
fixed  or  determinable  gains,  profits  and  income  (other  than 
payments  described  in  Sections  254  and  255),  of  $1,000  or 
more  in  any  taxable  year,  or  in  the  case  of  such  payments 
made  by  the  United  States,  the  officers  or  employes  of  the 
United  States  having  information  as  to  such  payments  and 
required  to  make  returns  in  regard  thereto  by  the  regula- 
tions hereinafter  provided  for,  shall  render  a  true  and  ac- 
curate return  to  the  Commissioner,  under  such  regulations 
and  in  such  form  and  manner  as  may  be  prescribed  by  him 
with  the  approval  of  the  Secretary,  setting  forth  the 
amount  of  such  gains,  profits,  and  income,  and  the  name 
and  address  of  the  recipient  of  such  payment. 

Such  returns  may  be  required,  regardless  of  amounts  (1) 
in  the  case  of  payments  of  interest  upon  bonds,  mortgages, 
deeds  of  trust,  or  other  similar  obligations  of  corporations, 
and  (2)  in  the  case  of  collections  of  items  (not  payable  in 
the  United  States)  of  interest  upon  the  bonds  of  foreign 
countries  and  interest  upon  the  bonds  of  and  dividends  from 
foreign  corporations  by  individuals,  corporations,  or  part- 


INDIVIDUALS— Cont^d         INFORMATION  AT  SOURCE 

nerships,  undertaking  as  a  matter  of  business  or  for  profit 
the  collection  of  foreign  payments  of  such  interest  or  divi- 
dends by  means  of  coupons,  checks,  or  bills  of  exchange. 

When  necessary  to  make  effective  the  provisions  of  this 
Section,  the  name  and  address  of  the  recipient  of  the  in- 
come shall  be  furnished  upon  demand  of  the  individual,  cor- 
poration, or  partnership  paying  the  income. 

The  provisions  of  this  Section  shall  apply  to  the  calendar 
year  1918  and  each  calendar  year  thereafter,  but  shall  not 
apply  to  the  payment  of  interest  on  obligations  of  the 
United  States. 

T[  350  (a) — Letter  of  Transmittal. 

Returns  of  information  for  the  preceding  calendar  year 
shall  be  filed  with  the  Commissioner  of  Internal  Revenue  on 
or  before  March  1  of  each  year,  accompanied  by  a  letter  of 
transmittal,  under  oath  (Form  1096),  which  will  show  the 
number  of  returns  filed  and  the  aggregate  amount  repre- 
sented by  the  payments. — Art.  34,  Reg.  33,  Revised. 

^  351  — Returns  of  Payments  of  Dividends. 

Every  corporation  subject  to  the  tax  imposed  by  this 
title  shall,  when  required  by  the  Commissioner,  render  a 
correct  return  duly  verified  under  oath,  of  its  payments  of 
dividends,  stating  the  name  and  address  of  each  stock- 
holder, the  number  of  shares  owned  by  him,  and  the  amount 
of  dividends  paid  to  him. 

11352— Return  of  Brokers. 

Every  individual,  corporation,  or  partnership  doing  busi- 
ness as  a  broker  on  any  exchange  or  board  of  trade  or  other 
similar  place  of  business  shall,  when  required  by  the  Com- 
missioner, render  a  correct  return  fully  verified  under  oath, 
under  such  rules  and  regulations  as  the  Commissioner,  with 
the  approval  of  the  Secretary,  may  prescribe,  showing  the 
names  of  customers  for  whom  such  individual,  corporation, 
or  partnership  has  transacted  any  business,  with  such  de- 
tails as  to  the  profits,  losses,  or  other  information  which 
the  Commissioner  may  require,  as  to  each  of  such  cus- 

289 


COLLECTION  OF  FOREIGN  ITEMS— 

tomers,  as  will  enable  the  Commissioner  to  determine 
whether  all  income  tax  due  on  profits  or  gains  of  such  cus- 
tomers has  been  paid. 

INCOME    DERIVED    FROM    COUPONS,    CHECKS    OR 
BILLS  OF  EXCHANGE  ON  FOREIGN  BONDS, 
MORTGAGES,    DIVIDENDS,    ETC. 
H  353— 

Amounts  received  by  citizens  or  residents  of  the  United 
States  for  or  in  payment  of  interest  upon  bonds  issued  in 
foreign  countries,  and  upon  foreign  mortgages  or  like  obli- 
gations, and  for  any  dividends  upon  stock  or  interest  upon 
obligations  of  foreign  corporations,  associations,  or  insur- 
ance companies  engaged  in  business  in  foreign  countries, 
are  subject  to  the  income  tax. — Treasury  Decision  2090. 

Note — Dividends  paid  by  a  foreign  corporation  which  de- 
rives its  entire  income  from  business  transacted  in  the 
United  States,  to  be  treated  in  same  manner  as  income  from 
domestic  corporations. 

11 354 — Collection  of  Coupons,  Checks,  Bills  of  Exchange, 
Etc. — License  to  Be  Obtained. 

All  individuals,  corporations,  partnerships,  or  associ- 
ations, undertaking  as  a  matter  of  business  or  for  profit 
the  collection  of  foreign  payments  of  interest  or  dividends 
by  means  of  coupons,  checks,  or  bills  of  exchange  shall  ob- 
tain a  license  from  the  Commissioner  of  Internal  Revenue, 
and  shall  be  subject  to  such  regulations  enabhng  the  Gov- 
ernment to  obtain  the  information  required  under  this  title 
as  the  Commissioner  of  Internal  Revenue,  with  the  approval 
of  the  Secretaiy  of  the  Treasury,  shall  prescribe ;  and  who- 
ever knowingly  undertakes  to  collect  such  payments  as 
aforesaid  without  having  obtained  a  license  therefor,  or 
without  complying  with  such  regulations,  shall  be  deemed 
guilty  of  a  misdemeanor,  and  for  each  offense  be  fined  in  a 
sum  not  exceeding  $5,000,  or  imprisonied  for  a  term  not 
exceeding  one  year,  or  both,  in  the  discretion  of  the  court. 

Definition  of  foreign  corporation  and  method  of  proce- 
dure in  caes  of  interest  on  bonds  of  corporation. 

290 


COLLECTION  OF  FOREIGN  ITEMS— Continued. 

^  355 — Application  for  License — ^Penalty  for  Failure  to 
Obtain  License. 

Applications  for  such  license  (Form  1017)  will  be  made 
to  the  collector  for  the  district  in  which  such  business  is  to 
be  carried  on.  Upon  the  acceptance  of  such  application  the 
collector  will  issue  to  the  applicant  without  cost  a  license 
(Form  1010)  which  will  continue  in  force  until  revoked  or 
canceled.  Blank  forms  of  such  license,  bearing  the  fac- 
simile signature  of  the  Commissioner  of  Internal  Revenue, 
will  be  furnished  collectors  on  requisition,  who  will  in  all 
cases  countersign  the  same  before  issuing  it  to  applicant. 
Failure  to  obtain  a  license  or  to  comply  with  regulations  is 
punishable  by  a  fine  not  exceeding  $5,000  or  imprisonment 
not  exceeding  one  year,  or  both,  in  the  discretion  of  the 
court. 

License  not  required  for  collection  of  foreign  pensions 
paid  to  resident  aliens  or  citizens  of  the  United  States. — 
Treasury  Decision  2090. 

Tf  356 — License  to  Be  Obtained  for  Branch  Offices — 
Application  to  Be  Certified  to  Collector. 

When  any  person,  firm,  or  corporation  shall  have  branch 
offices  and  desire  to  collect  foreign  interest  or  dividend  in- 
come through  said  branch  offices,  the  application  for  license 
or  licenses  shall  be  made  by  the  person,  firm,  or  corpora- 
tion through  its  principal  office  for  its  branch  office  or 
offices.  Application  for  licenses  in  such  cases  shall  be  made 
to  the  collector  of  internal  revenue  for  the  district  in  which 
the  home  office  is  located.  The  names  and  addresses  of  the 
branch  offices  shall  be  furnished  to  the  collector  in  the 
application  of  the  said  principal,  and  if  the  requirements  of 
the  foregoing  regulations  have  been  complied  with  to  the 
satisfaction  of  the  collector,  he  shall  certify  this  fact  to  the 
collector  of  internal  revenue  for  the  district  in  which  the 
branch  office  is  located,  and  the  collector  to  whom  this  cer- 
tification is  made  shall  issue  to  such  branch  office  a  license. 

If  the  foreign  item  is  in  form  of  a  check  or  bill  of  ex- 
change, the  words  "Information  obtained  and  furnished  by 
(name  of  collecting  agent),"    Also  name 

291 


COLLECTION  OF  FOREIGN  ITEMS— Continued. 

and  address  of  licensee  as  the  case  may  be,  shall  be  endorsed 
or  stamped  thereon  by  such  licensee ;  but  if  the  item  is  rep- 
resented by  a  coupon  or  coupons  from  bonds,  the  licensee 
shall  attach  thereto  a  statement  identifying  the  same,  and 
the  endorsement  or  stamp  showing  who  will  pay  the  tax  is 
to  be  placed  on  the  statement  instead  of  the  coupon  or  cou- 
pons. Said  endorsement  or  stamp  shall  be  sufficient  evi- 
dence showing  that  the  information  has  been  furnished. 

TI 357 — Statement  to  Be  Appended  to  Coupons,  Checks, 
Etc. 

If  the  size  or  nature  of  such  coupons,  checks,  etc.,  makes 
it  impracticable  to  make  said  indorsement  thereon,  a  state- 
ment identifying  the  item  on  which  tax  is  to  be  paid  and 
bearing  said  indorsement  may  be  attached  thereto  with 
the  same  effect  as  if  the  indorsement  was  made  directly 
thereon.— Art.  58,  Reg.  33. 

^  357  (a) — Licensee  to  Furnish  List. 

Such  licensee  shall  obtain  the  names  and  addresses  of  the 
persons  from  whom  such  items  are  received  and  shall  pre- 
pare certificates  on  Form  1099  and  make  return  on  Form 
1096. 

^  358 — Annual  List  Return. 

The  annual  list  return  in  the  form  as  required,  together 
with  certificates,  should  be  forwarded  to  the  Commissioner 
of  Internal  Revenue,  Sorting  Division,  Washington,  D.  C, 
on  or  before  March  1,  1919. 

^  359 — Interest  on  Foreign  Bonds. 

The  provisions  for  collection  of  the  tax  on  foreign  obli- 
gations herein  set  forth  includes  the  interest  upon  all  for- 
eign bonds,  even  though  the  coupons  may,  at  the  option  of 
the  holder,  be  payable  in  the  United  States  as  well  as  in 
some  foreign  country. 

If  360 — Licensee  to  Keep  Records. 

All  person  licensed  shall  keep  their  records  in  such  man- 
ner as  to  show  from  whom  every  such  item  has  been  re- 
ceived, and  such  records  shall  be  open  at  all  times  to  the 
inspection  of  internal-revenue  officers. — Art.  62,  Reg.  33. 

»9» 


PARTNERSHIPS. 

IT  381  — Salary  Received  by  Foreign  Employe  of  a  Domestic 
Corporation  for  Services  Abroad. 

Salary  received  by  a  foreign  employe  of  a  domestic  cor- 
poration for  service  rendered  entirely  in  a  foreign  land  is 
not  subject  to  deductions  and  withholding  of  the  normal 
tax  at  the  source. 

^  362  to  Tf  367  Void.— [Ed.] 


PARTNERSHIPS. 

^  368— Partnership  Profits. 

Individuals  carrying  on  business  in  partnership  shall  be 
liable  for  income  tax  only  in  their  individual  capacity.  There 
shall  be  included  in  computing  the  net  income  of  each  part- 
ner, his  distributive  share,  whether  distributed  or  not,  of 
the  net  income  of  the  partnership  for  the  taxable  year.  If 
his  net  income  for  such  taxable  year  is  computed  upon  the 
basis  of  a  period  different  from  that  upon  which  the  net 
income  of  the  partnership  is  computed,  then  his  distributive 
share  of  the  net  income  of  the  partnership  for  any  account- 
ing period  of  the  partnership  ending  within  the  fiscal  or 
calendar  year  upon  the  basis  of  which  the  partner's  net  in- 
come is  computed. 

While  partnerships,  as  such,  are  not  taxable,  every  part- 
nership nevertheless  is  required  to  make  a  return  for  each 
taxable  year,  stating  specifically  the  items  of  its  gross  in- 
come and  the  deductions  allowed  and  shall  include  ~in  the 
return  the  names  and  addresses  of  the  individuals  who 
would  be  entitled  to  share  in  the  net  income  if  distributed 
and  the  amount  of  the  distributive  share  of  each  individual. 
The  return  shall  be  sworn  to  by  any  one  of  the  partners. 
This  is  done  for  the  information  of  the  Government. 

Tj  369 — Partnership  Profits  to  Be  Included  in  Returns 
Made  by  Individual  Partners. 

The  net  annual  profits  of  a  partnership  when  divided  and 
paid  to  the  members  thereof  shall  be  included  by  each  indi- 
vidual partner  receiving  same  in  his  annual  return  of  net 

393 


PARTNERSHIPS— Continued. 

income,  and  the  tax  shall  be  paid  thereon  as  required  by 
law.  When  the  annual  profits  of  a  partnership  are  not  dis- 
tributed and  paid  to  the  members  thereof  the  respective 
interest  of  each  member  in  said  profits  shall  be  ascertained, 
and  the  individuals  entitled  thereto  shall  include  the  said 
amount  in  their  annual  return  as  a  part  of  their  gross  in- 
come, the  same  as  if  said  profits  had  been  distributed  and 
paid  to  them. 

If  a  fiscal  year  of  a  partnership  ends  during  a  calendar 
year  for  which  the  rates  of  tax  differ  from  those  for  the 
preceding  calendar  year,  then  (1)  the  rate  for  such  pre- 
ceding calendar  year  shall  apply  to  an  amount  of  each  part- 
ner's share  of  such  partnership  net  income  equal  to  the  pro- 
portion which  the  part  of  such  fiscal  year  falling  within  such 
calendar  year  bears  to  the  full  fiscal  year  and  (2)  the  rates 
for  the  calendar  year  during  which  such  fiscal  year  ends 
shall  apply  to  the  remainder. 

In  the  case  of  an  individual  member  of  a  partnership 
which  makes  return  for  a  fiscal  year  beginning  in  1917  and 
ending  in  1918,  his  proportionate  share  of  any  excess-profits 
tax  imposed  upon  the  partnership  under  the  Revenue  Act 
of  1917  with  respect  to  that  part  of  such  fiscal  year  falling 
in  1917,  shall,  for  the  purpose  of  determining  the  tax  im- 
posed by  this  title,  be  credited  against  that  portion  of  the 
net  income  embraced  in  his  personal  return  for  the  taxable 
year  1918  to  which  the  rates  for  1917  apply. 


Tf  370 — Private  Bank  Partnerships. 

Private  banks  (which  do  not  have  the  form  of  corporate 
organizations)  which  transact  business  not  in  the  name  of 
the  bank  but  in  the  name  of  individuals  who  compose  the 
firm,  as  John  Smith  and  Company,  are  held  to  be  co-partner- 
ships and,  as  such,  are  required  to  make  a  return.  In  such 
cases  the  individuals  who  compose  the  firm,  if  they  have 
income  in  excess  of  $1,000,  will  be  required  to  make  indi- 
vidual returns  on  Form  1040,  accounting  therein  for  their 
respective  incomes  arising  and  accruing  from  the  earnings 
of  the  bank. 

294 


PARTNERSHIPS— Continued. 

11  371 — Income — ^When  Accrued. 

Income  from  a  partnership  accrues  to  the  individual  part- 
ner at  the  time  his  distributive  interest  is  determined  and 
reducible  to  possession.  In  returns  of  income  made  by  indi- 
viduals for  the  calendar  year,  therefore,  there  should  be 
included  such  income  accruing  from  the  business  of  partner- 
ships for  their  business  years  as  may  have  been  definitely 
ascertained  by  book  balance,  whether  distributed  or  not. 
In  other  words,  members  of  partnerships  are  required  to 
make  returns  of  income  like  other  individuals  for  the  cal- 
endar year  and  should  include  in  their  returns  the  net  pro- 
ceeds of  their  interest  in  partnership  profits  ascertained  at 
the  end  of  the  business  year  falling  within  the  calendar  or 
fiscal  year  for  which  the  individual  return  is  being  rendered, 

If  372 — Life  Insurance  Premiums  of  OflScers,  Employes, 
Etc. 

That  premiums  paid  on  life  insurance  policies  covering 
the  lives  of  officers,  employes,  or  those  financially  interested 
in  any  trade  or  business  conducted  by  the  taxpayer,  shall 
not  be  deducted  in  computing  the  net  income  of  such  tax- 
payer when  the  taxpayer  is  directly  or  indirectly  a  bene- 
ficiary under  such  policy. — Law,  page  65,  line  22. 

1i  373 — Identity  of  Income. 

The  character  of  partnership  profits  divisible  between 
persons  has  no  reference  (except  as  otherwise  specially  pro- 
vided) to  any  character  which,  as  income  accruing  to  the 
partnership  it  may  have  borne  prior  to  the  receipt  by  the 
partnership,  and  hence,  with  the  exception  noted,  income 
received  from  a  partnership  can  not  be  traced  to  its  source 
behind  the  partnership  for  the  purpose  of  claiming  indi- 
vidual exemption.  Where  the  result  of  partnership  opera- 
tion is  a  net  loss,  the  loss  will  be  divisible  between  the  part- 
ners in  the  same  proportion  as  net  income  would  have  been 
divisible,  and  may  be  used  by  the  individual  partners  in 
their  returns  of  income. — Art.  30,  Reg.  33,  Revised. 

H  374 — Limited  Partnerships. 

For  taxable  status  of  limited  partnerships  under  the  law 

.  see  K  40. 

895 


PARTNERSHIPS— Continued. 
H  375.— Void.— [Ed.] 

t[37© — Net  Income. 

The  net  income  of  the  partnership  shall  be  computed  in 
the  same  manner  and  on  the  same  basis  as  provided  in  Sec- 
tion 212,  except  that  the  deduction  for  contributions  shall 
not  be  allowed. 

11  377— Credits  Allowed. 

The  partner  shall,  for  the  purpose  of  the  normal  tax,  be 
allowed  as  credits,  in  addition  to  the  credits  allowed  to  him 
under  Section  216,  his  proportionate  share  of  such  amounts 
received  as  dividends  and  interest  upon  obligations  of  the 
United  States  and  bonds  issued  by  the  War  Finance  Cor- 
poration, which  are  included  in  gross  income. 

Tf  378.— Fiscal  Year. 

A  partnership  shall  have  the  same  privilege  of  fixing  and 
making  returns  upon  the  basis  of  its  own  fiscal  year  as  is 
accorded  to  corporations,  under  this  title. 

Any  partnership  may,  at  its  option,  designate  the  last 
day  of  any  month  as  the  close  of  its  fiscal  year.  In  each 
case  where  the  partnership's  fiscal  year  differs  from  the 
calendar  year,  it  shall,  not  less  than  30  days  prior  to  March 
15,  give  notice  in  writing  to  the  collector  of  internal  revenue 
of  the  district  in  which  its  principal  place  of  business  is 
located,  that  the  day  it  has  thus  designated  is  the  closing 
day  of  its  fiscal  year. 

Tf37d — llfdividual  Partnership  Profits. 

Undivided  annual  net  profits  of  partnerships  thus  re- 
turned by  the  individual  members  thereof,  and  tax  paid 
thereon,  shall  not,  when  said  profits  are  actually  distributed 
and  paid  to  such  members,  be  again  included  in  their  annual 
return  as  part  of  their  gross  income. 

H  380— Void.— [Ed.] 


FIDUCIARIES- 
EFFECTIVE  DATE  OF  TREASURY  DECISIONS. 

11381- 

Treasury  decisions  promulgating  rulings  of  the  Internal 
Revenue  Bureau  become  effective  upon  the  date  of  approval 
unless  otherwise  stated  therein.  Cases  previously  adjusted 
in  contravention  of  law  as  pronounced  in  such  decisions,  are 
subject  to  readjustment  in  accordance  with  the  decision. — 
Art.  38,  Reg.  33,  Revised. 


FIDUCIARIES. 

For  summary  of  income  of  estates  and  trusts  subject 
to  taxation  see  Law,  page  57,  line  33. 

II 382.— Definition  of  Term  "Fiduciary." 

"Fiduciary"  is  a  term  which  applies  to  all  persons  or  cor- 
porations that  occupy  positions  of  peculiar  confidence  toward 
others,  such  as  trustees,  executors,  or  administrators;  and 
a  fiduciary,  for  income-tax  purposes,  is  any  person  or  cor- 
poration that  holds  in  trust  an  estate  of  another  person 
or  persons. 

There  may  be  a  fiduciary  relationship  between  an  agent 
and  a  principal;  but  the  word  "agent"  does  not  denote  a 
"fiduciary"  within  the  meaning  of  the  income  tax  law. — 
Treasury  Decision  2090. 

^  383 — Agent — Acting  Under  Power  of  Attorney. 

An  agent  acting  under  power  of  attorney  and  having  full 
charge  of  property  is  not  obliged  to  render  a  return  as 
fiduciary. — Treasury  Decisions  2135  and  2137;  also,  see 
II  423,  424. 

Tl  384. — Fiduciary  Returns. 

Every  fiduciary  (except  receivers  appointed  by  authority 
of  law  in  possession  of  part  only  of  the  property  of  an  indi- 
vidual) shall  make  under  oath  a  return  for  the  individual, 
estate  or  trust  for  which  he  acts  (1)  if  the  net  income  of 

297 


FIDUCIARIES— Continued. 

such  individual  is  $1,000  or  over  if  single  or  if  married  and 
not  living  with  husband  or  wife,  or  $2,000  or  over  if  married 
and  living  with  husband  or  wife,  or  (2)  if  the  net  income 
of  such  estate  or  trust  is  $1,000  or  over  or  if  any  beneficiary 
of  such  estate  or  trust  is  a  non-resident  alien,  stating  specifi- 
cally the  items  of  the  gross  income  and  the  deductions  and 
credits  allowed  by  this  title..  Under  such  regulations  as  the 
Commissioner  with  the  approval  of  the  Secretary  may  pre- 
scribe, a  return  made  by  one  or  two  or  more  joint  fiduciaries 
and  filed  in  the  district  where  such  fiduciary  resides  shall  be 
a  sufficient  compliance  with  the  above  requirement.  The 
fiduciary  shall  make  oath  that  he  has  sufficient  knowledge 
of  the  affairs  of  such  individual,  estate  or  trust  to  enable 
him  to  make  the  return,  and  that  the  same  is,  to  the  best 
of  his  knowledge  and  belief,  true  and  correct. 

11385— 

Fiduciaries  required  to  make  returns  under  this  Act  shall 
be  subject  to  all  the  provisions  of  this  Act  which  apply  to 
individuals. 

11386— 

Fiduciaries  shall,  on  or  before  March  15  of  each  year, 
make  and  render  a  return,  in  form  prescribed  by  the  Com- 
missioner of  Internal  Revenue  (Form  1041)  of  the  income 
coming  into  their  custody  or  control  and  management  from 
each  trust  estate  when  the  annual  interest  of  any  benefi-' 
ciary  in  the  income  of  said  trust  estate  is  $1,000  or  $2,000, 
according  to  the  marital  status  of  the  beneficiary. 

A  trustee  having  charge  of  a  trust  estate,  the  net  income 
of  which  is  regularly  distributed  among  the  beneficiaries,  is 
required  to  render  a  return  only  if  any  one  of  the  benefi- 
ciaries is  unmarried  and  his  or  her  distributive  interest  in 
the  net  income  of  the  trust  equals  or  exceeds  $1,000;  and 
also,  if  all  the  beneficiaries  are  married  and  the  distributive 
interest  of  any  one  equals  or  exceeds  $2,000. 

It  should  be  understood,  however  ,that  the  above  is  appli- 
cable only  in  a  case  where  all  the  beneficiaries  are  citizens 
or  residents  of  the  United  States.  If  any  portion  of  the 
net  income  of  an  estate  or  trust  is  distributed  to  a  non- 
298 


FIDUCIARIES— Continued. 

resident  alien  beneficiary,  a  return  is  required,  and  the  nor- 
mal income  tax  of  8  per  cent,  is  to  be  deducted  and  withheld 
from  so  much  of  the  amount  remitted  to  such  beneficiaries 
as  was  not  derived  from  dividends  or  from  the  net  earnings 
of  corporations,  joint-stock  companies,  etc.,  subject  to  a  like 
tax,  or  has  been  subject  to  the  withholding  of  the  normal 
tax  at  the  source. — Primer,  Question  113. 

^  387 — Non-resident  Alien  Beneficiary. 

Where  a  fiduciary  in  the  United  States  is  the  recipient 
of  trust  income  for  which  there  is  but  one  beneficiary  and 
that  beneficiary  a  non-resident  alien,  the  fiduciary  will  be 
required  to  make  full  and  complete  return  on  Income  Tax 
Form  1040  or  1040  A,  as  the  case  may  be,  for  this  trust 
income  on  behalf  of  the  non-resident  alien  and  pay  any  and 
all  tax  found  by  such  return  to  be  due.  Where  there  are  two 
or  more  beneficiaries,  one  or  all  of  whom  are  non-resident 
aliens,  the  fiduciary  shall  render  a  return  on  Form  1041, 
and  a  personal  return  on  Form  1040  or  1040  A  for  each  non- 
resident alien  beneficiary. — Art.  29,  Reg.  33,  Revised. 

If  388 — Estates  and  Trusts. 

The  tax  imposed  by  Sections  210  (normal  tax  on  indi- 
vidual) and  211  additional  or  surtax  shall  apply  to  the  in- 
come of  estates  or  of  any  kind  of  property  held  in  trust. 

^  389 — Undistributed  Income  of  Trust  Estates  Subject  to 
Both  Normal  and  Additional  Tax. 

Income  received  by  estates  of  deceased  persons  during 
the  period  of  administration  or  settlement  of  the  estate, 
shall  be  subject  to  the  normal  and  additional  tax  and  taxed 
to  their  estates. 

^  390 — Accumulated  Income  for  Benefit  of  Unborn  or 
Unascertained  Persons. 

Income  of  estates  or  any  kind  of  property  held  in  trust, 
including  such  income  accumulated  in  trust  for  the  benefit 
of  unborn  or  unascertained  persons,  or  persons  with  con- 
tingent interests,  and  income  held  for  future  distribution 
under  the  terms  of  the  will  or  trust,  shall  be  hkewise  taxed. 


FIDUCIARIES— Continued. 

Tf  391  — Executors  and  Administrators. 

Where,  during  the  period  of  administration,  an  executor 
converts  the  estate  in  his  possession  as  such  executor  into 
money  for  the  purpose  of  setthng  the  estate  and  closing  the 
administration  and  in  which  conversion  a  profit  is  realized 
which  with  other  income  exceeds  $1,000,  a  return  of  income 
should  be  made  by  the  executor  covering  the  period  of 
administration  in  which  should  be  included  all  gains,  profits, 
and  income  of  the  estate  during  such  period,  and  he  should 
pay  the  tax  found  by  such  return  to  be  due.  The  income  of 
the  estate  being  thus  freed  of  income-tax  liability  may 
thereafter  be  dealt  with  without  further  regard  to  income- 
tax  requirements. 

11392—. 

Proceeds  of  life  insurance  policies  payable  to  the  estate 
of  a  decedent,  when  received  by  an  executor,  or  adminis- 
trator, are,  in  the  amount  by  which  such  proceeds  exceed 
the  premium  or  premiums  paid  by  the  decedent,  income  of 
the  estate  to  be  accounted  for  by  the  executor  or  adminis- 
trator. This  return  is  to  be  made  on  Income  Tax  Form  1040 
or  1040  A.— Art.  29,  Reg.  33,  Revised. 

^  393— Two  Estates. 

A  fiduciary  acting  for  a  beneficiary  in  more  than  one 
estate  or  trust  is  required  to  account  for  each  estate  sepa- 
rately when  the  amounts  are  such  as  to  require  the  filing  of 
a  return,  and  also  a  return  of  information. — Art.  29,  Reg.  33, 
Revised. 

11394— 

A  fiduciary  acting  for  a  minor  or  insane  person  having  a 
net  income  of  $1,000  or  $2,000,  according  to  the  marital 
status  of  such  person,  will  be  required  to  file  a  return  for 
such  incompetent  on  Form  1040  and  1040  A  and  pay  the 
tax  found  by  such  return  to  be  due. — Art.  29,  Reg.  33, 
Revised. 

If  395— 

Stock  dividends  paid  from  earnings  or  profits  accumulated 
after  March  1,  1913,  received  by  a  fiduciary  and  retained  as 

800 


FIDUCIARIES— Continued. 

an  accretion  to  the  estate  under  the  terms  of  the  will  or 
trust  are  held  to  be  income  to  the  estate  and  taxable  as  such 
to  the  estate. — Art.  29,  Reg.  33,  Revised. 

usee— 

Income  held  for  future  distribution  under  the  terms  of 
the  will  or  trust  shall  be  likewise  taxed  except  when  re- 
turned by  the  beneficiary  for  the  purpose  of  the  tax. — Art. 
29,  Reg.  33,  Revised. 

11397- 

The  beneficiary  will  be  required  in  the  case  of  trust 
estates  to  account  for  the  actual  amounts  distributed  or 
credited  to  him. — Art.  29,  Reg.  33,  Revised. 

If  398— Trust,  Return  of. 

Where,  in  the  case  of  more  than  one  trust,  the  creator 
of  the  trust  in  each  instance  is  the  same  person  and  the 
trustee  in  each  instance  is  the  same,  the  trustee  should 
make  a  single  return  on  Form  1041  for  all  of  the  trusts 
in  his  hands,  notwithstanding  the  fact  that  they  arise  from 
different  instruments.  When  a  trustee  holds  trusts  created 
by  different  persons  for  the  benefit  of  the  same  beneficiary, 
he  should  make  return  for  each  trust  separately  on  Form 
1041.  This  ruling  is  based  on  the  identity  of  the  creator 
and  the  identity  of  the  trustee  of  the  various  trusts,  and 
not  upon  the  identity  of  the  beneficiary. — Art.  29,  Reg.  33, 
Revised. 

If  399 — Tax  to  Be  Assessed  to  Fiduciary  Direct — When. 

The  tax,  in  each  instance,  except  when  the  income  is  re- 
turned by  the  beneficiary,  is  to  be  assessed  to  the  executor, 
administrator,  or  trustee,  as  the  case  may  be. 

If  400— When  Tax  Is  Not  Paid  by  Fiduciary. 

Where  the  income  is  to  be  distributed  to  the  beneficiaries 
periodically,  whether  or  not  at  regular  intervals,  the  tax 
shall  not  be  paid  by  the  fiduciary,  but  there  shall  be  included 
in  computing  net  income  of  each  beneficiary  his  distributive 
share,  whether  distributed  or  not,  of  the  net  income  of  the 

301 


FIDUCIARIES— Continued. 

estate  or  trust  for  the  taxable  year,  or  if  his  net  income 
for  the  taxable  year  is  computed  upon  a  basis  different 
from  that  upon  the  basis  of  which  the  net  income  of  the 
estate  or  trust  is  computed,  then  his  distributive  share  of 
the  net  income  of  the  estate  or  trust  for  the  last  annual 
accounting  period  of  such  estate  or  trust  prior  to  the  close 
of  the  fiscal  or  calendar  year  upon  the  basis  of  which  such 
beneficiary's  net  income  is  computed.  In  such  cases  the 
beneficiary  shall,  for  the  purpose  of  the  normal  tax,  be 
allowed  as  credits,  in  addition  to  the  credits  allowed  to  him 
under  Section  216,  his  proportionate  share  of  dividends  and 
interest  received  upon  obligations  of  the  United  States,  any 
State  or  political  subdivision  thereof  as  are  received  by  the 
estate  or  trust. 

11401  — 

In  the  following  cases  the  tax  shall  be  imposed  upon  the 
net  income  of  the  estate  or  trust  and  shall  be  paid  by  the 
fiduciary.  In  such  cases  the  estate  or  trust  shall,  for  the 
purpose  of  normal  tax,  be  allowed  the  same  credits  as  are 
allowed  to  single  persons  under  Section  216.  (See  Law, 
page  65,  line  30.)  (1)  Income  received  by  estate  of  de- 
ceased persons  during  the  period  of  administration  or  set- 
tlement of  the  estate;  (2)  Income  accumulated  in  trust  for 
the  benefit  of  unborn  or  unascertained  persons,  or  persons 
with  contingent  interests;  (3)  Income  held  for  future  dis- 
tribution under  the  terms  of  the  will  or  trust. 

Notice  of  failure  to  file  a  return  as  required  shall  be 
served  upon  the  fiduciary. 

If  402 — Depreciation — Deduction  in  Return  of. 

In  the  case  of  a  trust  estate  where  the  terms  of  the  will 
or  trust  or  the  decree  of  a  court  of  competent  jurisdiction 
provides  for  keeping  the  corpus  of  the  estate  intact,  and 
where  physical  property  forming  a  part  of  the  corpus  of 
such  estate  has  suffered  depreciation  through  its  employ- 
ment in  business,  a  deduction  from  gross  income  for  the  pur- 
pose of  caring  for  this  depreciation,  where  the  deduction  is 
applied  or  held  by  the  fiduciary  for  making  good  such  de- 
preciation, may  be  claimed  by  the  fiduciary  in  his  return  of 

802 


FIDUCIARIES— Continued. 

income.  Fiduciaries  should  set  forth  in  connection  with 
their  returns  the  provision  of  law,  trust,  or  decree  requiring 
such  depreciation  deduction  where  any  exists  or  when  actual 
depreciation  occurs,  the  amount  thereof,  and  that  the  same 
has  been  or  will  be  preserved  and  applied  as  such.  All 
amounts  paid  by  fiduciaries  to  beneficiaries  of  trust  estates 
from  the  income  of  such  trust  estates,  whether  from  re- 
serves or  otherwise,  are  held  to  be  distributions  of  income 
and  will  be  treated  for  income-tax  purposes  in  accordance 
with  the  provisions  of  law  and  regulations  applicable  to  in- 
come of  such  beneficiaries. — Art.  29,  Reg.  33,  Revised. 

]l  403 — Returns  of  Joint  Fiduciaries. 

A  return  made  by  one  of  two  joint  fiduciaries  filed  in  the 
district  where  such  fiduciary  resides,  shall  be  a  sufficient 
compliance  with  the  requirements  of  the  law. 

If  404 — Withholding  by  Fiduciaries. 

Any  part  of  the  annual  income  of  trust  estates  not  dis- 
tributed becomes  an  entity,  and  as  such,  is  liable  for  the 
normal  and  additional  tax,  which  must  be  paid  by  the  fidu- 
ciary. When  the  beneficiary  is  not  in  esse  and  the  income 
of  the  estate  is  retained  by  the  fiduciary,  such  income  will 
be  taxable  to  the  estate  as  for  an  individual  and  the  fidu- 
ciary will  pay  the  tax,  both  normal  and  additional.  *  *  * 
When  the  gross  net  income  not  distributed  and  remaining 
in  the  hands  of  a  fiduciary  is  less  than  $5,000,  the  estate 
will  be  listed  as  a  beneficiary  and  only  the  normal  income 
tax  will  be  assessable,  and  such  tax  will  be  paid  by  the  fidu- 
ciary. When  the  gross  net  income  not  distributed  and  re- 
maining in  the  hands  of  a  fiduciary  exceeds  $5,000  such 
income  is  subject  to  both  the  normal  and  additional  tax,  and 
the  estate  will  be  listed  as  a  beneficiary  and  both  the  normal 
and  additional  tax  will  be  paid  by  the  fiduciary. 

]|  405---Trust  Estates  As  Entities. 

Where  income  is  accounted  for  in  a  return  of  income  by 
the  executor,  administrator,  or  trustee,  as  the  case  may  be 
and  the  tax  shall  have  been  assessed  and  paid  under  such 

303 


FIDUCIARIES— Continued. 

return,  such  income  is  thereby  freed  of  all  tax  liability  and 
may  be  thereafter  dealt  with  without  further  regard  to  the 
provisions  of  the  income  tax  law. 

11400— 

Under  the  provisions  of  the  Law  it  is  held  that  estates 
during  the  period  of  administration  have  but  one  benefi- 
ciary, and  that  beneficiary  is  the  estate.  Therefore,  a  return 
on  Form  1040  or  1040  A,  subject  to  all  the  deductions  and 
exemption,  shall  be  made  by  the  executor  or  administrator 
for  such  beneficiary  and  the  entire  tax  paid  thereon. — Art. 
29,  Reg.  33,  Revised. 

If  407 — Fiduciaries  Acting  for  Incompetents. 

In  all  cases  where  fiduciaries  act  for  incompetents  they 
are  held,  for  the  purpose  of  the  income  tax,  to  be  acting 
as  the  agents  of  such  incompetents  and  must  pay  all  tax 
(normal  and  additional)  chargeable  on  such  income  in  their 
hands  as  though  the  persons  for  whom  they  act  were  acting 
for  themselves. 

^  408 — Fiduciaries  Indemnified  for  Taxes  Paid  in  Behalf  of 
Beneficiary. 

Trustees,  executors,  administrators  and  other  fiduciaries 
are  indemnified  against  the  claims  and  demands  of  every 
beneficiary  for  all  payments  of  taxes  which  they  shall  be 
required  to  make  under  the  provisions  of  the  law;  and 
they  shall  have  credit  for  the  amount  of  such  payments 
against  the  beneficiary  or  principal  in  any  accounting  they 
make  as  such  trustees  or  other  fiduciaries. 

]\  409 — Return  to  Include  Only  Income  Accruing  From 
Trust,  Unless  Otherwise  Authorized  by 
Beneficiary. 

As  each  such  fiduciary  acts  solely  in  behalf  of  the  bene- 
ficiaries of  the  trust,  the  annual  return  required  in  such 
cases  has  reference  only  to  the  income  accruing  and  pay- 
able through  said  fiduciary,  and  not  to  the  income  of  the 
beneficiary  derived  from  other  sources.  If,  however,  such 
fiduciary  is  legally  authorized  to  act  for  such  beneficiary  as 

804 


FIDUCIARIES— Continued. 

agent  or  attorney  in  fact,  he  may  in  such  case  also  make  for 
the  beneficiary  the  personal  annual  return  (Form  1040,  Re- 
vised) required  by  law.- 

If  41 0 — Expenses  of  Administration  of  Estates  Not 
Deductible. 

Expenses  of  administration  of  an  estate,  such  as  court 
costs,  attorney's  fees,  executors'  commissions,  etc.,  are 
chargeable  against  the  corpus  of  the*  estate  and  are  not 
allowable  deductions  in  a  return  of  a  fiduciary  on  Form 
1041.— Treasury  Decision  2090. 

^411 — Administrator  or  Executor. 

Administrators  or  executors  may,  immediately  after  their 
discharge,  upon  final  accounting,  file  with  the  proper  col- 
lector of  internal  revenue  a  return  of  income  for  the  income 
of  the  estate  for  the  calendar  year  in  which  the  administra- 
tion was  closed,  and  should  pay  the  tax  found  by  such  return 
to  be  due  immediately  upon  receipt  of  notice  and  demand 
for  the  amount  of  such  tax.  There  should  be  attached  to 
this  return  a'  copy  of  the  certificate,  under  seal,  setting 
forth  the  fact  of  final  accounting  and  discharge  of  the  execu- 
tor or  administrator.  The  liability  for  return  is  fixed  by 
the  law  as  of  December  31,  and  return  will  be  required  in 
accordance  with  the  provisions  of  law  existing  on  that  date. 

11412— 

An  ancillary  administrator  is  held  to  be  merely  an  agent 
of  the  domici|i^ry  administrator  and  should  transmit  to  him 
all  information  as  to  income  of  the  estate  received  by  the 
ancillary  administrator,  to  the  end  that  the  original  admin- 
istrator may  make  a  return  covering  the  entire  income  of 
the  estate.— Art.  26,  Reg.  33,  Revised. 

11413— Deed  of  Trust. 

A  deed  of  trust  must  be  absolute  so  far  as  the  conveyance 
of  title  is  concerned  and  irrevocable  by  the  donor,  other- 
wise the  income  from  the  property  in  question  will  accrue 
to  the  donor  and  must  be  accounted  for  by  him. — Art.  29, 
Reg.  33,  Revised. 

305 


FIDUCIARIES— Continued. 

^414 — Fiduciary  Depreciation. 

Depreciation  not  allowed  fiduciaries  as  a  deduction  from 
gross  income  in  cases  where  no  depreciation  reserve  is 
maintained,  but  the  amount  claimed  as  a  deduction  is  paid 
to  the  beneficiary  as  income. — Treasury  Decision  2267. 

Ti  41 5 — Inspection  of  Executor's  Return — Beneficiary  Not 

Entitled  To.       • 

An  executor  acts  for  his  principal  and  not  for  the  benefi- 
ciaries of  the  estate  of  his  principal.  Beneficiaries  are  not 
entitled,  as  such,  to  an  inspection  of  returns  of  income  filed 
by  such  executor. — Art.  26,  Reg.  33,  Revised. 

^  41 6 — Annual  Return  to  Include  List  of  Beneficiaries, 
Showing  Amount  Paid  to  Each. 

The  annual  return  of  the  fiduciary  shall  contain  a  hst  of 
the  name  and  full  address  of  each  beneficiary  and  the  share 
of  said  income  to  which  each  may  be  entitled.  There  must 
also  be  entered  opposite  the  name  of  each  beneficiary  the 
amount  of  exemption,  if  any,  claimed  by  him,  the  amount 
of  income  on  which  the  beneficiary  is  liable  for  tax,  and  the 
said  return  shall  be  signed  and  sworn  to  by  the  fiduciary,  if 
an  individual,  making  same,  and  his  full  address  must  be 
stated.  If  the  fiduciary  is  an  organization,  the  return  shall 
be  signed  and  sworn  to  by  the  president,  secretary,  or 
treasurer  of  said  organization. 

If  41 7 — Personal  Exemption  Allowed  to  Each  Ward  or 
Cestui  Trust. 

Guardians  or  trustees  are  allowed  to  make  a  personal 
exemption  of  $1,000,  or  if  married,  $2,000,  from  the  net 
income  received  from  all  sources  of  each  ward  or  cestui 
trust. 

H  41 8 — No  Penalty  for  Delay  in  Payment  of  Tax  from 

Estates  of  Insane,  Deceased  or  Insolvent  Persons. 

When  a  personal  return  from  such  estates  or  persons  has 
been  rendered,  delay  in  payment  of  taxes  assessed  against 
such  persons  or  estates  is  not  penalized. 

306 


FIDUCIARIES— Continued. 

^  41 9 — Income  of  a  Beneficiary-r-Liability  to  Tax. 

A  beneficiary  is  liable  for  the  normal  tax  upon  the 
amount  of  net  income  derived  by  him  from  a  taxable 
source  through  a  fiduciary,  less  the  amount  of  exemption 
claimed,  and  is  also  liable  for  the  additional  tax  assessable 
on  the  amount  of  net  income  received  by  him  in  excess  of 
$5,000 ;  and  in  order  to  determine  whether  the  net  income  of 
a  beneficiary  is  or  is  not  in  excess  of  $5,000  and  subject 
to  the  additional  tax,  the  amount  derived  by  him  from  an 
estate  and  all  other  taxable  sources  is  required  to  be  shown 
on  his  personal  annual  return. 

^420 — Personal  Representative  to  Make  Return  of 
Individual  in  Case  of  Death. 

If  the  net  income  of  a  decedent  from  January  1  of  the 
year  in  which  he  died  to  the  date  of  his  death  was  $1,000 
or  over,  a  return  for  such  decedent  must  be  made  by  his 
personal  representative  on  Form  1040,  Revised,  and  such 
representative  may  claim  all  deductions  and  exemption  to 
which  the  decedent  would  have  been  entitled  under  the  law. 

Ti  421 — Administrator  or  Executor. 

Liability  for  payment  of  income  tax  attaches  to  the  per- 
son of  an  executor  or  administrator  for  income  tax  up  to 
and  including  the  date  of  his  discharge,  regardless  of  the 
fact  that  the  time  in  which  claim  is  made  and  filed  against 
the  estate  has  expired  or  where,  prior  to  distribution  and 
discharge,  the  executor  or  administrator  had  notice  of  his 
obligations  to  the  Federal  Government  or  where  he  failed 
to  exercise  due  diligence  in  determining  whether  or  not  such 
obligations  existed. 

11422— 

Liability  for  the  tax  due  from  a  deceased  person,  or  from 
his  estate,  also  attaches  to  the  estate  itself,  and  when  by 
reason  of  distribution  of  the  estate  and  discharge  of  the 
executor  or  administrator  it  shall  appear  that  collection  of 
the  tax  can  not  be  made  from  the  executor  or  administrator, 
the  collector  will  make  demand  on  the  distributees  for  their 
proportionate  share  of  the  tax  due  and  unpaid. — Art.  29, 
Reg.  33,  Revised. 

307 


FIDUCIARIES— Continued. 

If  423— Agents. 

Agents  not  acting  in  a  fiduciary  capacity  have  no  respon- 
sibility with  reference  to  making  return  of  income  turned 
over  to  resident  aliens  or  citizens  of  the  United  States. — 
Treasury  Decision  2090. 

For  responsibility  of  the  agent  or  representative  of  non- 
resident aliens,  see  If  472. 

Tf424 — Power  of  Attorney — Fiduciary  Relation  Cannot  Be 
Created  By. 

A  fiduciary  relationship  for  the  purposes  of  the  income 
tax  can  not  be  created  by  a  power  of  attorney.  An  agent 
having  entire  charge  of  property  with  authority  to  effect 
and  execute  leases  with  tenants  entirely  on  his  own  respon- 
sibility and  without  consulting  his  principal,  paying  taxes 
and  expenses  and  all  other  charges  in  connection  with  the 
property  out  of  funds  in  his  hands  from  collection  of  rents, 
merely  turning  over  the  net  profits  from  the  property 
periodically  to  his  principal  by  virtue  of  authority  conferred 
upon  him  by  a  power  of  attorney,  is  not  a  fiduciary  within 
the  meaning  of  the  income  tax  law.  In  all  cases  where  no 
legal  trust  has  been  created  in  the  estate  controlled  by  the 
agent  and  attorney  the  liability  under  the  law  rests  with 
the  principal. — Art.  29,  Reg.  33,  Revised. 

U  425 — Guardians,  Trustees,  Executors,  Etc.,  as  Fiduciary 
Agents,  to  File  Returns. 

Guardians,  trustees,  executors,  administrators,  agents, 
receivers,  conservators,  and  all  persons,  corporations,  or 
associations  acting  in  any  fiduciary  capacity,  hereinafter 
referred  to  as  fiduciary  agents,  who  hold  in  trust  an  estate 
of  another  person  or  persons,  shall  file  returns. 

^  42e—Certificates. 

Certificates  are  required  to  be  filed  for  information  pur- 
poses.   See  index,  "Reporting  at  the  Source." 

T[  427 — Form  1015 — Exemption  Claimed. 

Certificate  Form  1015,  Revised,  may  be  filed  when  exemp- 
tion is  claimed. 

303 


FIDUCIARIES— Continued. 

^  428 — Form  1019-— When  Exemption  is  Not  Claimed. 

When  such  exemption  is  not  claimed,  notice  thereof  on 
Form  1019,  Revised,  should  be  filed  with  the  withholding 
agent.  Form  1019,  Revised,  however,  cannot  be  used  when 
the  income  affected  is  payable  by  the  fiduciary  to  a  bene- 
ficiary who  would  not  be  liable  under  the  statute  for  incom-e 
tax,  if  such  income  were  payable  to  such  beneficiary 
directly. — Treasury  Decision  2231. 

When  the  fiduciary  uses  Form  1019,  Revised,  the  debtor 
organization  becomes  the  source  for  the  deduction  and 
withholding  of  the  normal  tax  in  the  case  of  tax-free  bonds. 

fl  429 — Certificates  to  Be  Filed  for  Each  Issue  of  Bonds  and 
for  Each  Trust— Certificates  1015  and  1019  May 
Be  Adapted. 

Fiduciaries  are  required  to  file  Forms  1015,  Revised,  or 
1019,  Revised,  according  to  the  nature  of  the  claim  to  be 
made  by  the  fiduciary,  for  each  issue  of  bonds  and  for  each 
trust. 

Therefore,  where  fiduciaries  have  custody  and  control  of 
more  than  one  estate  or  trust,  and  said  estates  or  trusts 
have  as  assets  bonds  of  corporations  of  the  same  issue,  the 
said  fiduciaries  may  adapt  Forms  1015  and  1019,  Revised, 
by  changing  the  words  "estate  or  trust"  in  lines  1,  2  and  3 
of  said  forms  to  the  plural,  and  writing  on  the  blank  line 
provided  for  (name  of  estate  or  trust)  the  words;  "As 
noted  on  the  back  hereof." 

In  such  cases  the  notation  on  the  back  of  the  certificate 
should  show  for  each  estate  or  trust: 

(a)  The  name  of  the  estate  or  trust. 

(b)  The  amount  of  bonds. 

(c)  The  amount  of  the  interest. 

In  all  other  respects  the  certificates  should  be  filled  out 
as  indicated  thereon. — Treasury  Decision  1987. 

11430 — Non-resident  Alien  Fiduciaries — Certificates  of 

Ownership  to  Be  Used  With  Coupons  Detached 
from  Bonds  of  Domestic  Corporations. 

Form  1000,  Revised,  is  provided  to  be  attached  to  coupons 
from  bonds  or  other  obligations  of  domestic  corporations 

309 


FIDUCIARIES— Continued. 

owned  by  non-resident  alien  individuals,  organizations  and 
fiduciaries,  for  the  purpose  of  declaring  ownership  of  bonds 
of  domestic  corporations,  etc.,  and  to  be  attached  to  interest 
coupons  detached  from  said  bonds  when  presenting  same  for 
payment. 

If  431 — Returns  of  Fiduciaries  Paying  $1,000  or  More. 

All  persons,  corporations,  partnerships,  associations  and 
insurance  companies,  in  whatever  capacity  acting,  including 
lessees  or  mortgagors  of  real  or  personal  property,  trustees 
acting  in  any  trust  capacity,  executors,  administrators,  re- 
ceivers, conservators  and  employers,  making  payment  to  an- 
other person,  corporation,  partnership,  association,  or  insur- 
ance company,  of  interest,  rent,  salaries,  wages,  premiums, 
annuities,  compensation,  remuneration,  emoluments,  or 
other  fixed  or  determinable  gains,  profits  and  income  (other 
than  payments  described  in  Sections  254  and  255)  of  $1,000 
or  more  in  any  taxable  year,  or,  in  the  case  of  such  payments 
made  by  the  United  States,  the  officers  or  employes  of  the 
United  States  having  information  as  to  such  payments  and 
required  to  make  returns  in  regard  thereto  by  the  regula- 
tions hereinafter  provided  for,  are  hereby  authorized  and 
required  to  render  a  true  and  accurate  return  to  the  Com- 
missioner of  Internal  Revenue,  under  such  rules  and  regula- 
tions and  in  such  form  and  manner  as  may  be  prescribed  by 
him,  with  the  approval  of  the  Secretary  of  the  Treasury, 
setting  forth  the  amount  of  such  gains,  profits  and  income, 
and  the  name  and  address  of  the  recipient  of  such  payment : 
Provided,  That  such  returns  shall  be  required,  regardless 
of  amounts,  in  the  case  of  payments  of  interest  upon  bonds 
and  mortgages  or  deeds  of  trust  or  other  similar  obligations 
of  corporations,  joint-stock  companies,  associations  and  in- 
surance companies,  and  in  the  case  of  collections  of  items 
(not  payable  in  the  United  States)  of  interest  upon  the 
bonds  of  foreign  countries  and  interest  from  the  bonds  and 
dividends  from  the  stock  of  foreign  corporations  by  persons, 
corporations,  partnerships,  or  associations,  undertaking  as 
a  matter  of  business  or  for  profit  the  collection  of  foreign 
payments  of  such  interest  or  dividends  by  means  of  coupons, 
checks,  or  bills  of  exchange. 

310 


NON-RESIDENT  ALIENS— 

When  necessary  to  make  effective  the  provisions  of  this 
Section  the  name  and  address  of  the  recipient  of  income 
shall  be  furnished  upon  demand  of  the  person,  corporation, 
partnership,  association,  or  insurance  company  paying  the 
income. 

The  provisions  of  this  Section  shall  apply  to  the  calendar 
year  nineteen  hundred  and  seventeen  and  each  calendar 
year  thereafter,  but  shall  not  apply  to  the  payment  of  in- 
terest on  obligations  of  the  United  States. 


NON-RESIDENT  ALIENS. 

H  432— Definition. 

Non-resident  aliens  have  been  defined  as  citizens  or  sub- 
jects, firms,  corporations  or  organizations  of  a  foreign  coun- 
try who  are  not  a  resident  of  the  United  States. — ^Treasury 
Decision  1977. 

^  433 — Aliens  Temporarily  Residing  in  United  States. 

Aliens  who  are  physically  present  in  the  United  States 
but  only  temporarily  resident  or  employed  therein  (as  for  a 
season  or  other  similarly  definite  term,  and  with  the  expec- 
tation or  intention  of  leaving  the  United  States  upon  the 
termination  of  employment  or  accomplishment  of  the  pur- 
pose which  necessitated  presence  in  the  United  States)  are 
within  the  class  of  "Persons  residing  elsewhere." — ^Treasury 
Decision  2242. 

^  434 — American  Wife  of  Non-resident  Alien. 

An  American  woman  who  marries  a  foreigner  takes  the 
nationahty  of  her  husband. — Treasury  Decision  2090. 

Tl  435 — Resident  Aliens. 

For  purposes  of  the  income  tax  it  is  held  that  where  for 
business  purposes  or  otherwise  an  alien  is  permanently  lo- 
cated in  the  United  States,  has  there  his  principal  business 
establishment  and  is  there  permanently  occupied  or  em- 
ployed, even  though  his  domicile  may  be  without  the  United 
States,  he  will  be  held  to  be  within  the  definition  of  "Every 
person  residing  in  the  United  States,  but  not  a  citizen 
thereof." — Treasury  Decision  2242. 

811 


NON-RESIDENT  ALIENS—Continued. 

11  436 — Method  of  Establishing  Residence  in  United  States. 

Aliens  coming  to  the  United  States  with  the  intention  of 
becoming  residents  thereof  within  the  meaning  and  intent 
of  the  income  tax  statute,  may  establish  that  fact  and  have 
the  privilege  of  resident  aliens  under  the  statute  by  filing 
with  withholding  agents  a  certificate  (Form  1078)  under 
oath,  and  which  certificate  shall  be  filed  by  said  withholding 
agents  with  Collectors  of  Internal  Revenue  as  justification 
for  withholding  on  the  basis  of  "residence  in  the  United 
States." — Treasury  Decision  2242. 

II  437 — Income  Subject  to  Tax. 

Subject  to  the  deductions  allowed,  and  set  forth  below,  the 
income  of  non-resident  aliens  subject  to  the  normal  and  ad- 
ditional tax  consists  of  only  the  gross  income  from  sources 
within  the  United  States,  including  interest  on  bonds,  notes 
and  other  interest-bearing  obligations  of  residents,  cor- 
porate or  otherwise,  dividends  from  resident  corporations, 
and  including  all  amounts  received  (although  paid  under  a 
contract  for  the  sale  of  goods  or  otherwise)  representing 
profits  on  the  manufacture  and  disposition  of  goods  within 
the  United  States. 

1l  438 — Non-resident  Alien  Individuals. 

A  non-resident  alien  individual  shall  make  a  full  and  ac- 
curate return  of  all  net  income  received  from  sources  within 
the  United  States,  regardless  of  amount,  unless  the  tax  on 
such  income  has  been  fully  paid  at  the  source ;  and  is  not  en- 
titled to  the  benefit  of  the  several  deductions  and  credits 
provided,  unless  such  return  is  filed  by  him  or  his  authorized 
agent. — Art.  32,  Reg.  33,  Revised. 

If  43d — Non-resident  Aliens. — Services  Rendered  by,  in  a 
Foreign  Country. 

Compensation  paid  for  services  rendered  in  a  foreign  coun- 
try, including  per  diem  allowance  for  business  and  travel  ex- 
pense, not  taxable. — Treasury  Decision  2152. 

^  440 — Royalties  Paid  to  Non-resident  Aliens 

Royalties  paid  to  non-resident  aliens  are  held  to  be  income 
accruing  by  reason  of  property  owned  or  business  carried  on 
within  the  United  States. — Treasury  Decision  2137. 

312 


NON-RESIDENT  ALIENS— Continued. 

^441— .Sale  of  Stock. 

When  a  non-resident  alien  who  owns  stock  in  an  American 
corporation  disposed  of  same  by  sale,  the  sale  and  dehvery 
being  made  within  the  United  States,  the  profit  will  be  held 
to  have  been  derived  from  sources  within  the  United  States 
and  is  to  be  included  for  the  purposes  of  income  tax. — Art.  4, 
Reg.  33,  Revised. 

51 442 — Income  from  Dividends. 

In  making  return  of  income  from  dividends  on  capital 
stock  or  from  the  net  earnings  of  corporations,  etc.,  non- 
resident aliens  shall  not  include  such  income  derived  from 
sources  without  the  United  States. 

^443. — Individual  Income  From  Dividends  Subject  to 
Additional  Tax  Only. 

In  the  case  of  non-resident  alien  individuals  the  amount 
received  on  the  stock  or  from  the  net  earnings  of  domestic 
corporations  which  are  taxable  on  their  net  income  are  sub- 
ject to  the  additional  tax  only.  Income  from  dividends 
should  be  included  in  every  return,  but  for  purposes  of  the 
normal  tax  only,  the  amount  of  such  income  may  be  deducted 
as  a  credit. 

]j  444 — Income  From  Dividends  Accruing  to  Foreign 
Corporations. 

Foreign  corporations  not  engaged  in  business  within  the 
United  States  and  not  having  any  office  or  place  of  business 
therein,  are  not  subject  to  the  tax  on  dividends  received 
from  the  net  earnings  of  domestic  corporations. 

NOTE. — Record  owners  of  stock  under  the  Provisions  of 
the  Revenue  Act  of  1916,  as  amended,  were  required  to 
disclose,  by  ownership  certificate  (Form  1087)  the  name  and 
address  of  the  actual  owner  of  stock  in  order  to  determine 
tax  liability,  and  if  the  record  owner  did  not  exercise  his 
right  to  disclose  actual  ownership,  the  tax  was  withheld  by 
the  debtor  corporation. 

Under  the  Revenue  Act  of  1918,  provision  is  made  that 
dividends  paid  by  domestic  corporations  to  non-resident 
alien  individuals  are  not  subject  to  the  normal  tax,  but  are 

313 


NON-RESIDENT  ALIENS— Continued. 

subject  to  additional  tax,  and  that  dividends  paid  by  domes- 
tic corporations  to  foreign  corporations,  not  having  a  place 
of  business  in  the  United  States  are  not  taxable. 

As  there  will  be  no  withholding  in  connection  with  divi- 
dends paid  under  the  Revenue  Act  of  1918,  it  is  not  known 
whether  the  procedure  of  filing  ownership  certificates  by 
record  owners  will  be  required  disclosing  the  names  of  the 
actual  owners. 

![445 — Record  Owner  Liable  for  Tax.  (See  ^444  above.) 
Dividends  on  stock  of  domestic  corporations  or  resident 
alien  corporations  are  held,  prima  facie,  to  be  income  to  the 
record  owner  of  the  stock,  and  such  record  owner  will  be 
liable  for  income  tax,  normal  or  additional,  according  to  his 
or  its  individual  or  corporate  status,  unless  a  disclosure  of 
actual  ownership  is  made  to  the  Commissioner  of  Internal 
Revenue  which  will  show  who  the  owner  is  and  his  address, 
and  that  the  record  owner  is  not  the  actual  owner.  (Form 
1087  is  provided  for  this  purpose.) 

j[  446 — Record  Owner  to  Make  Return  and  Pay  Tax.    (See 

T[  444  above.) 
In  all  cases  where  the  actual  owner  is  a  non-resident  alien 
individual  and  the  record  owner  is  an  individual,  firm  or  cor- 
poration in  the  United  States,  citizen  or  resident  alien,  or  a 
non-resident  alien,  and  the  aforesaid  showing  of  actual  own- 
ership is  made,  the  record  owner  will  be  held,  for  income  tax 
purposes,  to  have  receipt,  custody,  control  and  disposal  of 
the  dividend  income,  and  will  be  required  to  make  return  for 
the  actual  owner  and  pay  the  additional  tax  found  by  such 
return  to  be  due. 

^447 — Certificate  to  Disclose  Actual  Ownership  of  Stock. 

(See  II  444  above.) 
A  certificate  has  been  provided  for  disclosing  actual  own- 
ership (Form  1087,  Revised)  for  the  use  of  the  foreign 
(actual)  owner  — whether  an  individual,  firm  or  organiza- 
tion— to  be  filed  with  his,  her  or  its  representative  in  the 
United  States.  This  certificate  is  to  be  filed  with  the  record 
owner  by  the  non-resident  alien  person,  firm  or  corporation 
for  whom  the  record  owner  acts. 

314 


NON-RESIDENT  ALIENS— Continued. 

A  certificate  once  filed  disclosing  the  actual  owner  will  be 
held  to  answer  for  all  the  requirements  under  this  regulation 
until  ownership  shall  change,  when  it  will  be  necessary  to 
disclose  the  actual  owner  as  in  the  first  instance. 

When  a  return  is  not  required  to  be  filed  by  or  on  behalf 
of  the  actual  owner,  the  showing  may  be  made  upon  the 
certification  of  the  record  owner. — Art.  32,  Reg.  33,  Revised. 

Upon  the  showing  thus  made,  either  by  certification  or 
return,  as  the  circumstances  may  require,  the  Commisisoner 
of  Internal  Revenue  will  make  such  assessments  and  issue 
such  instructions  to  debtors  and  withholding  agents  as  will 
insure  the  proper  collection  of  tax  in  accordance  with  the 
respective  tax  liabilities. — Art.  32,  Reg.  33,  Revised. 

^  448 — Returns  of  Dividends  When  Actual  Owner  is  a 
Non-resident  Individual. 

When  the  actual  owner  is  a  non-resident  alien  individual, 
a  return  (Form  1040)  shall  be  made.  When  the  net  amount 
exceeds  $5,000  said  custodian  shall  pay  the  additional  tax  on 
such  income. 

If  449 — ^When  Actual  Owner  is  a  Non-resident  Corporation. 

Where  the  actual  owner  is  a  non-resident  alien  corpora- 
tion, return  (Form  1031  or  1030  for  insurance  companies) 
will  be  made  regardless  of  amount  of  the  dividend  paid. 

^  450 — When  Actual  Owner  is  a  Non-resident  Alien 
Partnership. 

When  it  shall  appear  from  the  disclosure  provided  for 
that  the  actual  owner  is  a  non-resident  ahen  partnership,  all 
certificates  making  such  disclosure  shall  be  transmitted  to 
the  collector  for  information  of  the  Commissioner  of  In- 
ternal Revenue. 

^  451 — Proceduce  When  Stockholder  of  Record  is  Other 
Than  the  Non-resident  Alien  Individual  Actual 
Owner,  and  is  a  Non-resident  Alien. 

Dutch  Administration  offices  being  non-resident  alien  cor- 
porations not  engaged  in  business  or  trade  in  the  United 
States,  and  not  having  an  office  or  place  of  business  therein, 

315 


NON-RESIDENT  ALIENS— Continued. 

and  such  Dutch  Administration  offices  being  the  registered 
owners  of  stock  of  domestic  or  other  resident  corporations 
in  theUnited  States,  are  prima  facie  liable  for  the  normal 
income  tax  on  income  derived  from  dividends  on  capital 
stock  or  from  the  net  earnings  of  the  aforesaid  domestic  or 
other  resident  corporations  in  the  United  States  and  to  hav- 
ing the  tax  deducted  and  withheld  from  such  income.  It  ap- 
pearing that  such  Dutch  Administration  offices,  while  reg- 
istered owners  of  stock,  are  not  the  actual  owners  thereof, 
but  that  they  have  issued  their  bearer  certificates,  with 
coupons  attached,  against  said  stock,  and  that  dividends  on 
said  stock  are  collected  for  the  account  of  the  holders  of  said 
bearer  certificates,  and  that  the  relation  sustained  by  said 
Dutch  Administration  offices  to  the  said  bearer-certificate 
holders  is  that  of  agent.  For  the  purpose  of  administration, 
the  Dutch  Administration  offices  may  appoint  an  agent  in 
the  United  States  and  give  notice  of  that  fact  by  filing,  in 
duplicate,  with  each  corporation  issuing  the  stock  so  held  by 
said  Dutch  Administration  offices. — Treasury  Decision  2386. 

Tf  452 — When  Record  Owner  is  Non-resident  Alien 
Corporation. 

For  the  purpose  of  claiming  exemption  from  withholding 
at  the  source  on  domestic  dividend  payments,  non-resident 
alien  corporations  who  are  record  owners  are  authorized  the 
use  of  certificate  (Form  1087),  to  disclose  actual  ownership 
of  stock.  The  certificate  should  be  modified  by  striking  out 
the  words  "to  be  filed  with  representative  in  the  United 
States  of  such  Foreign  Principal"  in  the  caption  and  the 
words  "in  the  United  States"  in  the  body  of  the  form. — 
Treasury  Decision  2452. 

II  45a-Void— [Ed.] 

%  454 — Deductions  Allowed. 

A  non-resident  alien  individual  shall  receive  the  benefit  of 
the  deductions  and  credits  provided  for  in  this  section  only 
by  filing  or  causing  to  be  filed  with  the  Collector  of  Internal 
Revenue  a  true  and  accurate  return  of  his  total  income,  re- 

^  316 


NON-RESIDENT  ALIENS— Continued. 

ceived  from  all  sources,  corporate  or  otherwise,  in  the  United 
States,  in  the  manner  prescribed  by  this  title,  including 
therein  all  the  information  which  the  Commissioner  may 
deem  necessary  for  the  calculation  of  such  deductions  and 
credits;  and  in  case  of  his  failure  to  file  such  return,  the 
collector  shall  collect  the  tax  on  such  income,  and  all  prop- 
erty belonging  to  such  non-resident  alien  individual  shall  be 
Hable  to  distraint  for  the  tax. — Law,  page  66,  line  8. 

^  455 — AUowable  Deductions  Specified. 

In  computing  the  net  income  of  a  non-resident  alien  there 
shall  be  allowed  as  deductions — 

T[  456—  EXPENSES. 

All  the  ordinary  and  necessary  expenses  paid  or  incurred 
during  the  taxable  year  in  carrying  on  any  trade  or  business, 
including  a  reasonable  allowance  for  salaries  or  other  com- 
pensation for  personal  service  actually  rendered  and  includ- 
ing rentals  or  other  payments  required  to  be  made  as  a  con- 
dition to  the  continued  use  or  possession,  for  purposes  of 
trade  or  business,  of  property  to  which  the  taxpayer  has  not 
taken  or  is  not  taking  title  or  in  which  he  has  no  equky. 

^  457—  INTEREST. 

The  proportion  of  all  interest  paid  within  the  taxable  year 
by  such  person  which  the  amount  of  his  gross  income  from 
sources  within  the  United  States  bears  to  the  amount  of  his 
gross  income  from  all  sources  within  and  without  the  United 
States. 

H  458—  TAXES. 

Taxes  paid  or  accrued  within  the  taxable  year  imposed 
by  the  authority  of  the  United  States  (except  income, 
war-profits  and  excess-profits  taxes),  or  by  the  authority 
of  any  of  its  possessions,  or  by  the  authority  of  any  State 
or  territory,  or  any  county,  school  district,  municipality,  or 
other  taxing  subdivision  of  any  State  or  territory,  not  in- 
cluding those  assessed  against  local  benefits. 


317 


NON-RESIDENT  ALIENS— Continued. 

1|45d—  LOSSES. 

Losses  sustained  during  the  taxable  year,  and  not  com- 
pensated for  by  insurance  or  otherwise,  if  incurred  in  trade 
or  business. 

Losses  sustained  during  the  taxable  year  and  not  com- 
pensated for  by  insurance  or  otherwise,  if  incurred  in  any 
transaction  entered  into  for  profit  though  not  connected 
with  the  trade  or  business  to  the  extent  of  transactions 
entered  into  within  the  United  States. 

Losses  sustained  during  the  taxable  year  of  property 
within  the  United  States,  not  connected  with  the  trade  or 
business,  if  arising  from  fires,  storms,  shipwreck,  or  other 
casualty,  or  from  theft,  and  if  not  compensated  for  by  insur- 
ance or  otherwise. 

^  460—  BAD  DEBTS. 

Debts  ascertained  to  be  worthless  and  charged  off  within 
the  taxable  year. 

fl  461—    SUMMARY  OF  DEDUCTIBLE  LOSSES. 

The  summary  of  deductible  losses  allowed  citizen  and  res- 
ident individuals  (Pars.  163  to  183)  will  furnish  further  de- 
tails as  to  losses  allowed  as  a  deduction  to  non-resident 
aliens. 

Tl  462 — Depreciation. 

A  reasonable  allowance  for  the  exhaustion,  wear  and 
tear,  and  obsolescence  of  property  within  the  United  States 
arising  out  of  its  use  or  employment  in  the  business  or  trade. 

11463-  ■  :ii 

In  the  case  of  buildings,  machinery,  equipment,  or 
other  facihties,  constructed,  erected,  installed,  or  acquired, 
on  or  after  April  6,  1917,  for  the  production  of  articles  con- 
tributing to  the  prosecution  of  the  present  war,  and  in  the 
case  of  vessels  constructed  or  acquired  oft  or  after  such  date 
for  the  transportation  of  articles  or  men  contributing  to 
the  prosecution  of  the  present  war,  there  shall  be  allowed  a 
reasonable  deduction  for  the  amortization  of  such  part  of 

318 


NON-RESIDENT  ALIENS— Continued. 

the  cost  of  such  facihties  or  vessels  as  has  been  borne  by  the 
taxpayer,  but  not  again  including  any  amount  otherwise 
allowed  under  this  title  or  previous  Acts  of  Congress  as  a 
deduction  in  computing  net  income.  At  any  time  within 
three  years  after  the  termination  of  the  present  war  the 
Commissioner  may,  and  at  the  request  of  the  taxpayer 
shall,  re-examine  the  return,  and  if  he  then  finds  as  a  result 
of  an  appraisal  or  from  other  evidence  that  the  deduction 
originally  allowed  was  incorrect,  the  taxes  imposed  by  this 
title  and  by  Title  III  for  the  year  or  years  affected  shall  be 
redetermined;  and  the  amount  of  tax  due  upon  such  re- 
determination, if  any,  shall  be  paid  upon  notice  and  demand 
by  the  collector,  or  the  amount  of  tax  overpaid,  if  any,  shall 
be  credited  or  refunded  to  the  taxpayer  in  accordance  with 
the  provisions  of  section  252. 

^  464 — Mines,  Oil  and  Gas  Wells,  Other  Natural  Deposits 
and  Timber. 

In  the  case  of  mines,  oil  and  gas  wells,  other  natural  de- 
posits, and  timber,  a  reasonable  allowance  for  depletion  and 
for  depreciation  of  improvements,  according  to  the  peculiar 
conditions  in  each  case,  based  upon  cost  including  cost  of 
development  not  otherwise  deducted,  is  an  allowable  deduc- 
tion from  gross  income.  In  the  case  of  such  properties  ac- 
quired prior  to  March  1,  1913,  the  fair  market  value  of  the 
property  (or  the  taxpayer's  interest  therein)  on  that  date 
shall  be  taken  in  lieu  of  cost  up  to  that  date.  In  the  case 
of  mines,  oil  and  gas  wells,  discovered  by  the  taxpayer,  on 
or  after  March  1,  1913,  and  not  acquired  as  the  result  of 
purchase  of  a  proven  tract  or  lease,  where  the  fair  market 
value  of  the  property  is  materially  disproportionate  to  the 
cost,  the  depletion  allowance  shall  be  based  upon  the  fair 
market  value  of  the  property  at  the  date  of  the  discovery, 
or  within  30  days  thereafter.  Such  reasonable  allowance 
in  all  the  above  cases  to  be  made  under  rules  and  regulations 
to  be  prescribed  by  the  Commissioner  with  the  approval  of 
the  Secretary.  In  the  case  of  leases  the  deductions  provided 
by  this  paragraph  shall  be  equitably  apportioned  between 
the  lessor  and  lessee. 

819 


NON-RESIDENT  ALIENS—Continued. 

^  465-— Deductions  for  Improvements. 

Deduction  shall  not  be  allowed  for  any  amount  paid  out  for 
improvements  made  to  increase  the  value  of  any  property  or 
estate. 

T[  466 — Contributions,  Gifts,  Etc. 

Contributions  or  gifts  made  within  the  taxable  year  to 
corporations  organized  and  operated  exclusively  for  re- 
ligious, charitable,  scientific,  or  educational  purposes,  or  for 
the  prevention  of  cruelty  to  children  or  animals,  no  part  of 
the  net  earnings  of  which  inures  to  the  benefit  of  any  pri- 
vate stockholder  or  individual,  or  to  the  special  fund  for 
vocational  rehabilitation  authorized  by  Section  7  of  the  Vo- 
cational Rehabilitation  Act,  to  an  amount  not  in  excess  of 
15  per  centum  of  the  taxpayer's  net  income  as  computed 
without  the  benefit  of  this  paragraph.  Such  contributions 
or  gifts  shall  be  allowable  as  deductions  only  if  verified 
under  rules  and  regulations  prescribed  by  the  Commissioner, 
with  the  approval  of  the  Secretary.  This  deduction  shall 
be  allowed  only  as  to  contributions  or  gifts  made  to  domestic 
corporations,  or  to  such  vocational  rehabilitation  fund. 

1[  467 — Deductions  by  Non-resident  Aliens. 

The  deductions  for  Expenses,  Losses  incurred  in  trade  or 
business,  Debts,  Depreciation,  Amortization  of  cost  of  spe- 
cial property.  Depreciation  and  Depletion  of  Mines,  etc.,  and 
Losses  of  previous  years,  as  set  out  in  paragraphs  463,  404, 
respectively,  shall  be  allowed  non-residents  aliens  only  if  and 
to  the  extent  that  they  are  converted  with  income  arising 
from  sources  within  the  United  States.  The  proper  appor- 
tionment and  allocation  of  such  deductions  with  respect  to 
sources  of  income  within  and  without  the  United  States 
shall  be  determined  under  rules  and  regulations  prescribed 
by  the  Commissioner  of  Internal  Revenue. 

The  benefit  of  all  deductions  and  credits  may  be  had  only 
if  the  non-resident  alien  files,  or  causes  to  be  filed,  with  the 
collector,  and  in  the  manner  prescribed  by  the  Commis- 
sioner, a  true  and  accurate  return  of  his  total  income  re- 
ceived from  all  sources  within  the  United  States.  However, 
the  benefit  of  the  credits  provided  in  t[  453,  in  the  discretion 

320 


NON-RESIDENT  ALIENS— Continued. 

of  the  Commissioner  and  except  as  otherwise  provided,  may 
be  received  by  filing  a  claim  therefor  with  the  withholding 
agent. 

11468— 

At  the  time  of  fihng  return  for  the  taxable  year  1918 
a  taxpayer  may  file  a  claim  in  abatement  based  on  the  fact 
that  he  has  sustained  a  substantial  loss  (whether  or  not 
actually  realized  by  sale  or  other  disposition)  resulting  from 
any  material  reduction  (not  due  to  temporary  fluctuation) 
of  the  value  of  the  inventory  for  such  taxable  year,  or  from 
the  actual  payment  after  the  close  of  such  taxable  year  of 
rebates  in  pursuance  of  contracts  entered  into  during  such 
year  upon  sales  made  during  such  year.  In  such  case  pay- 
ment of  the  amount  of  the  tax  covered  by  such  claim  shall 
not  be  required  until  the  claim  is  decided,  but  the  taxpayer 
shall  accompany  his  claim  with  a  bond  in  double  the  amount 
of  the  tax  covered  by  the  claim,  with  sureties  satisfactory 
to  the  Commissioner,  conditioned  for  the  payment  of  any 
part  of  such  tax  found  to  be  due,  with  interest.  If  any  part 
of  such  claim  is  disallowed  then  the  remainder  of  the  tax 
due  shall  on  notice  and  demand  by  the  collector  be  paid  by 
the  taxpayer  with  interest  at  the  rate  of  1  per  centum  per 
month  from  the  time  the  tax  would  have  been  due  had  no 
such  claim  been  filed.  If  it  is  shown  to  the  satisfaction  of 
the  Commissioner  that  such  substantial  loss  has  been  sus- 
tained, then  in  computing  the  tax  imposed  by  this  title  the 
amount  of  such  loss  shall  be  deducted  from  the  net  income. 

^469  — 

If  no  such  claim  is  filed,  but  it  is  shown  to  the  satis- 
faction of  the  Commissioner  that  during  the  taxable  year 
1919  the  taxpayer  has  sustained  a  substantial  loss  of  the 
character  above  described  then  the  amount  of  such  loss  shall 
be  deducted  from  the  net  income  for  the  taxable  year  1918 
and  the  tax  imposed  by  this  title  for  such  year  shall  be  re- 
determined accordingly.  Any  amount  found  to  be  due  to 
the  taxpayer  upon  the  basis  of  such  redetermination  shall 
be  credited  or  refunded  to  the  taxpayer  in  accordance  with 
the  provisions  of  Section  252. 

331  a 


NON-RESIDENT  ALIENS— Continued. 

fl  470— -Credits  Allowed. 

For  the  purpose  of  the  normal  tax  only  there  shall  be 
allowed  the  following  credits: 

(a)  The  amount  received  as  dividends  from  a  corporation 
which  is  taxable  under  this  title  upon  its  net  income,  and 
amounts  received  as  dividends  from  a  personal  service  cor- 
poration out  of  earnings  or  profits  upon  which  income  tax 
has  been  imposed  by  Act  of  Congress ; 

(b)  The  amount  received  as  interest  from  obligations  of 
the  United  States,  and  bonds  issued  by  the  War  Finance 
Corporation,  which  is  included  in  gross  income; 

(c)  In  the  case  of  a  single  person,  the  personal  exemption 
of  $1,000,  or  in  the  case  of  the  head  of  a  family  or  a  mar- 
ried person  living  with  husband  or  wife,  a  personal  exemp- 
tion of  $2,000.  A  husband  and  wife  living  together  shall 
receive  but  one  personal  exemption  of  $2,000  against  their 
aggregate  net  income,  and  in  case  they  make  separate  re- 
turns, the  personal  exemption  of  $2,000  may  be  taken  by 
either,  or  divided  between  them ; 

(d)  $200  for  each  person  (other  than  husband  or  wife) 
dependent  upon  and  receiving  his  chief  support  from  the 
taxpayer,  if  such  dependent  person  is  under  eighteen  years 
of  age  or  is  incapable  of  self-support  because  mentally  or 
physically  defective. 

11471-      . 

The  marital  credit  and  the  credit  for  dependents  as  pro- 
vided in  subdivisions  (c)  and  (d)  of  Section  216  shall  be 
allowed  to  non-resident  alien  only  if  such  country,  which 
imposes  an  income  tax,  of  which  he  is  a  citizen  or  subject, 
allows  a  similar  credit  to  citizens  of  the  United  States  not 
residing  in  such  country. 

See  paragraph  454  for  further  conditions  under  which 
non-resident  aliens  shall  have  benefit  of  deductions  and 
credits. 

TJ  472 — Returns — Agents  or  Representatives  of  Non- 
resident Aliens  to  Make  Returns  and  Pay  Tax 

The  responsible  heads,  agents,  or  representatives  of  said 
non-resident  aliens  who  are  in  charge  of  the  property  owned 


NON-RESIDENT  ALIENS— Continued. 

or  business  carried  on  within  the  United  States  by  non- 
resident aliens  shall  make  fuUand  complete  return  of  the 
income  therefrom  on  Form  1040,  Revised,  and  shall  pay  any 
and  all  tax,  normal  and  additional,  assessed  upon  the  said 
income  of  non-resident  aliens,  except  where  the  income  tax 
on  income  so  in  their  receipt,  custody  or  control,  shall  have 
been  withheld  at  the  source. — Treasury  Decisions  2109 
and  2313. 

11473- 

The  liabihty,  under  the  provisions  of  the  law,  to  render 
personal  returns,  on  or  before  March  15  next  succeeding  the 
tax  year,  of  annual  net  income  accrued  to  them  from  sources 
within  the  United  States  during  the  preceding  calendar  year, 
attaches  to  non-resident  aliens  as  in  the  case  of  returns 
required  from  citizens  and  resident  ahens.  Therefore,  a 
return  on  Form  1040,  Revised,  is  required  except  in  cases 
where  the  total  tax  liability  has  been  or  is  to  be  satisfied  at 
the  source  by  withholding  or  has  been  or  is  to  be  satisfied 
by  personal  return  on  Form  1040,  Revised,  rendered  in  their 
behalf.  Returns  should  be  rendered  to  the  collector  of  in- 
ternal revenue  for  the  district  in  which  a  non-resident 
alien  carries  on  his  principal  business  within  the  United 
States  or,  in  the  absence  of  a  principal  business  within  the 
United  States  and  in  all  cases  of  doubt,  to  the  collector  of 
internal  revenue  at  Baltimore,  Maryland,  in  whose  district 
Washington  is  situated. — Treasury  Decision  2313. 

11474- 

Where  non-resident  aliens  have  various  sources  of  income 
within  the  United  States  so  that  at  any  one  source  or  from 
all  sources  combined,  the  amount  of  income  shall  call  for  the 
assessment  of  additional  tax  and  a  return  of  income  shall 
not  be  filed  by  or  on  behalf  of  a  non-resident  alien  for  the 
purpose  of  the  assessment  of  income  tax,  the  Commissioner 
of  Internal  Revenue  will  cause  a  return  of  income  to  be  made 
and  include  therein  the  income  of  the  non-resident  alien 
from  all  sources  concerning  which  he  has  information  and 
shall  assess  the  tax  and  collect  the  same  from  one  or  more 

323 


NON-RESIDENT  ALIENS— Continued. 

or  all  of  the  sources  of  income  within  the  United  States  of 
said  non-resident  alien,  without  allowance  for  deductions 
and  credits. — Art.  32,  Reg.  33,  Revised. 

^  475 — Exempt  Income. 

Non-resident  aliens  will  not  be  required  to  make  return 
of  any  of  the  classes  of  income  specified  as  exempt  and 
received  by  them  from  sources  in  the  United  States. — Art. 
32,  Reg.  33,  Revised. 

^  476 — Fiduciaries. 

A  fiduciary  acting  in  the  capacity  of  trustee,  executor,  or 
administrator,  when  there  is  only  one  beneficiary  and  that 
beneficiary  a  non-resident  alien,  shall  render  a  return  on 
Form  1040,  Revised ;  but  when  there  are  two  or  more  bene- 
ficiaries, one  or  all  of  whom  are  non-resident  aliens,  the  fidu- 
ciary shall  render  a  return  on  Form  1041,  Revised,  and  a 
personal  return  on  Form  1040,  Revised,  for  each  non-resi- 
dent alien  beneficiary. 

Tf  477 — Non-resident  Alien — Agent  for. 

Agent  for  non-resident  alien,  whether  an  individual  or 
corporation,  stands  in  place  of  the  principal  and  should  exe- 
cute Form  1040,  Revised,  for  principal,  when  principal  is 
liable  to  tax  on  income  passing  through  agent's  hands. — 
Treasury  Decision  2135. 

II  478 — Withholding  at  Source  of  Income. 

The  person,  firm,  corporation,  etc.,  in  the  United  States, 
citizen  or  resident  alien,  in  whatever  capacity  acting,  hav- 
ing control,  receipt,  disposal  or  payment,  etc.,  of  fixed  or  de- 
terminable annual  or  periodic  gains  accruing  to  a  non- 
resident alien  individual  from  sources  within  the  United 
States,  including  income  from  corporate  obligations  (other 
than  dividends  of  domestic  corporations) ,  shall  deduct  a  tax 
equal  to  8  per  cent,  thereof,  with  the  exception  of  tax-free 
bonds  which  shall  be  at  the  rate  of  2  per  cent. 

TI479- 

When  all  income  tax  to  which  income  of  a  non-resident 
alien  is  subject  is  not  withheld  at  the  source,  a  return  of 
income  will  be  required  to  be  filed  by  or  on  behalf  of  said 

324 


NON-RESIDENT  ALIENS— Continued. 

non-resident  alien,  and  penalty  for  failure  to  make  return 
in  time  will  attach.  All  property  in  the  United  States  of  a 
non-resident  alien  will  be  subject  to  distraint  for  collection 
of  tax  and  penalty. 

11 480 — Salary,  Rents,  Etc. 

It  is  held  that  salaries,  wages,  commissions,  and  rents 
paid  by  domestic  corporations,  resident  individuals,  or  part- 
nerships to  non-resident  alien  employes  for  services  ren- 
dered entirely  in  a  foreign  country  and  for  property  located 
in  a  foreign  country  are  not  subject  to  deduction  and  with- 
holding of  the  normal  tax,  and  such  payments  of  income 
win  not  be  subject  to  the  income  tax  in  the  hands  of  the 
recipient  as  from  a  source  within  the  United  States. — Art. 
32,  Reg.  33,  Revised. 

Tf  481 — Return  By  Agent. 

The  agent  of  a  non-resident  alien  is  responsible  for  a  cor- 
rect return  of  all  income  accruing  to  his  principal  within 
the  purview  of  the  agency,  and  the  agent  will  be  held  re- 
sponsible for  a  complete  return  of  all  such  income.  The 
agency  appointment  will  determine  how  completely  the 
agent  is  substituted  for  the  principal  for  income-tax  pur- 
poses.— Art.  32,  Reg.  33,  Revised. 

]]  482 — Income  of  Foreign  Corporations  Having  No  OiTice 
or  Place  of  Business  in  United  States  Subject  to 
Withholding. 

All  provisions  of  the  law  relating  to  withholding  the  nor- 
mal tax  from  the  income  of  non-resident  alien  individuals 
from  sources  within  the  United  States,  apply  also  to  the 
income  of  corporations  not  engaged  in  business  in  the 
United  States  and  not  having  any  office  or  place  of  business 
therein. 

11483— 

The  withholding  provisions  of  the  law  relating  to  such 
corporations  apply — 

335 


NON-RESIDENT  ALIENS— Continued. 

11484- 

To  income  derived  from  bonds,  etc.,  of  domestic  or  other 
resident  corporations,  regardless  of  amount.  Tax  to  be 
withheld  8  per  cent.,  except  on  tax-free  bonds  a  tax  of  2  per 
cent  shall  be  withheld. 

11485- 

The  normal  tax  on  the  character  of  income  specified  and 
payable  to  non-resident  firms,  corporations,  etc.,  will  be  de- 
ducted, withheld  and  paid  to  the  proper  officer  of  the  United 
States  Government  authorized  to  receive  it,  unless  the  firm, 
corporation,  etc.,  entitled  to  the  payment  shall  file  a  certifi- 
cate (Form  1086) ,  under  penalty  of  false  claim,  as  provided, 
and  only  those  firms,  corporations,  etc.,  which  have  "an 
office  or  place  of  business"  in  the  United  States  can  use  such 
certificate.  The  corporations  which  are  permitted  to  use 
such  certificate  are  required  to  make  and  render  a  return  of 
income  to  the  Collector  of  Internal  Revenue  for  the  district 
in  which  they  have  their  office  or  place  of  business. — Treas- 
ury Decision  2374. 

^486 — Foreign  Firms,  Corporations,   Etc.,  Which  Are 
Exempt  from  Withholding  of  Their  Income. 

To  enable  debtor  corporations  to  distinguish  between 
foreign  firms,  corporations,  etc.,  which  have,  and  those 
which  have  not  "any  office  or  place  of  business  within  the 
United  States,"  a  certificate  (Form  1086)  has  been  provided 
for  the  use  of  such  firms,  organizations,  etc.,  as  "have  an 
office  or  place  of  business  in  the  United  States"  to  claim 
exemption  from  having  their  income  withheld  at  the  source. 

^  487— Refund,  On  Return. 

Where,  upon  filing  return  of  income,  it  appears  that  a 
non-resident  alien  is  not  liable  for  income  tax,  but  neverthe- 
less, income  tax  shall  have  been  withheld  at  the  source,  in 
order  to  obtain  a  refund  on  the  basis  of  the  showing  made 
by  the  return  there  shall  be  attached  to  the  return  a  state- 
ment showing  accurately  the  amounts  of  tax  withheld,  with 
the  names  and  post  office  addresses  of  all  withholding 
agents. — Art.  32,  Reg.  33,  Revised. 

326 


CORPORATIONS,  ETC. 

RELATING    TO    THE    INCOME    TAX    IMPOSED    BY 

SECTION  230  OF  THE  REVENUE  ACT  OF  1918,  ON 

CORPORATIONS,   JOINT-STOCK   COMPANIES, 

ASSOCIATIONS,  AND  INSURANCE 

COMPANIES. 

11488— 

In  lieu  of  the  taxes  imposed  by  Section  10  of  the  Revenue 
Act  of  1916,  as  amended  by  the  Revenue  Act  of  1917 ;  and 
by  Section  4  of  the  Revenue  Act  of  1917,  the  Revenue  Act 
of  1918  imposes  upon  the  net  income  of  every  corporation, 
joint-stock  company,  association,  and  insurance  company 
for  the  calendar  year  1918,  a  tax  of  12  per  cent,  of  the 
amount  of  such  income  in  excess  of  the  credits  provided 
under  Section  236.    See  Law,  page  79,  line  29. 

f[  48d— Term  "Taxable  Year." 

The  term  "taxable  year"  or  "taxable  period"  means  the 
calendar  year  or  the  fiscal  year  ending  during  such  calendar 
year  upon  the  basis  of  which  the  net  income  is  computed. 

j[  490— Term  "Corporation." 

The  term  "corporation"  includes  joint-stock  companies, 
associations,  and  insurance  companies. 

11491 — ^Joint-Stock  Companies  and  Associations  Denied. 

The  term  "joint-stock  companies"  or  "associations"  shall 
include  associations,  common-law  trusts,  or  organizations  by 
whatever  name  known  which  carry  on  or  do  business  in  an 
organized  capacity,  whether  created  under  and  pursuant  to 
State  laws,  trust  agreements,  declarations  of  trust,  or  other- 
wise, the  net  income  of  which,  if  any,  is  distributed  or  dis- 
tributable among  the  members  or  shareholders  on  the  basis 
of  the  capital  stock  which  each  holds  or,  where  there  is  no 
capital  stock,  on  the  basis  of  the  proportionate  share  or  cap- 
ital which  each  has,  or  has  invested,  in  the  business  or 
property  of  the  organization,  all  of  which  joint-stock  com- 
panies or  associations  shall  in  their  organized  capacity  be 

327 


CORPORATIONS— Continued.  DEFINITIONS 

subject  to  the  tax  imposed  by  this  Act,  and  shall  make  re- 
turns of  annual  net  income  accordingly. — Art.  58,  Reg.  33, 
Revised. 

Tf  492 — Philippine  and  Porto  Rican  Corporations. 

In  Porto  Rico  and  the  Philippine  Islands  the  income  tax 
shall  be  levied,  assessed,  collected  and  paid  in  accordance 
with  the  provisions  of  the  Revenue  Act  of  1916,  as  amended 
by  the  Revenue  Act  of  1917;  Provided:  That  the  Porto 
Rican  or  Philippine  Legislature  shall  have  power  by  due 
enactment  to  amend,  alter,  modify,  or  repeal  the  income  tax 
laws  in  force  in  Porto  Rico  or  the  Philippine  Islands,  re- 
spectively. For  the  purpose  of  credits  and  deductions  under 
the  Revenue  Act  of  1918,  taxes  imposed  in  Porto  Rico  or 
the  Philippine  Islands  shall  not  be  considered  as  having  been 
levied  under  the  provisions  of  said  Act. 

See  H  777. 

If  493 — Incomplete  Corporations. 

Corporations  which  have  applied  for  but  have  never  re- 
ceived charters  and  corporations  which  have  received  char- 
ters but  have  never  perfected  their  organizations  and  which 
as  entities  have  transacted  no  business  and  had  no  income 
from  any  source  may,  upon  presentation  of  the  facts  to  the 
collector,  be  relieved  from  the  necessity  of  making  returns, 
so  long  as  they  remain  in  this  unorganized  condition.  In 
the  absence  of  a  showing  to  this  effect  to  the  collector  of  in- 
ternal revenue,  such  companies  will  be  required  to  make  re- 
turns and  will  be  liable  to  the  penalties  of  the  law  for  fail- 
ure to  do  so. — Art.  60,  Reg.  33  Revised. 

1[  494^ — Corporations  Dissolved. 

A  corporation  which  was  dissolved  in  1918,  prior  to 
passage  of  the  Revenue  Act  of  1918,  is  subject  to  tax. 
(Brady  et  al.  v.  Anderson,  240  Fed.,  665).  A  corpora- 
tion so  situated  will  make  a  return  on  Revised  Form  1031, 
covering  the  period  in  1918  during  which  it  was  in  business 
prior  to  its  dissolution.  If  it  shall  have  previously  made  a 
return  covering  this  period  and  shall  have  paid  any  excess 
profits  tax  under  the  Revenue  Act  of  1917,   it  shall  be 


CORPORATIONS— Continued.  DEFINITIONS 

entitled  to  credit  for  the  amount  of  such  tax  so  paid 
against  any  excess-profits  tax  assessable  against  it  under 
the  Revenue  Act  of  1918. 

Dissolved  corporations  whose  fiscal  year  coincides  with 
the  calendar  year  will  make  returns  covering  the  period 
from  January  1  to  the  date  of  dissolution,  and  corporations 
having  a  fiscal  year  other  than  the  calendar  year  will  make 
returns  covering  the  period  from  the  beginning  of  the  fiscal 
year  to  the  date  of  dissolution. — Treasury  Decision  2090. 

^  495 — Limited  Partnerships. 

Limited  partnerships — that  is,  partnerships  having  one 
or  more  special  partners  who  may  share  in  the  profits  of  the 
firm  but  whose  liability  for  the  debts  of  the  company  is  lim- 
ited to  the  amount  of  capital  invested  by  such  special  part- 
ner or  partners — are  held  to  be  associations  within  the 
meaning  of  this  title,  and  as  such  are  required  to  make  re- 
turns of  annual  net  income  and  pay  any  tax  thereby  shown 
to  be  due.  The  income  received  by  the  members  out  of  the 
earnings  of  such  limited  partnerships  will  be  treated  in  their 
personal  returns  in  the  same  manner  as  if  it  were  dividends 
on  the  stock  of  corporations  and  will  be  subject  to  the 
additional  or  surtaxes  in  the  hands  of  the  recipient. — ^Art. 
62,  Reg.  33  Revised. 

II 496 — Common-law  Partnerships. 

Common-law  partnerships  are  not  associations  within  the 
meaning  of  the  income  tax  law,  and  are  not  taxable  as  such. 
They  must,  however,  make  returns. 

11  497 — Private  Banks — Associations. 

Private  banks  which  have  the  form  of  corporate  organi- 
zations, elect  officers  and  a  board  of  managers,  have  a  dis- 
tinctive name,  a  fixed  situs,  and  distribute  their  net  earnings 
upon  the  basis  of  the  amount  of  capital  invested  by  the 
members  or  owners,  are  held  to  be  associations  within  the 
meaning  of  the  Federal  income  tax  law,  and  in  their  organ- 
ized capacity  should  make  returns  of  annual  net  income  and 
pay  any  income  tax  thereby  shown  to  be  due. 

329 


CORPORATIONS— Continued.  DEFINITIONS 

11498  — 

The  holders  of  the  stock  or  the  owners  of  the  bank  will 
be  exempt  from  the  normal  tax  to  the  extent  of  the  divi- 
dends or  earnings  which  they  receive  from  such  private 
banks  as  make  returns  in  their  organized  capacity  and  pay 
income  tax  in  accordance  therewith.  The  individual  owners 
of  the  bank  will  not  be  required  to  return  as  income  for  the 
purpose  of  the  normal  tax  any  dividends  or  earnings  re- 
ceived from  the  private  bank  which  pays  the  tax  on  its 
net  earnings,  but  for  the  purpose  of  the  surtax  the  divi- 
dends will  be  returned  as  income  by  the  individual  stock- 
holders or  owners. — Treasury  Decision  2137. 

If  499 — Private  Banks  as  Associations — Assessments 
Against. 

It  is  not  purposed  to  assess  tax  against  such  banking  as- 
sociations and  then,  also,  against  the  individual  members 
of  such  associations. — Treasury  Decision  2152. 

K  500 — Private  Banks — Individual  Ownership. 

When  it  can  be  clearly  shown  that  a  private  bank  is 
owned  by  one  man,  it  is  evident  that  such  bank  is  not  an 
association  within  the  meaning  of  the  Federal  income  tax 
law,  and  that  therefore  such  bank  will  not  be  required  to 
make  a  return  such  as  corporations  and  associations  are 
required  to  make,  but  the  individual  owner,  if  he  has  a  net 
income  of  $1,000  or  more,  will  be  required  to  make  a  return 
on  Form  1040,  showing  in  such  return  the  income  which  he 
receives  not  only  from  the  bank  but  from  all  other  sources. 
— Treasury  Decision  2137. 

fl  501 — Corporations  Required  to  Make  Returns — Mutual 
Telephone  and  Mutual  Insurance  Companies 
Not  Exempt. 

Every  corporation  not  specifically  enumerated  as  exempt 
shall  make  the  return  of  annual  net  income  required  by  law 
whether  or  not  it  may  have  any  income  liable  to  tax,  or 
whether  or  not  it  shall  be  subordinate  to  or  controlled  by 
another  corporation. — See  H  711,  "Consolidated  Returns." 

330 


CORPORATIONS— Continued.  DEFINITIONS 

|[  502 — Liability  of  Close  Corporation. 

A  corporation  formed  as  a  family  affair  to  hold  property 
together  and  not  to  sacrifice  in  selling  does  not  come  within 
the  class  of  corporations  specifically  enumerated  as  exempt 
from  the  requirements  of  the  Federal  income  tax  law,  and 
is  required  to  make  a  return  of  annual  net  income  showing 
therein  all  income  arising  and  accruing  to  it  from  all  sources 
and  to  pay  any  income  tax  shown  by  such  returns  to  be  due. 
— Treasury  Decision  2137. 

Tf  503 — Income  of  Contracting  Companies. 

The  Department  requires  no  special  system  of  bookkeep- 
ing, neither  does  it  require  any  specific  method  by  which  the 
net  income  to  be  returned  by  corporations  shall  be  deter- 
mined. 

In  the  case  of  a  large  contracting  company,  which  has 
numerous  uncompleted  contracts  which  probably,  in  some 
cases,  run  for  periods  of  several  years,  there  does  not  ap- 
pear to  be  any  objection  to  such  corporations  preparing  its 
return  in  such  manner  that  its  gross  income  will  be  arrived 
at  on  the  basis  of  completed  work — that  is  to  say,  on  jobs 
which  have  been  finally  completed  and  payments  made  dur- 
ing the  year  in  which  the  return  is  made.  If  the  gross  in- 
come is  arrived  at  in  this  method,  the  deductions  from  gross 
income  should  be  limited  to  the  expenditures  made  on  ac- 
count of  such  completed  contracts. 

Tf  504 — Domestic  Corporation  Doing  Foreign  Business. 

A  domestic  corporation  doing  the  greater  part  of  its  busi- 
ness in  the  United  States  and  having  its  principal  place  of 
business  in  this  country  and  transacting  business  in  Porto 
Rico  through  a  branch  office,  is  required  to  report  in  its  re- 
turn of  annual  net  income  its  entire  earnings  from  all 
sources,  including  those  arising  and  accruing  to  the  branch 
in  Porto  Rico  or  elsewhere. 

The  return  of  such  corporation  will  be  made  to  the  col- 
lector of  internal  revenue  of  the  district  in  this  country  in 
which  is  located  its  principal  place  of  business. — ^Treasury 
Decision  2137. 

331 


CORPORATIONS— Continued.  DEFINITIONS 

jf  SOS — Returns  of  Holding  Companies. 

In  a  case  wherein  a  holding  company  actually  takes  up 
each  month  on  its  books  its  proportionate  share  of  the  earn- 
ings of  the  underlying  companies,  such  holding  company 
will  be  required  to  include  in  its  gross  income  the  amounts 
thus  taken  up  regardless  of  the  fact  that  the  same  may  not 
have  been  actually  paid  to  it  in  cash.  The  fact  that  the 
underlying  companies  credit  to  the  holding  company  the 
amount  of  earnings  to  which  it  is  entitled  on  the  basis  of 
the  stock  it  holds,  together  with  the  fact  that  the  holding 
company  takes  up  on  its  books  the  amount  thus  credited, 
renders  it  incumbent  upon  the  holding  company  to  return 
these  amounts  as  income,  regardless  of  the  fact  that  the 
underlying  companies  needed  these  earnings  and  used  them 
in  making  extensions  and  improvements  and  in  furtherance 
of  their  business. 

Expenditures  for  such  extensions  and  improvements  being 
chargeable  to  the  property  account  of  the  subsidiary  com- 
panies are  not  deductible  from  the  gross  income  and  will 
therefore  not  have  the  effect  to  reduce  the  earnings  to  their 
respective  shares  of  which  the  stockholders  are  entitled. — 
Treasury  Decision  2137;  also  see  tf  711,  "Consolidated 
Returns." 

11  SOB — Subsidiary  Companies  Required  to  Make  Returns. 

Parent  and  subsidiary  companies  are  distinct  entities  and 
each  must  make  detailed  returns  and  each  is  required  to  pay 
the  tax.  Net  earnings  of  subsidiary  companies  turned  over 
to  parent  company  are  dividends  within  meaning  of  the  law. 
— Treasury  Decision  2137;  also  see  H  711,  "Consolidated 
Returns." 

^  SOT — Place  of  Filing  Returns  by  Domestic  Corporations 
Having  Principal  Place  of  Business  in  Foreign 
Country. 

In  the  case  of  domestic  corporations  whose  books  of  ac- 
count and  other  data  are  kept  in  foreign  countries,  the  re- 
turns should  be  made  to  the  collector  of  internal  revenue  of 
the  district  in  which  they  have  branch  offices  in  this  coun- 
try, if  they  have  such  branch  offices.  Otherwise,  the  returns 

332 


CORPORATIONS— Continued.  DEFINITIONS 

of  annual  net  income  of  such  corporations  should  be  made  to 
the  collector  of  the  district  in  which  are  located  the  statu- 
tory offices  of  the  corporations. — Treasury  Decision  2137. 

^  508 — Tentative  Returns. 

In  cases  wherein  foreign  corporations  or  domestic  cor- 
porations doing  business  in  foreign  countries  are  unable  to 
assemble  their  data  in  time  to  make  their  returns  of  annual 
net  income  within  the  prescribed  time,  it  will  be  permissible 
for  such  corporations  upon  a  showing  of  this  fact  to  file  with 
the  collector  of  internal  revenue  a  tentative  return  in  which 
there  shall  be  approximated,  as  nearly  as  possible,  the  actual 
business  tranacted  during  the  year. 

This  tentative  return  will  be  substituted  by  a  true  and 
accurate  return  as  soon  as  the  necessary  data  to  make  such 
true  and  accurate  return  shall  be  available. 

^  509— 

Collectors  of  internal  revenue  are  authorized  to  grant 
an  extension  of  time  not  in  excess  of  30  days  from  the  date 
when  returns  are  due,  such  extension  to  be  granted  only  in 
cases  wherein  the  neglect  to  file  the  return  within  the  pre- 
scribed time  was  due  to  the  sickness  or  absence  of  an  officer 
whose  signature  to  the  return  was  necessary.  Foreign  cor- 
porations or  domestic  corporations  doing  business  in  for- 
eign countries  cannot  be  granted  an  extension  of  tim.e 
merely  for  the  reason  that  they  are  unable  to  assemble 
their  data  to  make  the  return  within  the  prescribed  time. 
In  all  such  cases,  liabiHty  to  the  penalty  of  the  Act  can  be 
obviated  only  by  filing  a  tentative  return  as  hereinbefore 
indicated. — Treasury  Decision  2137. 

11510— 

The  Revenue  Act  of  1918  provides  that  the  Commissioner 
of  Internal  Revenue  may  grant  an  extension  of  time  for 
the  filing  of  returns  when  in  his  judgment  good  reason  ex- 
ists therefor. 

1[  51 1  —Return  Period. 

The  return  for  a  completed  period  must  be  made  inde- 
pendently of  any  other  period.     A  corporation  changing 

333 


CORPORATIONS— Continued.  DEFINITIONS 

from  the  basis  of  a  calendar  year  to  a  fiscal  year,  and  be- 
cause of  said  change  having  a  part  of  the  calendar  year  for 
which  return  is  to  be  made,  will  be  required  to  make  a  sep- 
arate return  for  the  fraction  of  the  calendar  year,  and  an- 
other separate  return  for  the  entire  fiscal  year;  as  June  30 
being  designated  as  the  end  of  the  fiscal  year,  the  part  of  the 
calendar  year  from  January  1  to  June  30  must  be  covered 
in  a  return  to  be  made  on  or  before  March  1  then  following, 
and  on  or  before  60  days  next  following  June  30  (next 
after  the  filing  of  return  for  the  fractional  part  of  a  cal- 
endar year)  a  return  must  be  made  and  returned  for  the  en- 
tire fiscal  year  of  the  corporation. — Treasury  Decision 
2029. 

^BIS^-Rent. 

Payments  measured  by  a  fixed  percentage  on  the  stock 
of  a  railroad  corporation  whose  lines  are  leased  by  another 
railroad  corporation  and  which  rent  is  payable  by  the  lessee 
directly  to  the  stockholders  of  the  lessor  corporation,  have, 
under  the  income  tax  law  with  respect  to  the  corporation 
paying  such  sums,  the  status  of  a  rental  payment. 

In  such  cases  there  are  two  corporations  involved,  the 
lessor  and  the  lessee — one  the  rent  payer  and  the  other  the 
rent  receiver.  To  the  lessee  rental  payments  are  an  expense 
of  operation ;  to  the  lessor  the  rentals  are  an  income. 

A  contract  which  provides  that  the  rentals  shall  be  paid 
to  a  third  party,  not  a  party  to  the  contract,  does  not  change 
the  character  of  the  payment,  nor  relieve  the  lessor  from 
liability  to  tax  on  the  rental  income  which  the  lessee  pays 
to  it  or  to  such  third  party.  The  income  of  the  third  party, 
the  stockholder,  is  dividends  on  the  stock  which  he  holds  in 
the  lessor  company.  Dividends  cannot  be  paid  unless  the 
lessor  has  an  income  out  of  which  to  pay  them.  Hence  the 
lessor  company  is  required  under  the  law  to  return  as  income 
the  rentals  which  the  lessee  is  required  to  pay.  In  paying 
direct  to  the  stockholders  the  lessee  is  acting  as  the  agent  of 
the  lessor,  and  the  amounts  received  by  stockholders  are,  in 
effect  and  in  fact,  dividends  received  out  of  the  earnings  of 
the  lessor. — Treasury  Decision  2090. 

331 


CORPORATIONS— Continued.  DEFINITIONS 

If  51 3 — Leased  Properties. 

When  a  corporation  shall  have  leased  its  property  in  con- 
sideration that  the  lessee  shall  pay  in  lieu  of  rental  an 
amount  equivalent  to  a  certain  rate  of  dividend  on  its  capi- 
tal stock  or  the  interest  on  its  outstanding  indebtedness,  to- 
gether with  taxes,  insurance,  or  other  fixed  charges,  such 
payments  shall  be  considered  rental  payments  and  shall  be 
returned  by  the  lessor  corporation  as  income,  notwithstand- 
ing the  fact  that  the  dividends  and  interest  are  paid  by  the 
lessee  direct  to  the  stockholders  and  bondholders  of  the 
lessor.  The  lessee,  in  making  these  payments  direct  to  the 
bondholders  and  the  stockholders,  does  so  as  the  agent  of  the 
lessor,  and  the  latter  is  none  the  less  liable  to  return  the 
amounts  thus  paid  as  income  and  to  pay  any  tax  that  may  be 
due  thereon. — Treasury  Decision  2620;  also  Art.  102,  Reg. 
33,  Revised. 

The  fact  that  a  corporation  has  conveyed  or  let  its  prop- 
erty and  has  thus  parted  with  its  management  and  control 
or  has  ceased  to  engage  in  the  business  for  which  it  was 
originally  organized  will  not  relieve  it  from  liability  to  in- 
come tax.  If  it  has  or  may  have  income  directly  or  indirectly 
from  any  source,  it  must  make  a  return,  account  for  all  such 
income,  and  pay  any  tax  assessable  upon  such  income. — 
Art.  102,  Reg.  33,  Revised. 

^  51 4 — Interest  Deduction  by  Corporations  Operating 
Leased  or  Purchased  Lines. 

A  railroad  company  operating  leased  or  purchased  lines 
shall  include  all  receipts  derived  therefrom,  and,  if  bonded 
indebtedness  of  such  lines  has  been  assumed,  such  operating 
company  may  deduct  the  interest  paid  thereon  to  be  com- 
puted as  indicated  in  1|  610  and  679. 

If  51 5 — Lessee  Corporations  Not  to  Include  Capital  Stock  or 
Indebtedness  of  Lessor  Corporations. 

Corporations  operating  leased  lines  should  not  include  the 
capital  stock  of  the  lessor  corporations  in  their  own  state- 
ment of  capital  stock  outstanding  at  the  close  of  the  year. 
The  indebtedness  of  such  lessor  corporations  should  not  be 
included  in  the  statement  of  the  indebtedness  of  the  lessee 

335 


CORPORATIONS— Continued.  DEFINITIONS 

unless  the  lessee  has  assumed  the  same.  Each  leased  or  sub- 
sidiary company  will  make  its  own  separate  return,  ac- 
counting for  therein  all  income  which  it  may  have  received 
by  way  of  dividends,  rentals,  interest,  or  from  any  other 
source. — See  H  711,  "Consolidated  Returns." 

Tf  51 0 — Foreign  Corporations  Having  Branch  Offices  in 
United  States  to  Designate  Principal  Office. 

A  foreign  corporation  having  several  branch  offices  in  the 
United  States  should  designate  one  of  such  branches  as  its 
principal  office  and  should  also  designate  the  proper  officers 
to  make  the  required  return. 

II  51 7 — Fiscal  Year  Returns  of  New  Corporations. 

In  the  case  of  new  corporations,  if  they  shall  file  or  shall 
have  filed  within  the  prescribed  time,  a  notice  designating 
the  last  day  of  some  month  as  the  close  of  the  fiscal  year, 
such  corporations  will  be  permitted  to  make  their  returns  as 
of  the  period  ended  with  the  date  designated,  provided  the 
period  intervening  between  the  date  of  organization  of  the 
corporation  and  the  date  designated  as  the  close  of  its  fiscal 
year  does  not  exceed  12  months.  If  such  period  does 
exceed  12  months,  the  corporation  will  make  a  return  for 
the  portion  of  the  calendar  year  preceding  the  beginning 
of  the  fiscal  year,  which  return  must  be  filed  on  or  before 
the  15th  day  of  March  next  following  the  calendar  year  of 
which  it  is  a  part.  Corporations  partially  organized  during 
the  year  1918  should  file  a  return  for  the  period  ended 
December  31,  1918,  unless  they  shall  have  established  a 
fiscal  year  for  this  purpose,  and  if  they  shall  have  actually 
done  no  business  during  the  period  for  which  the  return 
is  made,  that  fact  will  be  set  out  in  a  notation  on  or  a 
rider  attached  to  the  return. 

TI 51 8 — Change  of  Name  of  Corporation. 

The  mere  change  in  name  does  not  constitute  a  new  cor- 
poration. If  the  business  was  continuous  throughout  the 
year,  no  change  in  ma^nagement  or  operation  other  than  the 
change  of  name,  the  return  should  be  made  covering  the 
business  transacted  throughout  the  year,  such  return  to  be 

336 


CORPORATIONS— Continued.  EXEMPT 

made  by  the  corporation  in  the  name  which  it  bears  at  the 
end  of  the  year,  with  a  notation  on  the  return  to  the  effect 
that  the  name  had  been  changed,  giving  both  the  old  and 
new  names.  If,  however,  a  distinct  new  corporation  was 
organized  to  take  over  the  property  of  the  old,  both  corpora- 
tions will  be  required  to  make  separate  returns  covering  the 
periods  of  the  year  during  which  they  were  respectively  in 
charge  of  the  business. 

All  corporations  having  an  existence  as  such  during  all  or 
any  portion  of  a  year,  unless  coming  within  the  classes  spe- 
cifically enumerated  as  exempt,  are  required  to  make  re- 
turns. New  corporations  will  make  returns  for  the  period 
from  the  date  of  their  organization  to  December  31.  The 
net  income  in  all  such  cases  will  be  ascertained  in  the  man- 
ner provided  in  Section  232  of  the  Revenue  Act  of  1918  and 
the  specific  credit  shall  be  reduced  to  an  amount  which  bears 
the  same  ratio  to  the  full  credit  as  the  number  of  months 
in  the  period  bears  to  twelve  months. 

^f  51 9 — Corporations  Organized  During  the  Year  to  Make 
Returns. 

A  corporation  organized  and  transacting  no  business 
within  the  calendar  year  of  its  organization  must,  neverthe- 
less, make  and  file  a  return  on  the  basis  of  the  calendar 
year  unless  such  corporation  shall  designate  a  fiscal  year 
other  than  the  calendar  year  in  the  manner  and  form  as 
provided  for  that  purpose.  The  duty  to  make  a  return  de- 
pends upon  corporate  or  associational  existence  and  not 
upon  the  receipt  of  income. — ^Treasury  Decision  2090. 

EXEMPT  CORPORATIONS. 

Tf  520 — Corporations  Exempt  from  Tax — Conditional. 

Corporations  or  associations  organized  and  operated  ex- 
clusively for  religious,  charitable,  scientific,  or  educational 
purposes,  business  leagues,  chambers  of  commerce,  boards 
of  trade,  civic  leagues,  cemetery  companies,  and  pleasure  and 
recreation  clubs,  are  not,  as  such,  exempt  from  the  require- 
ments of  this  title.    Their  exemption  is  conditional,  and  in 

337 


CORPORATIONS— Continued.  EXEMPT 

order  to  be  relieved  from  liability  under  the  law  they  must 
file  with  the  collector  of  internal  revenue  an  affidavit  set- 
ting out  the  character  and  purpose  of  the  organizations,  and 
showing  that  no  part  of  any  income  which  they  receive 
inures  to  the  benefit  of  any  private  stockholder  or  individ- 
ual, and  that  such  income  is  used  exclusively  for  the  pro- 
motion of  the  purposes  for  which  organized  as  indicated  in 
the  particular  paragraphs  under  which  exemption  is 
claimed. — Art.  67,  Reg.  33,  Revised. 

^521 — Corporations — ^When  Not  Exempt. 

A  corporation  is  not  exempt  simply  and  only  because  it  is 
primarily  not  organized  and  operated  for  profit.  If  income 
within  the  meaning  of  the  law  arises  and  accrues  to  a  cor- 
poration which  is  not  organized  for  profit,  such  income  will 
be  subject  to  tax. — Treasury  Decision  2137 ;  also  see  U  528. 

U  522 Corporations  Exempt  from  Tax — Unconditional. 

The  Act  specifically  enumerates  and  exempts  from  its  pro- 
visions the  income  of  the  following  corporations,  associa- 
tions, etc.: 

1.  Labor,  agricultural,  or  horticultural  organizations ; 

2.  Mutual  savings  banks  not  having  a  capital  stock  repre- 
sented by  shares ; 

3.  Fraternal  beneficiary  societies,  orders  or  associations 
(a)  operating  under  the  lodge  system  or  for  the  exclusive 
benefit  of  the  members  of  a  fraternity  itself  operating  under 
the  lodge  system,  and  (b)  providing  for  the  payment  of  life, 
sick,  accident,  or  other  benefits  to  the  members  of  such 
society,  order  or  association  or  their  dependents. — See  U  — ; 

4.  Domestic  building  and  loan  associations ;  and  co-opera- 
tive banks  without  capital  stock  organized  and  operated  for 
mutual  purposes  and  without  profit ; 

5.  Cemetery  companies  owned  and  operated  exclusively 
for  the  benefit  fo  their  members ; 

6.  Corporations  organized  and  operated  exclusively  for 
religious,  charitable,  scientific,  or  educational  purposes 
or  for  the  prevention  of  cruelty  to  children  or  animals,  no 
part  of  the  net  income  of  which  inures  to  the  benefit  of  any 
private  stockholder  or  individual ; 


CORPORATIONS— Continued.  EXEMPT 

7.  Business  leagues,  chambers  of  commerce,  or  boards  of 
trade,  not  organized  for  profit  and  no  part  of  the  net  income 
of  which  inures  to  the  benefit  of  any  private  stockholder 
or  individual ; 

8.  Civic  leagues  or  organizations  not  organized  for  profit, 
but  operated  exclusively  for  the  promotion  of  social  welfare ; 

9.  Clubs  organized  and  operated  exclusively  for  pleasure, 
recreation,  and  other  non-profitable  purposes,  no  part  of  the 
net  earnings  of  which  inures  to  the  benefit  of  any  privato 
stockholder  or  member; 

10.  Farmers'  or  other  mutual  hail,  cyclone,  or  fire  in- 
surance company ; 

Mutual  ditch  or  irrigation  companies; 

Mutual  or  co-operative  telephone  companies; 
or  like  organizations  of  a  purely  local  character,  the  in- 
come of  which  consists  solely  of  assessments,  dues,  and  fees 
collected  from  members  for  the  sole  purpose  of  meeting 
expenses ; 

11.  Farmers',  fruit  growers',  or  like  associations,  or  co- 
operative societies,  organized  and  operated  as  sales  agents 
for  the  purpose  of  marketing  the  products  of  members  and 
turning  back  to  them  the  proceeds  of  sales,  less  the  neces- 
sary selling  expense,  on  the  basis  of  the  quantity  of  produce 
furnished  by  them ; 

12.  Corporations  organized  for  the  exclusive  purpose  of 
holding  title  to  property,  collecting  income  therefrom,  and 
turning  over  the  entire  amount  thereof,  less  expenses,  to 
an  organization  which  itself  is  exempt  from  the  tax  imposed 
by  this  title; 

13.  Federal  land  banks  and  national  farm-loan  associa- 
tions as  provided  in  Section  26  of  the  Act  approved  July 
17, 1916,  entitled  "An  Act  to  provide  capital  for  agricultural 
development,  to  create  standard  forms  of  investment  based 
upon  farm  mortgage,  to  equalize  rates  of  interest  upon  farm 
loans,  to  furnish  a  market  for  United  States  bonds,  to  create 
Government  depositaries  and  financial  agents  for  the  United 
States,  and  for  other  purposes;"  or 

14.  Personal  service  corporations. 

339 


CORPORATIONS— Continued.  EXEMPT 

^523 — Labor,  Agricultural  and  Horticultural 
Organizations. 

Agricultural  or  horticultural  organizations,  which  are  ex- 
empt under  this  title,  do  not  include  those  corporations 
engaged  in  growing  agricultural  or  horticultural  products, 
raising  live  stock  or  similar  products  for  profit,  but  will  in- 
clude only  those  organizations  which,  having  no  net  income 
inuring  to  the  benefit  of  their  members,  are  educational  or 
instructive  in  character,  and  which  have  for  their  purpose 
the  betterment  of  the  conditions  of  those  engaged  in  these 
pursuits,  the  improvement  of  the  grade  of  their  products, 
and  the  encouragement  and  promotion  of  those  industries  to 
a  higher  degree  of  efficiency. — ^Treasury  Decision  2090 ;  also 
Art.  73,  Reg.  33,  Revised. 

Included  in  this  class  as  exempt  are  those  organizations 
such  as  county  fairs  and  like  associations  of  a  quasi-public 
character,  which,  through  a  system  of  awards,  prizes,  or  pre- 
miums, are  designed  to  encourage  the  production  of  better 
live  stock,  better  agricultural  and  horticultural  products,  and 
whose  income,  derived  from  gate  receipts,  entry  fees,  dona- 
tions, etc.,  is  used  exclusively  to  meet  the  necessary  ex- 
penses of  upkeep  and  operation. — Art.  73,  Reg.  33,  Revised. 

Societies  or  associations  which  have  for  their  purpose  the 
holding  of  annual  or  periodical  race  meets,  and  from  which 
profits  inure  or  may  inure  to  the  benefit  of  the  members  or 
stockholders  do  not  come  within  the  terms  of  this  exemp- 
tion.— Art.  73,  Reg.  33,  Revised. 

11524- 

Corporations  engaged  in  agricultural  or  horticultural  pur- 
suits for  plantations  and  disposing  of  the  products  thereof 
are  held  to  be  operating  for  profit  and  are  not  entitled  to 
exemption  as  agricultural  organizations. — Treasury  Decis- 
ion 2090. 

If  525 — Agricultural  Organizations. 

Corporations  owning  sugar  or  other  plantations  and  dis- 
posing of  the  products  thereof  are  held  to  be  operating  for 
profit  and  are  not  entitled  to  exemption  as  agricultural  or- 
ganizations.— Treasury  Decision  2090. 

340 


CORPORATIONS— Continued.  EXEMPT 

^  528— Societies  Not  Agricultural  or  Horticultural. 

A  corporation  engaged  in  the  business  of  raising  stock 
or  poultry,  or  growing  grain,  fruits,  or  other  products  of 
this  character,  as  a  means  of  livelihood  and  for  the  purpose 
of  gain,  is  an  agricultural  or  horticultural  society  only  in 
the  sense  that  its  name  indicates  the  kind  of  business  in 
which  it  is  engaged  and,  as  such,  is  not  exempt  from  the 
requirements  of  the  law,  and  must  make  returns  and  pay 
any  income  tax  thereby  shown  to  be  due. — Treasury  Decision 
2090 ;  also  Art.  74,  Reg.  33,  Revised. 

U  527 — Domestic  Building  and  Loan  Associations. 

A  domestic  building  and  loan  association  entitled  to  ex- 
emption is  one  organized  under  and  pursuant  to  the  laws 
of  the  United  States  or  under  and  pursuant  to  the  laws  of 
some  State  or  Territory  thereof,  and  which  is  actually 
carrying  on  for  the  benefit  of  its  members  a  building  and 
loan  association  business  in  accordance  with  the  laws  under 
which  it  is  organized.  The  fact  that  such  an  association 
issues  fully  paid  or  prepaid  shares,  calling  for  a  specified 
rate  of  interest  or  dividends,  will  not  disqualify  it  for  ex- 
emption. The  exemption  is  without  qualification  other  than 
that  the  association  is  a  domestic  building  and  loan  asso- 
ciation. If  a  corporation  by  any  other  name  is  carrying  on 
an  exclusive  building-and-loan  business,  before  it  is  entitled 
to  exemption  it  will  be  incumbent  upon  it  to  show  to  the 
satisfaction  of  the  Commissioner  of  Internal  Revenue  that 
it  is  in  fact  a  building  and  loan  association. — Art.  70,  Reg. 
33,  Revised. 

^  528 — Qualifications  for  Exemption. 

In  every  instance  wherein  exemption  is  conditioned  upon 
the  ground  that  no  part  of  the  net  income  received  by  cor- 
porations inures  to  the  benefit  of  any  private  stockholder 
or  individual,  it  will  be  necessary,  before  such  organizations 
will  be  classed  as  exempt,  for  them  to  show  to  the  satisfac- 
tion of  the  collector  or  the  Commissioner  of  Internal  Revenue 

(1)  The  character  and  purpose  of  the  organization; 

(2)  The  source  from  which  all  its  income  is  derived ; 

(3)  What  disposition  is  made  of  such  incomes;  and 

341 


CORPORATIONS— Continued.  EXEMPT 

(4)  Whether  or  not  any  of  it  is  credited  to  surplus  or 
inures  or  may  inure  to  the  benefit  of  any  private  stockholder 
or  individual. — Art.  78,  Reg.  33,  Revised. 

^  529 — Organizations,  Exemption  Doubtful. 

Any  corporation  which  entertains  any  doubt  as  to  its 
status  under  the  law,  for  the  reason  that  it  does  not  clearly 
come  within  one  or  another  of  the  classes  of  those  specifical- 
ly enumerated  as  exempt,  should,  within  the  prescribed  time, 
file  a  return  and  attach  thereto  for  the  consideration  of  the 
collector,  a  statement  setting  out  fully  the  nature  and  pur- 
pose of  the  organization,  the  source  of  its  income,  what  dis- 
position is  made  of  it,  and  particularly  of  any  surplus  which 
it  may  receive  over  and  above  its  reasonable  needs. 

If  the  collector  is  in  doubt,  he  will  refer  the  statement  and 
return  to  the  Commissioner  of  Internal  Revenue  for  de- 
cision, and  withhold  listing  for  assessment  until  a  decision 
is  reached. — Treasury  Decision  2090 ;  also.  Art.  79,  Reg.  33, 
Revised. 

^  630 — Exemption  Established. 

When  a  corporation  or  organization  has  established  its 
right  to  exemption  under  any  of  the  paragraphs  of  Section 
11  of  this  title,  it  will  be  unnecessary  for  it  to  make  a  return 
or  to  make  any  further  showing  thereafter  with  respect  to 
its  status  under  the  law,  unless  it  changes  the  character  of 
its  organization  or  the  purpose  for  which  it  was  originally 
created.  (Exempt  corporations  are  enumerated  in  Section 
231  of  the  Revenue  Act  of  1918.) 

Collectors  will  keep  a  list  of  all  corporations  whose  ex- 
emption is  conditional,  to  the  end  that  they  may  occasionally 
inquire  into  their  status  and  ascertain  whether  or  not  they 
are  violating  the  conditions  upon  which  their  exemption  is 
predicated. — Art.  80,  Reg.  33,  Revised. 

^531 — Exempt  Corporations. 

In  cases  wherein  corporations  have,  by  affidavit  or  other- 
wise, clearly  established  the  fact  and  satisfied  collectors 
of  internal  revenue  that  they  are  exempt  from  the  require- 
ments of  the  Federal  income  tax  law,  or  are  defunct,  dis- 
solved, or  obsolete,  and  are  no  longer  carrying  on  any  busi- 


CORPORATIONS— Continued.  EXEMPT 

ness  and  have  no  property  or  income,  returns  will  not  be 
required  of  them  after  such  condition  has  been  clearly  es- 
tablished. But  one  showing  of  this  character  as  to  each 
such  particular  corporation  will  be  required  unless  it  shall 
later  appear  that  any  such  corporation  shall  have  such  in- 
come within  the  meaning  of  the  law  as  brings  it  within  its 
requirements. — Treasury  Decision  2137. 
See  also  H  528. 

^  532 — Society  or  Association  Subject  to  Exemption 
Defined. 

A  society  or  association  "operating  under  the  lodge  sys- 
tem" is  considered  to  be  one  organized  under  a  charter  or 
dispensation,  with  properly  appointed  or  elected  officers, 
with  an  adopted  ritual  or  ceremonial,  holding  meetings  at 
stated  intervals,  and  supported  by  fees,  dues  or  assessments. 
See  H  522. 

1i  SSa— Clubs. 

All  clubs  are  not  exempt  from  the  provisions  of  the  in- 
come tax  law,  even  though  not  operated  for  profit.  A  club 
desiring  to  be  registered  as  an  exempt  organization  should 
file  with  the  Commissioner  of  Internal  Revenue  a  copy  of 
its  charter,  or  an  affidavit  of  its  principal  officer,  setting 
forth  the  nature  of  its  organization,  the  purpose  for  which 
organized,  the  source,  if  any,  from  which  it  derives  income, 
and  the  disposition  made  of  such  income  as  is  received  by  it 
for  consideration  and  determination  as  to  whether  or  not 
it  comes  within  the  class  of  organizations  held  to  be  exempt 
under  the  provisions  of  paragraph  G  of  the  income  tax  law. 
— Treasury  Decision  2029;  also  see  Tf  522. 

U  534— Social  Clubs. 

Social  clubs  organized  and  operated  exclusively  for  pleas- 
ure, recreation,  and  other  non-profitable  purposes  are  ex- 
empt from  the  tax,  provided  no  part  of  any  net  income  which 
they  receive  inures  to  the  benefit  of  any  private  stockholder 
or  individual.  This  exemption  will  reach  practically  an 
social  arid  recreation  clubs  which  are  supported  by  member- 
ship fees,  dues,  and  assessments. 

343 


CORPORATIONS— Continued.  EXEMPT 

If  a  club,  by  reason  of  the  comprehensive  powers  granted 
in  its  charter,  engages  in  traffic,  in  agriculture,  or  horti- 
culture, in  the  sale  of  real  estate,  timber,  etc.,  for  profit,  it 
will  be  held  that  such  club  is  not  organized  and  operated 
exclusively  for  pleasure,  recreation,  or  social  purposes.  It 
thus  becomes  a  business  or  commercial  enterprise,  and  any 
profit  realized  from  such  activities  is  subject  to  the  tax  im- 
posed by  this  title,  and  the  club  so  operated  must  make 
returns  of  annual  net  income. — Art.  72,  Reg.  33,  Revised. 

^  535 — Cemetery  Companies  Organized  for  Benefit  of  Their 
Members  Exempt. 

A  cemetery  company  having  a  capital  stock  represented 
by  shares,  or  which  is  operated  for  profit  or  for  the  benefit 
of  others  than  its  members,  does  not  come  within  the  ex- 
empted class,  and  will  be  required  to  make  returns  of  an- 
nual net  income  and  pay  any  income  tax  thereby  shown  to 
be  due. 

In  the  case  of  such  company  a  reserve  set  aside  out  of 
profits  as  a  "maintenance  fund''  is  not  deductible  from  gross 
income,  and  any  accretions  to  such  fund  will  be  held  to  be 
income  and,  as  such,  must  be  returned  by  the  corporation. 
The  expenses  of  maintenance  will  be  deductible  as  they  are 
paid. — Art.  71,  Reg.  33,  Revised. 

1J535(a) — Co-operative  Dairies  and  Like  Organizations. 

Co-operative  dairies  and  like  organizations  do  not  fall 
within  the  classes  of  organizations  enumerated  in  Tf  520 
to  541  as  exempt,  and  are  required  to  make  returns  of  an- 
nual income. — Treasury  Decision  1996;  also  see  536. 

\\  536 — Co-operative  Dairy  Defined. 

Co-operative  dairy  companies  or  associations  not  having 
capital  stock  and  engaged  in  collecting  milk  and  disposing 
of  the  same  or  the  products  thereof,  and  distributing  the 
proceeds  of  the  business,  less  necessary  operating  expenses, 
among  their  patrons,  upon  the  basis  of  the  quantity  of  butter 
fat  in  the  milk  furnished  by  such  patrons,  are  held  to  be 
exempt  from  the  tax  imposed  by  this  title. 

If,  however,  a  dairy  company  purchases  milk  at  k  stipu- 
lated price  and  disposes  of  the  same,  or  its  products,  through 

844 


CORPORATIONS— Continued.  EXEMPT 

sale  or  otherwise,  at  a  profit,  and  such  profit  inures  to  the 
benefit  of  the  company  or  its  members,  on  any  basis  other 
than  the  butter-fat  content  of  milk  furnished,  such  com- 
pany will  come  within  the  requirements  of  the  law,  and  will 
be  subject  to  the  tax. — Treasury  Decision  1996;  also.  Art. 
76,  Reg.  33,  Revised. 

If  537 — Co-operative  Associations  Defined. 

Co-operative  associations,  in  order  to  come  within  the  ex- 
emption provided  in  paragraph  "eleventh"  must  establish  to 
the  satisfaction  of  the  collector  or  Commissioner  of  Internal 
Revenue  the  fact  that,  for  their  own  account,  they  have  no 
net  income,  their  business  being  to  market  the  products  of 
their  members,  and  that  the  entire  proceeds  of  such  mar- 
keting, less  necessary  selling  expenses,  are  turned  back  or 
paid  to  the  members  on  the  basis  of  the  quantity  of  produce 
furnished  by  them — quality  and  grade  being  considered — as 
the  purchase  price  of  such  produce. 

If  in  the  course  of  their  business  such  associations  pur- 
chase for  cash  at  a  stipulated  price  articles  of  produce  with 
a  view  to  selling  them  for  gain,  it  will  be  held  that  such  as- 
sociations are  organized  for  profit  and  such  associations  will 
be  required  to  make  returns  of  annual  net  income  and  in- 
clude therein,  for  the  purpose  of  the  tax,  all  income  derived 
from  such  transactions  (Treasury  Decision  2090).  If 
amounts  paid  to  members  are  based  solely  upon  the  quantity 
of  produce  furnished,  such  amounts  may  be  deducted  from 
the  gross  proceeds  of  sales,  and  the  taxable  net  income  will 
be  the  amount  of  earnings  passed  to  surplus,  or  distributed 
or  distributable  among  members  on  the  basis  of  their  stock 
holdings. — Art.  75,  Reg.  33,  Revised. 

If  538 — Foreign  Governments  Not  Taxable. 

The  income  of  foreign  governments  received  from  invest- 
ments in  the  United  States  in  stocks,  bonds,  or  other  domes- 
tic securities,  owned  by  such  foreign  governments,  or  from 
interest  on  deposits  in  banks  in  the  United  States  of  moneys 
belonging  to  such  foreign  governments,  or  from  any  other 
source  within  the  United  States,  shall  not  be  subject  to  the 
tax  levied  under  this  Act. 


CORPORATIONS— Continued.  EXEMPT 

^  539— When  Income  from  Public  Utilities  Is  Not  Taxable. 

The  income  derived  from  any  public  utility  or  from  the 
exercise  of  any  essential  governmental  function,  which 
income  accrues  to  any  State,  Territory,  the  District  of  Co- 
lumbia, or  any  political  subdivision  of  a  State  or  Territory 
or  any  income  accruing  to  the  government  of  any  possession 
of  the  United  States,  or  any  political  subdivision  thereof — 
shall  not  be  subject  to  the  tax  imposed  by  this  Act. 

Whenever  any  State,  Territory,  or  the  District  of  Co- 
lumbia, or  any  political  subdivision  of  a  State,  or  Terri- 
tory, shall  have,  prior  to  September  8,  1916,  contracted  in 
good  faith  with  any  person  or  corporation  to  acquire,  con- 
struct, operate,  or  maintain  a  public  utility,  no  income  tax 
pursuant  to  this  Act  shall  be  levied  upon  the  income  derived 
from  the  operation  of  such  public  utility,  so  far  as  the  as- 
sessment and  payment  of  such  tax  will  impose  a  loss  or 
burden  upon  such  State,  Territory,  District  of  Columbia,  or 
political  subdivision,  but  the  person  or  corporation  is  not  re- 
lieved from  the  payment  of  the  tax  upon  that  portion  of  the 
income  accruing  to  him,  or  it,  under  such  contract. 

^540 — Public  Utility,  With  Mortgage  Indebtedness 
Purchased  by  a  Municipality. 

Where  a  municipality  purchases  a  public  utility  subject 
to  a  mortgage,  the  mortgage  retains  its  original  character, 
even  though  the  municipality  assumes  the  mortgage  indebt- 
edness and  pays  the  interest  thereon.  Therefore,  the  in- 
debtedness secured  by  such  mortgage  is  not  an  obligation 
of  the  municipality  within  the  meaning  of  the  income  tax 
law. —  (See  ^'Mortgage  Property  Purchased  Subject  To.")  — 
Treasury  Decision  2090. 

TI  541  — Partnerships  Not  Taxable  as  Corporations. 

Ordinary  copartnerships  are  not,  as  such,  subject  to  the 
tax  imposed  by  this  Act,  but  the  individual  members  of  any 
such  partnership  are  liable  for  income  tax  only  in  their  in- 
dividual capacity  on  their  respective  shares  of  the  earnings 
of  such  partnership,,  whether  such  earnings  be  distributed 
or  not. 

346 


CORPORATIONS—Continued.  CAPITALIZATION 

^  541  (a) — Definition  of  Personal  Service  Corporation. 

The  term  "personal  service  corporation"  means  a  corpora- 
tion whose  income  is  to  be  ascribed  primarily  to  the  activi- 
ties of  the  principal  owners  or  stockholders  who  are  them- 
selves regularly  engaged  in  the  active  conduct  of  the  affairs 
of  the  corporation  and  in  which  capital  (whether  invested  or 
borrowed)  is  not  a  material  income-producing  factor;  but 
does  not  include  any  foreign  corporation,  nor  any  corpora- 
tion 50  per  centum  or  more  of  whose  gross  income  consists 
either  ( 1 )  of  gains,  profits,  or  income  derived  from  trading 
as  a  principal,  or  (2)  of  gains,  profits,  commissions,  or  other 
income,  derived  from  a  government  contract  or  contracts 
made  between  April  6,  1917,  and  November  11,  1918,  both 
dates  inclusive. 

CAPITALIZATION. 

^  542--What  Constitutes  Paid-Up  Capital  Stock. 

Full  amount  of  stock,  as  represented  by  the  par  value  of 
the  shares  issued,  is  to  be  regarded  as  the  paid-up  capital 
stock,  except  when  such  stock  is  assessable  on  account  of 
deferred  payments,  or  payable  in  installments,  in  which  case 
the  amount  actually  paid  on  such  shares  will  constitute  the 
actual  paid-up  capital  stock  of  the  corporation. — Art.  181, 
Reg.  38,  Revised. 

U  543— Paid-Up  Capital  Stock— Definition. 

For  the  purpose  of  income  tax  corporations  must  report 
total  par  value  of  its  stock,  both  common  and  preferred, 
outstanding  at  close  of  year.  Stock  outstanding  at  the  close 
of  year  and  upon  the  basis  of  which  dividends  are  or  may 
be  paid  is  held  to  be  paid-up  capital  stock  within  meaning 
of  law.  Immaterial  whether  stock  be  paid  for  in  cash,  prom- 
issory notes  or  other  assets.  The  fact  that  notes  are  given 
in  payment  of  the  stock  issued  and  that  notes  have  not  been 
paid  in  full  at  time  of  return  is  immaterial. — Treasury  De- 
cision 2137. 

^  544 — Capital  of  a  Corporation. 

The  amount  received  by  a  corporation  for  the  original 
issue  and  sale  of  its  capital  stock  is  held  to  be  the  capital  of 

347 


CORPORATIONS— Continued.  INCOME 

the  corporation.  In  cases  where  the  stock,  as  originally  is- 
sued, is  sold  at  a  price  greater  or  less  than  the  par  value, 
neither  the  premium  nor  the  discount  will  be  taken  into  ac- 
count in  determining  the  net  income  of  the  corporation  for 
the  year  in  which  the  stock  is  sold.  This  is  purely  a  capital 
transaction  and  the  income  is  neither  increased  nor  de- 
creased by  reason  of  the  sale,  per  se,  of  the  stock  at  a  price 
greater  or  less  than  its  par  value. — Treasury  Decision  2090 ; 
also  see  If  542. 

If  545 — Donations  to  Corporations  of  Capital  Stock. 

If,  for  the  purpose  of  enabling  a  corporation  to  secure 
working  capital,  or  for  any  other  purpose,  the  stockholders 
donate  or  return  to  the  corporation  to  be  resold  by  it  certain 
shares  of  stock  of  the  company  previously  issued  to  them, 
the  sale  of  such  stock  will  be  considered  a  capital  transac- 
tion, and  the  proceeds  of  such  sale  will  be  treated  as  capital 
and  will  not  constitute  income  to  the  corporation. — Art.  99, 
Reg.  33,  Revised. 

INCOME. 

For  Definition  of  Gross  Income,  see  H  559. 

tl  546— Basis  of  Tax. 

The  corporation  income  tax  of  12  per  cent,  apphes  to  the 
net  income  received  by  every  taxable  corporation  in  the 
calendar  year  1918. 

If  547— Fiscal  Year. 

In  the  case  of  a  corporation  making  return  for  a  fiscal 
year  beginning  in  1917  and  ending  in  1918,  its  income  tax 
for  the  first  taxable  period  under  the  Revenue  Act  of  1918 
shall  be  the  sum  of  (1)  the  same  proportion  of  a  tax  for 
the  entire  period  computed  under  Title  I  of  the  Revenue 
Act  of  1916  (Income  Tax)  as  amended  by  the  Revenue  Act 
of  1917  and  under  Title  I.  of  the  Revenue  Act  of  1917  (War 
Income  Tax),  which  the  portion  of  such  period  falling 
within  the  calendar  year  1917  is  of  the  entire  period,  and 
(2)   the  same  proportion  of  a  tax  for  the  entire  period 

348 


CORPORATIONS— Continued.  .INCOME 

computed  under  this  title  at  the  rate  for  the  calendar  year 
1918  which  the  portion  of  such  period  falling  within  the 
calendar  year  1918  is  of  the  entire  period. 

In  computing  the  tax  as  above  provided,  the  tax  com- 
puted for  the  entire  period  under  Title  II.  of  the  Revenue 
Act  of  1917  (War  Excess-Profits  Tax)  shall  be  credited 
against  the  net  income  computed  for  the  entire  period 
under  Title  I.  of  the  Revenue  Act  of  1916  as  amended  by  the 
Revenue  Act  of  1917  and  under  Title  I.  of  the  Revenue  Act 
of  1917,  and  the  tax  computed  for  the  entire  period  under 
Title  III.  of  this  Act  (War-Profits  and  Excess-Profits  Tax) 
at  the  rates  prescribed  for  the  calendar  year  1918  shall  be 
credited  against  the  net  income  computed  for  the  entire 
period  under  this  Title. 

In  the  case  of  a  personal  service  corporation  the  amount 
to  be  paid  shall  be  only  that  specified  in  clause  (1). 

Any  amount  heretofore  or  hereafter  paid  on  account  of 
the  tax  imposed  for  such  fiscal  year  by  Title  I.  of  the  Rev- 
enue Act  of  1916  as  amended  by  the  Revenue  Act  of  1917, 
and  by  Title  I.  of  the  Revenue  Act  of  1917,  shall  be  credited 
against  the  payment  of  the  tax  for  such  fiscal  year  by  the 
Revenue  Act  of  1918,  and  if  the  amount  so  paid  exceeds  the 
amount  of  the  tax  imposed  by  said  Act,  or  in  the  case  of  a 
personal  service  corporation  the  amount  resulting  from 
clause  (1),  the  excess  shall  be  credited  or  refunded  in  ac- 
cordance with  the  provisions  of  Section  252.    See  If  634  (a) . 

^  548— Credits. 

The  above  tax  is  levied  upon  the  net  income  in  excess 
of  the  following  credits  as  outlined  in  Section  236. 

In  the  case  of  a  domestic  corporation  a  specific  exemption 
of  $2,000. 

The  amount  received  as  interest  upon  obligations  of  the 
United  States  and  bonds  issued  by  the  War  Finance  Cor- 
poration, which  is  included  in  gross  income  under  Section 
233. 

The  amount  of  any  taxes  imposed  by  Title  III  for  the  same 
taxable  year  (War-Profits  and  Excess-Profits  Tax),  ex- 
cept in  the  case  of  a  corporation  which  makes  a  return 

S40 


CORPORATIONS— Continued.  INCOME 

for  a  fiscal  year  beginning  in  1917  and  ending  in  1918 
in  computing  the  tax  for  such  fiscal  year  as  provided 
by  Section  205  (a)  the  tax  computed  for  the  entire 
period  under  Title  II.  (war-profits  tax)  of  the  Revenue  Act 
of  1917  shall  be  credited  against  the  net  income  computed 
for  the  entire  period  under  Title  I.  (Income  Tax)  of  the 
Revenue  Act  of  1916  as  amended  by  the  Revenue  Act  of 
1917,  and  under  Title  I.  (Income  Tax)  of  the  Revenue  Act 
of  1917,  and  the  tax  computed  for  the  entire  period  under 
Title  III.  (War-Profits  and  Excess-Profits  Tax)  of  the  Rev- 
enue Act  of  1918  at  the  rates  prescribed  for  the  calendar 
year  1918  shall  be  credited  against  the  net  income  computed 
for  the  entire  period  under  the  corporation  income  tax  of 
the  Revenue  Act  of  1918. 

^  549 — How  Determined. 

The  following  definitions  and  rules  are  given  for  deter- 
mining the  gross  income  of  various  classes  of  corporations : 

^  550 — Banks  and  Financial  Institutions. 

Gross  income  of  banks  and  other  financial  institutions 
consists  of  the  total  revenue  received  within  the  year  for 
which  the  return  is  made  frofn  the  operation  of  the  business, 
including  income,  gains,  or  profits  from  the  sale  of  capital 
assets  and  from  all  other  sources. 

In  cases  where  securities  or  other  assets,  real,  personal, 
or  mixed,  acquired  prior  to  March  1,  1913,  are  disposed  of 
during  the  year,  the  gain  or  loss  thereon  will  be  based  upon 
the  difference  between  the  price  at  which  disposed  of  and 
the  fair  market  price  or  value  of  such  assets  as  of  March  1, 
1913,  or  the  difference  between  the  price  at  which  disposed 
of  and  the  cost  if  acquired  subsequent  to  that  date. — Art. 
90,  Reg.  33,  Revised. 

Tf551 — Insurance  Companies. 

Gross  income  of  insurance  companies  consists  of  the  total 
revenue  derived  from  the  operation  of  the  business,  includ- 
ing income,  gains,  or  profits  from  all  other  sources,  as  shown 
by  the  entries  on  the  books  of  account  within  the  calendar 
or  fiscal  year  for  which  the  return  is  made,  except  (1)  such 

350 


CORPORATIONS— Continued.  INCOME 

portion  of  any  actual  premium  received  from  any  individual 
policyholder  as  is  paid  back  or  ciredited  to  or  treated  as  an 
abatement  of  premium  of  such  policyholder  within  the  tax- 
able year,  and  (2)  mutual  marine  insurance  companies  shall 
include  in  gross  income  the  gross  premiums  collected  and 
received  by  them  less  amounts  paid  for  reinsurance. 

If  552 — Other  Income. 

All  other  income  or  earnings  not  hereinbefore  referred  to 
will  form  a  part  of  and  must  be  reported  as  taxable  income. 
—Art.  242,  Reg.  33,  Revised. 

TI  553 — Income  from  Sale  of  Personal  Property  on  the 
Installment  Plan. 

It  has  been  ascertained  that  dealers  in  personal  property 
who  sell  on  the  installment  plan  adopt  one  of  four  ways  of 
protecting  themselves  in  case  of  default,  namely: 

(1)  A  provision  that  title  is  to  remain  in  the  seller  until 
the  buyer  has  performed  his  part  of  the  agreement. 

(2)  A  conveyance  of  title  to  the  purchaser  subject  to  a 
lien  for  the  unpaid  portion  of  the  purchase  price. 

(3)  The  conveyance  to  the  purchaser  and  an  immediate 
reconveyance  by  way  of  chattel  mortgage  to  the  seller. 

(4)  Conveyance  to  a  trustee  in  trust  to  hold  the  title 
pending  performance  of  the  contract  and  subject  to  its  pro- 
visions. 

The  purpose  is  the  same  in  all  of  these  transactions. 

In  view  of  the  fact  that  in  a  number  of  States  it  is  held 
that  the  form  first  mentioned  shall  not  be  enforced  accord- 
ing to  its  terms,  but  will  be  regarded  as  a  sale  with  a  chattel 
mortgage  back  to  secure  the  unpaid  purchase  price,  it  is 
desirable  that  a  uniform  rule  be  estabHshed  which  will  be 
equitable  and  applicable  to  all. 

The  rule  prescribed  is  that  in  the  sale  or  contract  for  sale 
of  personal  property  on  the  installment  plan,  whether  or  not 
title  remains  in  the  vendor  until  the  property  is  fully  paid 
for,  the  income  to  be  returned  by  the  vendor  will  be  that 
proportion  of  each  installment  payment  which  the  gross 
profit  to  be  realized  when  the  property  is  paid  for  bears  to 
the  gross  contract  price.    If,  for  any  reason,  the  vendee  de- 

8Si 


CORPORATIONS— Continued.  INCOME 

faults  in  his  installment  payments  and  the  vendor  repos- 
sesses the  property,  the  entire  amount  received  on  install- 
ment payments  less  the  profit  originally  returned  will  be 
income  to  the  vendor  to  be  so  returned  for  the  year  in  which 
the  property  was  repossessed. 

(This  ruling  amends  Articles  117  and  120  of  Regulations 
33,  Revised,  relating  to  the  Revenue  Act  of  1916,  and  re- 
vokes all  previous  decisions  and  rulings  which  are  in  conflict 
herewith. — ^Treasury  Decision  2707.) 

^  554 — Cost  of  Manufactured  Products. 

A  m.anufacturing  corporation  may  include  as  an  element 
of  the  cost  of  manufactured  products,  the  cost  of  the  raw 
material,  the  cost  of  labor  of  the  men  who  actually  work  on 
such  products,  as  well  as  the  cost  of  supervisory,  of  what 
may  be  denomiated  as  "unproductive"  labor,  such  as  that 
of  the  foremen,  inspectors,  overseers,  etc.,  provided  such  ex- 
penditures are  not  separately  deducted  from  gross  income  in 
the  return  of  annual  net  income. 

The  overhead  charges  referred  to  in  Form  1031  should 
include  the  salaries  of  officers,  clerk  hire,  and  such  other 
office  expenses  as  do  not  have  to  do  directly  with  the  manu- 
facture of  the  product. — Treasury  Decision  2152. 

^  555 — Miscellaneous  Corporations. 

Gross  income  of  miscellaneous  corporations  consists  of  the 
total  revenue  derived  from  the  operation  and  management  of 
the  business  and  property  of  the  corporation  making  the 
return,  together  with  all  amounts  of  income,  including  the 
income  gains,  or  profits  from  all  other  sources,  including 
dividends. — Art.  93,  Reg.  33,  Revised. 

1}  556 — Operating  Corporation  Controlled  by  Stock 
Ownership. 

A  railroad  company  operating  leased  or  purchased  lines  as 
an  integral  part  of  its  line  or  system,  and  keeping  no  sepa- 
rate books  of  account  as  to  such  leased  or  purchased  line, 
and  the  income  from  the  operation  of  which  can  not  be 
segregated,  shall  include  in  its  income  all  receipts  derived 
therefrom,  and  if  bonded  or  other  indebtdnss  of  the  leased 
or  purchased  line  has  been  assumed  by  the  operating  com- 

352 


CORPORATIONS— Continued.  INCOME 

pany,  it  may  deduct  from  its  gross  income  the  interest  paid 
on  such  indebtedness,  provided  the  interest  so  paid  plus 
the  interest  paid  on  its  own  indebtedness  is  not  in  excess  of 
the  hmit  fixed  by  the  law.  In  this  event  the  leased  or  pur- 
chased line  so  long  as  it  has  a  corporate  existence  will  make 
return  of  annual  net  income  setting  out  that  on  its  own  ac- 
count it  has  neither  income  nor  expenses,  and  that  both  are 
taken  up  in  the  return  of  the  operating  company,  naming  it» 

^  557 — Lessor  Must  Make  Return. 

If  the  leased  or  purchased  line  keeps  separate  books  of 
account,  or  the  income  from  its  operations  is,  or  can  be  se- 
gregated, or  if  the  lessee  or  operating  company  pays  it  a  cer- 
tain rental,  or  in  lieu  of  rental  pays  a  certain  per  cent,  of 
dividends  on  its  stock,  interest  on  its  bonds,  taxes,  etc.,  it 
(the  lessor)  will  return  the  same  as  its  income  and  will  be 
subject  to  tax  accordingly,  and  the  lessee  or  operating  com- 
pany will  make  its  return  as  though  it  were  in  no  way  re- 
lated to  the  leased  line. — Art.  125,  Reg.  33,  Revised. 

Tf  558 — Income  from  Real  Estate  Transactions. 

Sains  and  profits  resulting  from  a  real  estate  transaction 
are  subject  to  income  tax  in  so  far  as  they  represent  actual 
net  income  for  the  year  in  which  the  transaction  occurred. 
The  amount  of  income  to  be  returned  for  the  purpose  of  the 
income  tax  in  the  case  of  the  sale  of  capital  assets  is  the 
amount  received  upon  the  sale  of  the  property  in  excess  of 
its  original  cost,  provided  both  the  purchase  and  sale  of  the 
property  took  place  since  March  1,  1913.  If  the  property 
was  acquired  prior  to  March  1,  1913,  the  difference  between 
the  fair  market  value  of  that  date  and  the  selling  price  will 
be  considered  income  to  the  corporation. 

In  determining  the  amount  of  income  to  be  accounted  for 
on  this  basis  the  corporation  will  consider  mortgages,  mort- 
gage notes,  or  any  other  credits  received  in  payment  of  the 
property  as  though  they  were  cash,  and  if  it  should  occur 
that  the  purchaser  of  any  of  the  property  should  later  de- 
fault in  payment,  the  corporation  will  be  entitled  to  take 
credit  as  a  loss  for  the  amount  of  loss  actually  sustained 
by  reason  of  the  default. 

853 


CORPORATIONS— Continued.  INCOME 

In  determining  the  cost  of  the  property  for  the  purpose 
of  arriving  at  the  profit  realized  upon  the  sale  it  will  be 
permissible  for  the  corporation  to  add  to  the  initial  cost  such 
carrying  charges  as  interest,  taxes,  insurance,  etc.,  pro- 
vided such  carrying  charges  have  not  been  deducted  from 
net  income  which  the  corporation  may  have  had  and  re- 
turned for  years  subsequent  to  March  1,  1913,  and  prior  to 
the  date  of  the  sale  of  the  property.-^— Also  see  H  553. 

^  559 — Gross  Income  Defined. 

Gross  income  embraces  not  only  the  operating  revenues 
but  also  income,  gains,  or  profits  from  all  other  sources, 
such  as  rentals,  royalties,  interest,  and  dividends  from  stock 
owned  in  other  corporations;  and  also  profits  made  in  other 
corporations ;  and  also  profits  made  from  the  sale  of  assets, 
investments,  etc.  A  true  and  accurate  record  of  all  income 
received,  as  well  as  of  all  disbursements  or  charges  against 
income,  should  be  kept,  in  order  that  it  may  be  identified  and 
verified  by  an  internal-revenue  officer  if  an  examination  of 
the  books  should  be  deemed  advisable. — Art.  88,  Reg.  33, 
Revised. 

II 560 — Earnings  or  Dividends  from  Subsidiary  Companies 
Not  Deductible. 

Every  corporation,  no  matter  how  closely  related,  it  may 
be  to  any  other  corporation,  is  required  to  make  return  of 
annual  net  income  and  to  pay  any  income  tax  thereby  shown 
to  be  due. 

Parent,  holding,  or  other  corporations  must  include  in 
their  gross  income,  and  cannot  deduct  therefrom,  any  divi- 
dends or  share  of  earnings  which  they  may  receive  from 
a  subsidiary,  related,  or  any  other  corporation.  The  fact 
that  the  parent  or  holding  company  owns  all  the  stock  of 
the  subsidiary  company  is  immaterial  and  will  not  warrant 
such  parent  company  in  omitting  or  deducting  dividends 
from  gross  income. 

The  Federal  income  tax  law  fixes  a  specific  rule  by  which 
the  net  income,  for  the  purposes  of  the  tax,  is  to  be  com- 
puted. That  rule  makes  no  provision  for  the  exclusion  or 
deduction  from  the  taxable  income  of  dividends  received. — 
Treasury  Decision  2090. 

8M 


CORPORATIONS— Continued.  INCOME 

The  Federal  income  tax  law  .specifically  sets  out  that 
there  shall  be  returned  as  gross  income  all  income  received 
from  all  sources  during  the  year  for  which  the  return  is 
made,  and  it  specifically  enumerates  the  items  which  may 
be  allowably  deducted  from  such  gross  income.  There  is 
no  provision  of  the  law  whereby  dividends  received  from 
other  corporations  may  be  excluded  from  gross  income. 
Each  corporation  is  a  separate  and  distinct  entity  and  must 
return,  for  the  purposes  of  the  tax,  the  income  which  it 
receives  (except  interest  on  obligations  of  a  State  or  its 
political  subdivisions  or  on  the  obHgations  of  the  United 
States  or  its  possessions),  regardless  of  the  source  from 
which  such  income  is  received  or  regardless  of  the  fact  that 
a  portion  of  such  income  may  constitute  dividends  from 
other  corporations  subject  to  tax. — Treasury  Decision  2137. 

If  a  corporation  shall  have  returned  as  income,  interest 
received  on  bonds,  the  interest  upon  which  the  debtor  cor- 
poration had  agreed  to  pay  without  deduction  of  income 
taxes,  and  if  the  debtor  corporation  shall  have  actually  paid 
the  income  tax  assessable  on  such  interest  income,  it  will 
be  permissible  for  the  corporation  receiving  such  interest 
to  take  credit  against  the  tax  assessable  on  the  basis  of 
its  net  income  returned,  for  the  amount  of  tax  paid  thereon 
by  the  debtor  corporation. — Art.  199,  Reg.  33,  Revised. 

H  561 — Dividends — Deductions  from  Gross  Income. 

When  a  company  composed  of  two  stockholders  divide 
profits  between  them,  calHng  it  compensation,  same  cannot 
be  deducted  as  expense  of  business.  Money  paid  out  under 
those  circumstances  is  equivalent  to  dividends  and  must 
be  treated  as  income  of  the  corporation. 

Tf  562 — Interest  on  Exempt  Bonds,  Corporation. 

Interest  on  State,  municipal  and  United  States  bonds 
received  by  corporations  is  not  taxable  to  the  corporation 
for  the  purposes  of  the  Corporation  Income  Tax.  Upon 
amalgamation  with  other  funds  of  the  corporation  such 
income  loses  its  identity.  When  distributed  to  stockholders 
as  a  dividend,  the  entire  amount  of  the  dividend  is  subject 

855 


CORPORATIONS— Continued.  INCOME 

to  inclusion  in  returns  of  income  for  the  purposes  of  the 
income  tax. 

The  foregoing  holds  true  for  scrip  payments  of  interest. 
—Art.  4,  Reg.  33,  Revised. 

fl  563 — Sinking  Fund  Reserve. 

When  a  corporation  sets  aside  a  part  of  its  earnings  for 
the  purpose  of  creating  a  sinking  fund  with  which  to  retire 
its  bonded  or  other  indebtedness,  the  annual  additions  to 
such  funds  are  not  allowable  deductions  from  gross  income 
as  or  in  lieu  of  depreciation  or  on  any  other  account.  The 
earnings  thus  set  aside  are  an  asset  of  the  corporation  and 
any  accretion  thereto  must  be  accounted  for  as  income. — 
Treasury  Decision  2161. 

This  ruling  will  not,  however,  forbid  the  deduction  from 
gross  income  of  a  reasonable  allowance  for  depletion  of 
natural  deposits  even  though  the  amount  so  deducted  be 
used  in  whole  or  in  part  in  the  payment  of  its  bonded  or 
other  indebtedness. — Art.  166,  Reg.  33,  Revised. 

5|  564 — Sinking  Funds  Invested  in  Bonds  of  Corporation. 

If  the  trustees  of  a  sinking  fund  established  by  a  corpora- 
tion have  invested  the  amount  of  the  sinking  fund  reserve 
or  any  portion  of  it  in  the  bonds  of  the  corporation  and 
such  corporation  pays  to  the  trustees  the  interest  on  these 
bonds,  such  corporation  will  be  permitted  to  deduct  such 
interest  from  its  gross  income,  provided  the  amount  of  the 
interest  thus  paid,  plus  the  interest  on  any  other  outstand- 
ing indebtedness  which  it  may  have,  does  not  exceed  the 
limit  fixed  by  law.  The  interest  paid  to  the  trustees,  to- 
gether with  all  other  earnings  on  investments  made  by  the 
trustees  of  the  sinking  fund,  must  be  included  in  the  gross 
income  of  the  corporation. — Treasury  Decision  2161;  also 
Art.  189,  Reg.  33,  Revised. 

^  565 — Voluntary  Payments  by  Stockholders. 

In  cases  wherein  a  corporation  requires  additional  funds 
for  conducting  its  business  and  obtains  such  needed  money 
through  voluntary  pro  rata  payments  by  its  stockholders, 
and  such  amounts  received  are  credited  to  its  surplus  ac- 
count or  to  a  special  capital  account,  the  amounts  so  re- 

866 


CORPORATIONS— Continued.  INCOME 

ceived  will  not  be  considered  income,  although,  as  repre- 
senting this  additional  fund,  there  is  no  increase  in  out- 
standing shares  of  stock  or  liabiHty  of  the  corporation. 
The  payments  under  such  circumstances  are  in  the  nature 
of  voluntary  assessments  upon,  and  represent  an  additional 
price  paid  for,  the  shares  of  stock  held  by  the  individual 
stockholders,  and  will  be  treated  as  an  addition  to  and  as 
a  part  of  the  operating  capital  of  the  company. — Art.  96, 
Reg.  33,  Revised. 

^  566— -Treasury  Stock—When  Taxable. 

Treasury  stock,  wherever  and  whenever  that  term  is 
used  in  connection  with  the  accounts  of  the  corporation  or 
for  income-tax  purposes,  will  be  held  to  mean  stock  which 
had  been  previously  issued  by  the  corporation  and  which 
had  been  repossessed  by  it  through  purchase  or  otherwise 
and  then  carried  on  its  books  as  an  asset.  If  such  stock 
is  resold  at  a  price  in  excess  of  its  cost  upon  repossession, 
such  excess  shall  be  returned  as  income  for  the  year  in 
which  resold.  Unissued  stock,  which  had  been  retained  by 
the  corporation  for  the  purpose  of  future  sale,  will  not,  for 
the  purpose  of  the  income  tax,  be  considered  "Treasury 
stock,"  and  when  sold  no  part  of  the  proceeds  of  such  sale 
will  be  considered  taxable  income.  Nor  will  there  be  any 
deductible  loss  if  such  stock  is  sold  at  a  price  less  than  par. 
—Art.  98,  Reg.  33,  Revised. 

^  567 — Gifts  to  Corporation — Income. 

The  value  or  amount  of  a  gift  to  a  corporation  is  held  to 
be  income  to  such  corporation  and  should  be  returned  as 
such  for  the  year  in  which  the  gift  is  received.  The  pro- 
vision of  the  Act  of  October  3,  1913,  which  exempts  gifts, 
bequests,  etc.,  from  the  tax  imposed  by  the  Act  applies  to 
individuals  and  not  to  corporations. — Treasury  Decision 
2090. 

]\  568 — Bonds — Interest  On. 

The  exchange  of  interest  coupons  for  funding  bonds  is 
a  payment  of  interest  on  the  bonds  and  the  income  tax 
should  be  imposed  and  paid  upon  such  interest  as  income 
for  the  year  in  which  it  matures  and  such  payment  is  made, 

357 


CORPORATIONS— Continued.  INCOME 

and  in  the  absence  of  proper  claim  for  exemption  the  tax 
should  be  deducted  and  withheld  on  the  amount  repre- 
sented by  the  coupons. — Treasury  Decision  2090. 

^569 — Income  from  Damages  Recovered. 

When  a  corporation  as  a  result  of  suit  or  otherwise  se- 
cures payment  for  damages  which  it  may  have  sustained, 
and  the  amount  of  such  payment  is  in  excess  of  an  amount 
necessary  to  make  good  the  damage  or  damaged  property, 
the  amount  of  such  excess  shall  be  considered  and  returned 
as  income  for  the  year  in  which  received.  If  the  entire  or 
an  estimated  amount  of  the  damage  shall  have  been  previ- 
ously charged  off  and  deducted  from  gross  income,  then 
the  amount  recovered  shall  be  returned  as  income. 

If  the  amount  recovered  is  less  than  the  damage  sustained 
or  less  than  an  amount  necessary  to  make  good  the  damage, 
the  difference  between  the  actual  amount  of  damage  sus- 
tained and  the  amount  recovered  will  be  deductible  as  a  loss. 
—Art.  94,  Reg.  33,  Revised. 

11  570— Sale  of  Patents. 

A  corporation  disposing  of  patents  by  sale,  should  de- 
termine the  profit  or  loss  arising  therefrom,  by  computing 
the  difference  between  the  selling  price  and  the  cost,  or 
value  as  of  March  1,  1913,  if  acquired  before  that  date. 
The  apparent  profit  or  loss  should  be  increased  or  decreased, 
as  the  case  may  be,  by  the  amounts  deducted  since  March 
1,  1913,  as  a  return  of  capital  invested  in  such  patents. — 
Art.  109,  Reg.  33,  Revised. 

T[  571 — Exchange  of  Property  for  Stock. 

In  cases  wherein  property  was  taken  over  in  exchange 
for  the  capital  stock  of  a  corporation  at  a  par  value  in 
excess  of  the  fair  market  value  of  the  property,  and  such 
property  should  be  later  sold,  it  will  be  necessary  to  ascer- 
tain as  nearly  as  possible  the  fair  market  value  of  the 
property  at  the  time  it  was  taken  over  or  as  of  March  1, 
1913,  if  acquired  before  that  date,  and  any  excess  over 
this  ascertained  fair  market  value  at  which  the  property 

358 


CORPORATIONS— Continued.  INCOME 

is  sold  will  be  held  to  be  profit  or  income  to  the  corporation 
for  the  year  in  which  the  sale  was  made.^Art.  Ill,  Reg. 
33,  Revised. 

If  572 — Excess  Value. 

Similar  action  may  be  taken  in  cases  wherein  corpora- 
tions acquire  property  prior  to  March  1,  1913,  for  a  mere 
nominal  sum  and  which  had,  as  of  March  1,  1913,  a  value 
greatly  in  excess  of  such  nominal  sum.  A  careful  estimate 
of  the  fair  market  value  of  such  property,  as  of  March  1, 
1913,  may  be  made  and  set  up  as  the  capital  invested  in  the 
property,  and  if  such  property  is  thereafter  disposed  of 
at  a  price  in  excess  of  such  fair  market  value,  the  amount 
so  in  excess  will  be  treated  as  income  to  be  accounted  for 
in  preparing  the  return  of  annual  net  income  of  the  year 
in  which  the  property  is  sold.  The  value  of  the  property 
fixed  in  the  manner  and  for  the  purpose  hereinbefore  in- 
dicated will  be  subject  to  the  approval  of  the  Commis- 
sioner of  Internal  Revenue. 

If  the  property  was  acquired  subsequent  to  March  1, 
1913,  the  amount  for  which  it  is  later  sold  or  disposed  of 
in  excess  of  the  cost  price,  regardless  of  the  fact  that  it 
may  have  been  acquired  for  a  mere  nominal  price,  will  con- 
stitute income  for  the  year  in  which  the  property  was 
disposed  of  and  must  be  so  returned. — Art  112,  Reg.  33, 
Revised. 

^  573--Royalties  from  Patent  Rights. 

Royalties  received  by  a  corporation  in  accordance  with 
a  contract  by  which  it  has  assigned  the  patent  rights  to 
manufacture  machines,  etc.,  are  income  and  should  be  so 
accounted  for.  The  owner  of  the  patent  may  deduct  from 
gross  income  each  year,  until  the  capital  invested  therein 
is  extinguished,  a  sum  ascertained  by  dividing  the  cost  of 
the  patent  by  the  number  of  years  constituting  its  life  or 
by  a  number  representing  the  years  of  its  life  remaining 
after  the  date  of  acquirement. — Art.  113,  Reg.  33,  Revised. 

Tf  574 — Bank  Discounts. 

In  cases  wherein  banks  or  other  corporations  loan  money 
by  discounting  bills  or  notes,  one  of  two  methods  shall  be 

359 


CORPORATIONS— Continued.  INCOME 

used  in  determining  the  amount  of  discount  that  is  to  be 
reported  as  income,  namely  (1)  if  the  bank  or  corporation 
makes  a  practice  of  crediting  such  discount  directly  to  a 
"discount  account"  or  to  profit  and  loss,  the  total  amount 
thus  credited  during  the  year  shall  be  considered  income 
and  shall  be  so  reported,  regardless  of  the  fact  that  a  por- 
tion of  this  amount  may  represent  discount  paid  in  advance 
and  not  then  earned ;  (2)  if  the  bank  or  corporation  follows 
the  practice  of  crediting  such  discount  to  an  "unearned 
discount  account,"  and  later,  as  the  discount  becomes 
earned,  debits  the  unearned  account  and  credits  an  "earned 
discount  account"  with  the  amount  so  earned,  the  total 
amount  credited  to  the  "earned  discount  account"  during 
the  year  shall  be  considered  income  and  shall  be  so  returned. 
The  corporation  having  income  of  this  character  should 
state  in  a  memorandum  attached  to  its  return  which  of 
the  two  methods  was  used  in  determining  the  amount  of 
discount  returned  as  income. — Art.  114,  Reg.  33,  Revised. 

^  575 — Income  from  Sale  of  Capital  Assets. 

If  a  corporation  sells  its  capital  assets  in  whole  or  in 
part,  it  will  include  in  its  gross  income  for  the  year  in  which 
the  sale  was  made  an  amount  equivalent  to  the  excess  of 
the  sales  price  over  the  fair  market  price  or  value  of  such 
assets,  as  of  March  1,  1913,  if  acquired  prior  to  that  date, 
or  over  costs  if  acquired  subsequent  to  that  date. 

If  the  purchase  price  is  paid  with  stock  issued  by  a  pur- 
chasing company,  the  purchase  price  will  be  the  actual  value 
at  the  time  of  the  stock  issued  in  payment  for  such  assets. 
—Art.  101,  Reg.  33,  Revised. 

If  576 — Capital  Assets,  Value  of;  When  Exchanged  for 
Capital  Stock. 

In  cases  wherein  property  was  taken  over  in  exchange 
for  the  capital  stock  of  a  corporation  at  a  par  value  greatly 
in  excess  of  the  true  value  of  the  property,  and  such  prop- 
erty should  be  later  sold,  it  will  be  necessary  to  ascertain 
as  nearly  as  possible  the  true  value  of  the  property  at  the 
time  it  was  taken  over,  and  any  excess  over  this  ascertained 

3«Q 


CORPORATIONS— Continued.  INCOME 

true  value  at  which  the  property  is  sold  will  be  held  to  be 
profit  or  income  to  the  corporation. 

Similar  action  may  be  taken  in  cases  wherein  corpora- 
tions acquire  property  for  a  mere  nominal  sum  and  which 
had  at  the  time  of  its  acquirement  a  value  greatly  in  excess 
of  such  sum.  A  careful  estimate  of  the  value  of  such 
property  at  the  time  it  was  acquired  may  be  fixed  and  set 
up  as  the  value  representing  the  cost  of  the  property,  and 
any  excess  over  such  fixed  value  at  which  such  property 
may  be  thereafter  disposed  of  will  be  treated  as  income  to 
be  accounted  for  in  accordance  with  the  rules  of  this  de- 
partment in  the  case  of  the  sale  of  capital  assets.  The 
value  of  the  property  fixed  in  the  manner  and  for  the 
purpose  hereinbefore  indicated  will  bei  subject  to  the  ap- 
proval of  the  Internal  Revenue  Bureau. — Treasury  Decision 
2161. 

For  the  purpose  of  determining  the  amount  of  profit  or 
loss  arising  from  the  sale  of  capital  assets  acquired  prior 
to  March  1,  1913,  which  shall  be  taken  into  account  by 
corporations  in  making  their  returns  of  annual  net  income, 
the  gain  or  loss  is  represented  by  the  difference  between 
fair  market  value  of  such  assets,  as  of  March  1,  1913,  and 
the  selling  price.  To  any  gain  thus  apportioned  and  to  be 
included  in  income  there  should  be  added  any  amount,  or 
amounts,  which  had  been  charged  against  and  deducted 
from  gross  income  since  March  1,  1913,  on  account  of  de- 
preciation and  which  had  not  been  paid  out  in  making  good 
the  depreciation — that  is,  any  amount  charged  off  later 
than  March  1,  1913,  on  account  of  the  depreciation  of  the 
assets  sold  and  not  used  to  make  good  such  depreciation 
shall  be  added  to  the  gain  apportioned  to  these  years  and 
will  be  included  in  the  income  of  the  year  in  which  the 
property  was  sold.  Likewise,  for  the  purpose  of  a  deduc- 
tion from  gross  income  of  the  year  in  which  the  assets 
were  sold,  loss  resulting  from  any  such  sale,  apportionable 
to  the  years  subsequent  to  March  1,  1913,  will  be  reduced 
by  the  amount  of  the  unused  portion  of  the  depreciation 
charged  off  with  respect  to  such  assets  March  1,  1913. — 
Treasury  Decision  2077. 

361 


CORPORATIONS— Continued.  INCOME 

This  ruling,  in  so  far  as  it  relates  to  depreciation,  applies 
only  to  such  tangible  property  as  is  subject  to  wear  and 
tear,  exhaustion  and  obsolescence,  and  is  not  to  be  con- 
strued as  recognizing  any  gain  or  loss  due  to  jfluctuations 
in  the  market  value  or  arbitrary  changes  in  the  book  value 
of  securities  and  like  assets,  the  gain  or  loss  with  respect 
to  which  will  be  determined  only  when  such  assets  mature, 
or  are  sold  or  disposed  of — that  is,  when  there  is  a  com- 
pleted, a  closed,  transaction. — Treasury  Decision  2005  and 
2130. 

H  577 — Carrying  Charges  Part  of  the  Cost  of  Assets. 

The  foregoing  is  not  intended  to  be  so  constructed  that 
carrying  charges,  if  they  consist  of  such  expenditures  as 
constitute  allowable  deductions  from  gross  income,  are  to 
be  added  to  the  cost  of  the  property  if  there  is  a  gross 
income  from  which  such  charges  as  constitute  allowable 
deductions  may  be  deducted.  It  is  intended,  however,  that 
in  the  case  of  a  holding  or  developing  company  which  has 
not  yet  reached  the  stage  of  having  any  income  of  con- 
sequence resulting  from  its  corporate  operations,  the  carry- 
ing charges  or  other  excess  over  the  incidental  income  re- 
ceived may  be  added  to  and  made  a  part  of  the  cost  of  the 
property. 

As  a  general  proposition  involving  the  acquirement  and 
holding  of  property  for  future  sale,  which  property  was 
acquired  prior  to  the  incidence  of  the  tax  and  from  which 
property  there  is  but  a  nominal  income,  insufficient  to  meet 
the  carrying  charges,  it  would  be  proper  for  the  corpora- 
tion to  add  to  the  initial  cost  of  the  property  the  carrying 
charges,  such  as  interest,  insurance  and  taxes  actually  paid, 
and  from  that  amount  deduct  the  incidental  income  which 
may  have  been  received  between  the  date  of  purchase  and 
the  date  of  the  incidence  of  the  tax.  The  result  then  shown 
will  be  the  cost  of  the  property  or  the  amount  to  be  excluded 
from  the  proceeds  as  capital  when  the  property  is  sold. — 
Treasury  Decision  2137. 

^578 — Sale  to  Other  Corporation. 

In  determining  the  profits  realized  or  the  loss  sustained 
upon  the  sale  of  capital  assets  by  one  corporation  to  an- 


CORPORATIONS— Continued.  INCOME 

other,  payment  therefor  being  made  in  the  stocks  or  bonds 
of  the  purchasing  corporation,  the  profit  or  loss,  as  the  case 
may  be,  from  such  sale  will  be  ascertained  upon  the  basis 
of  the  difference  between  the  cost  of  such  assets  to  the 
seller,  in  case  they  were  acquired  subsequent  to  March  1, 
1913,  or  the  fair  market  value  as  of  March  1,  1913,  if 
acquired  prior  to  that  date,  and  the  fair  cash  value  of  the 
stock  or  bonds  at  the  time  the  sale  was  made. — Treasury 
Decisions  2077  and  2137;  also  Art.  118,  Reg.  33,  Revised. 

11  579 — Sale  by  Subsidiary  to  Parent  Corporation. 

Where  a  subsidiary  or  other  corporation  sells  or  trans- 
fers its  assets  to  a  parent  or  other  corporation,  accepting 
in  exchange  therefor  the  stock  or  bonds  of  the  purchasing 
corporation,  the  question  of  gain  or  loss  resulting  from  this 
transaction  will  be  determined  upon  the  basis  of  the  dif- 
ference between  the  cost  or  market  value  as  above  indi- 
cated of  the  assets  sold  and  the  actual  value  of  the  stock  or 
bonds  given  in  exchange  therefor.  Any  gain  or  loss  thus 
ascertained  as  resulting  from  such  a  transaction  will  be 
added  to  or  deducted  from  the  entire  gross  income,  as  the 
case  may  be,  of  the  selHng  corporation  in  the  year  in  which 
the  capital  assets  were  sold. — Treasury  Decisions  2077  and 
2137;  also.  Art.  119,  Reg.  33,  Revised. 

^  580 — Stock  Issued  for  Stock  of  Other  Corporation. 

In  a  case  wherein  a  corporation  acquires  from  stock- 
holders the  stock  of  another  corporation,  giving  in  exchange 
therefor  its  own  stock,  it  is  held  that  the  transaction  is  one 
by  which  the  corporation  acquiring  the  stock  becomes  the 
sole  stockholder  of  the  other  corporation.  As  a  result  of 
this  transaction  no  income  accrues  to  the  corporation  whose 
stock  is  thus  acquired.  Neither  will  any  income  accrue  to 
this  corporation  if  later  the  holding  corporation  should 
cause  the  assets  of  the  underlying  company  to  be  trans- 
ferred to  it  for  mere  nominal  consideration. 

If,  however,  one  corporation  buys  the  assets  of  another 
and  issues  direct  to  the  selling  company  its  own  capital 
stock  in  payment  for  the  assets  acquired,  the  transaction 

363 


CORPORATIONS— -Continued.  INCOME 

will  be  treated  by  the  selling  company  as  a  sale  of  its  assets, 
and  the  question  as  to  whether  profit  or  loss  results  from 
the  sale  will  depend  upon  whether  or  not  the  value  of  the 
stock  taken  in  payment  for  the  assets  is  in  excess  of  the 
fair  market  price  or  value  as  of  March  1,  1913,  of  the  assets 
sold  or  of  their  cost  accordingly  as  they  were  acquired  by 
the  selhng  company  prior  or  subsequent  to  that  date. 

If  the  value  of  the  stock  is  so  in  excess,  the  amount  of 
such  excess  will  be  taxable  income  for  the  year  in  which 
the  assets  were  sold  and  must  be  so  returned. 

If  the  excess  over  values  as  of  March  1,  1913,  or  over 
cost,  as  the  case  may  be,  includes  any  surplus  earned  since 
March  1,  1913,  upon  which  the  income  tax  has  been  paid, 
the  excess  or  profits  resulting  from  the  sale  may  be  reduced 
by  the  amount  of  such  tax-paid  surplus. 

If  the  purchasing  corporation  takes  over  all  the  assets 
including  accounts  receivable,  bills  receivable,  surplus,  etc., 
of  the  selling  corporation  and  assumes  its  liabilities,  the 
amount  so  assumed  will  be  considered  a  part  of  the  purchase 
price,  and  to  the  extent  that  the  entire  purchase  price  ex- 
ceeds the  cost  or  value,  as  of  March  1,  1913,  as  the  case 
may  be,  of  the  assets  disposed,  income  will  accrue  to  the 
selling  company. — Art.  124,  Reg.  33,  Revised. 

t[581 — Shrinkage  in  Value  of  Securities  Written  Down  by 
Order  of  Comptroller  of  Currency  or  State 
Banking  Department  Not  Allowable  Deduction. 

The  fact  that  bonds  and  similar  securities  were  written 
off  at  the  direction  of  the  Comptroller  of  the  Currency  or 
the  State  Banking  Department  is  not  material.  A  mere 
book  entry  does  not  constitute  either  a  loss  or  a  gain  for 
the  purpose  of  the  income  tax.  The  fact  that  bonds  were 
written  off  does  not  necessarily  imply  that  they  are  a  total 
loss,  nor  is  this  act  a  conclusive  proof  that  any  loss  oc- 
curred during  the  year  for  which  return  was  made.  Losses 
of  this  character  are  only  ascertainable  when  the  securities 
mature,  are  disposed  of,  or  cancelled. — Treasury  Decision 
2152. 

364 


CORPORATIONS— Cont'd  DEDUCTIONS— Expenses 

^  582 — Inventories  of  Merchandise  and  Securities. 

That  whenever  in  the  opinion  of  the  Commissioner  of 
Internal  Revenue  the  use  of  inventories  is  necessary  in  order 
clearly  to  determine  the  income  of  any  taxpayer,  inventories 
shall  be  taken  by  such  taxpayer  upon  such  basis  as  the  Com- 
missioner, with  the  approval  of  the  Secretary,  may  prescribe 
as  conforming  as  nearly  as  may  be  to  the  best  accounting 
practice  in  the  trade  oi'  business  and  as  most  clearly  reflect- 
ing the  income. 

IT  583 — Premium  or  Discount  on  Sale  of  Capital  Stock. 

See  "Capital  of  a  Corporation,"  T[  544. 

If  584— Void— [Ed.] 

If  585^ — Interest  to  Be  Included  in  Gross  Income. 

A  corporation  doing  a  brokerage  business,  buying  securi- 
ties for  its  customers,  who  paid  only  a  part  of  the  purchase 
price,  paying  interest  on  balances,  the  s  corporation  also 
paying  for  the  securities  purchased  only  part  of  the  pur- 
chase price  and  owing  balances  on  which  it  paid  interest, 
including  in  return  of  gross  income  the  difference  between 
the  interest  received  and  the  interest  paid,  made  incorrect 
return.  Such  interest  received  from  customers  should  be 
included  in  gross  income. — Decision  of  Court. 

DEDUCTIONS. 

If  588 — Net  Income — How  Ascertained. 

In  computing  the  net  income  of  a  corporation  subject  to 
the  tax  imposed  by  Section  230  there  shall  be  allowed  as 
deductions : 

(The  deductions  must  in  all  cases  be  such  as  are  author- 
ized and  within  the  limits  fixed  by  law. — Art.  127,  Reg.  33, 
Revised.) 

11  587 — Expenses. 

Al]  the  ordinary  and  necessary  expenses  paid  or  incurred 
during  the  taxable  year  in  carrying  on  any  trade  or  business, 
including  a  reasonable  allowance  for  salaries  or  other  com- 
pensation for  personal  services  actually  rendered,  and  in- 

365 


CORPORATIONS— Cont'd  DEDUCTIONS— Expenses 

eluding  rentals  or  other  payments  required  to  be  made  as  a 
condition  to  the  continued  use  or  possession  of  property  to 
which  the  corporation  has  not  taken  or  is  not  taking  title,  or 
in  which  it  has  no  equity. 

11 588— When  Deductible. 

Expenses  of  operation  and  maintenance  shall  include  all 
expenditures  for  material,  labor,  fuel,  and  other  items  en- 
tering into  the  cost  of  the  goods  sold  or  inventoried  at  the 
end  of  the  year,  provided  such  expenditures  have  not  been 
considered  in  determining  the  cost  of  goods  or  materials  or 
purchases  thereof  during  the  year,  when  the  income  derived 
from  operations  is  ascertained  through  inventory,  and  all 
other  disbursements  necessary  to  the  operation  of  the  busi- 
ness, except  such  as  are  required  by  the  Act  to  be  segre- 
gated and  stated  separately  in  the  return. 

Expenditures  which  are  taken  into  account  in  determining 
the  cost  of  products,  finished  or  unfinished,  are  not  to  be 
again  deducted  as  expenses  of  operation  and  maintenance. — 
Art.  129,  Reg.  33,  Revised. 

^  589— Cost  of  Material. 

In  ascertaining  expenses  proper  to  be  included  in  the  de- 
ductions to  be  made  under  the  item  of  "Expenses,"  corpora- 
tions carrying  materials  and  supplies  on  hand  should  include 
in  such  expense  the  charges  for  materials  and  supplies  only 
to  the  amount  that  the  same  are  actually  consumed  and  used 
in  operation  and  maintenance  during  the  year  for  which  the 
return  is  made,  provided  that  the  cost  of  such  material  and 
supphes  has  not  been  taken  into  account  in  determining  the 
net  income  for  any  previous  year. 

If  a  corporation  carries  materials  or  suppHes  on  hand  for 
which  no  record  of  consumption  is  kept  or  of  which  physical 
inventories  at  the  beginning  and  end  of  the  year  are  not 
taken,  it  will  be  permissible  for  the  corporation  to  include  in 
its  expenses  and  deduct  from  gross  income  the  total  cost 
of  such  supplies  and  materials  as  were  purchased  during  the 
year  for  which  the  return  is  made. — Art.  130,  Reg.  33,  Re- 
vised. 

366 


CORPORATIONS— Cont'd  DEDUCTIONS— Expenses 

TI580 — Repairs. 

The  cost  of  incidental  repairs  which  neither  add  to  the 
value  of  the  property  nor  appreciably  prolong  its  life,  but 
keep  it  in  an  ordinarily  efficient  operating  condition,  may  be 
deducted  as  expense,  provided  that  the  plant  or  property  ac- 
count is  not  increased  by  the  amount  of  such  expenditures. 
Such  repairs,  to  the  extent  that  they  arrest  deterioration, 
should  have  the  effect  to  reduce  the  depreciation  charge 
otherwise  deductible. — Art.  131,  Reg.  33,  Revised. 

^  591  — Depositors'  Guarantee  Fund. 

Banking  corporations  which,  pursuant  to  the  laws  of  the 
States  in  which  they  are  doing  business,  are  required  to  set 
apart,  keep,  and  maintain  in  their  banks  the  amount  levied 
and  assessed  against  them  by  the  State  authorities  as  a 
"Depositors*  guarantee  fund,"  may  deduct  from  their  gross 
income  in  their  returns  of  annual  net  income  the  amount  so 
set  apart  each  year  to  this  fund,  provided  that  such  fund, 
when  set  aside  and  carried  to  the  credit  of  the  State  banking 
board  or  other  duly  authorized  State  officer,  ceases  to  be  an 
asset  of  the  bank,  but  may  be  withdrawn  in  whole  or  in 
part,  upon  demand  by  such  board  or  State  officer  to  meet  the 
needs  of  these  officers,  as  required  by  State  laws,  in  re- 
imbursing depositors  in  insolvent  banks,  and  provided  fur- 
ther that  no  portion  of  the  amount  thus  set  aside  and  cred- 
ited as  returnable,  under  the  existing  laws  of  the  State,  to 
the  assets  of  the  banking  corporation. 

If,  however,  such  amount  is  simply  set  up  on  the  books 
of  the  bank  as  a  reserve  to  meet  a  contingent  liabiHty,  and 
remains  an  asset  of  the  bank,  it  will  not  be  deductible  ex- 
cept as  it  is  actually  paid  out  as  required  by  law  and  upon 
demand  of  the  proper  State  officers. — Art.  146,  Reg.  33, 
Revised. 

^  592 — Cost  of  Improvements. 

Where  old  machinery,  equipment,  etc.,  is  replaced  with 
new,  the  rule  is  that  the  cost  of  renewals  with  hke  kind  and 
quality  is  allowable,  but  excess  cost  is  not  an  allowable  de- 
duction from  gross  income.     Amounts  expended  for  im- 

367 


CORPORATIONS— Cont'd  DEDUCTIONS— Expenses 

proving  and  adding  to  property,  such  as  new  buildings, 
shops,  machinery  and  additions  to  equipment  are  to  be  in- 
cluded as  income. — Treasury  Decision  2210. 

]\  593 — Additions  and  Betterments. 

Amounts  expended  in  additions  and  betterments  or  for 
furniture  and  fixtures  which  constitute  an  increase  in  capital 
investment  and  add  to  the  value  of  the  assets  are  not  a 
proper  deduction,  but  such  expenditures  when  capitalized 
may  be  extinguished  through  annual  depreciation  deduc- 
tions, which  latter  deductions  will  be  computed  upon  the 
basis  of  the  cost  and  probable  life  of  the  property. — Art. 
132,  Reg.  33,  Revised. 

^  584 — Asset s^ — Carrying  Charges  Part  of  the  Cost  of, 
When.— See  If  577. 

Tf  595 — Salaries  Paid  Officers  and  Employes. 

In  the  case  of  salaries  paid  to  officers  and  employes  of 
corporations,  there  has  been  fixed  no  definite  amounts  which 
may  be  allowably  deducted  from  gross  income.  Any  amount 
representing  a  fair  and  reasonable  compensation  for  the 
services  rendered  by  the  officers  or  employes  will  constitute 
an  allowable  deduction  from  gross  income. 

For  more  detail  as  to  allowable  deductions  for  these  items, 
see  Treasury  Decision  2696. 

^  596— -Definition  of  "Paid." 

The  term  "paid,"  for  the  purposes  of  the  deductions  and 
credits  under  the  corporation  income  tax,  means  "paid  or 
accrued"  or  "paid  or  incurred"  and  the  terms  "paid  or  in- 
curred" and  "paid  or  accrued"  shall  be  construed  according 
to  the  method  of  accounting  upon  the  basis  of  which  the  net 
income  of  the  taxpayer  is  computed. 

^  597 — Charged  Against  Current  Earnings. 

All  expenses,  including  interest,  taxes,  and  other  neces- 
sary charges,  incidental  and  necessary  to  the  creation  or  pro- 
duction of  the  gross  income  or  properly  chargeable  against 
the  same,  being  deductible  from  the  gross  income,  whether 
paid  in  cash  or  entered  on  the  books  as  a  liabiHty,  can  not, 

368 


CORPORATIONS— Cont^d  DEDUCTIONS— Expenses 

if  unpaid,  be  carried  forward  to  be  deducted  from  the  gross 
income  of  a  subsequent  year. — Art.  127,  Reg.  33,  Revised. 

If  598 — Dividends — Deductions  from  Gross  Income. 

When  a  company  composed  of  two  stockholders  divides 
profits  between  them,  calHng  it  compensation,  same  cannot 
be  deducted  as  expense  of  business.  Money  paid  out  under 
those  circumstances  is  equivalent  to  dividends  and  must  be 
treated  as  income  of  the  corporation. — See  t[  614. 

]\  599 — Holding  or  Development  Company. 

Carrying  charges  part  of  the' cost  of  assets. — See  If  577. 

^  600 — Spending  Money. 

So-called  "spending  or  treating  money"  actually  advanced 
by  the  corporations  to  their  traveling  salesmen  to  be  used 
by  them  as  a  part  of  the  expense  incident  to  selling  the 
product  of  such  corporations,  is  an  allowable  deduction  in  a 
return  of  income  by  such  corporation.  The  deduction  of 
such  expenditures  is  conditioned  upon  a  satisfactory  show- 
ing that  all  the  allowance  claimed  as  a  deduction  was  actu- 
ally expended  for  and  was  an  ordinary  and  usual  expense  in- 
curred in  selling  the  product  or  merchandise  of  the  cor- 
poration.— Treasury  Decision  2090 ;  also  Art.  133,  Reg.  33, 
Revised. 

^  601 — Lobbying  Expenses. 

Sums  of  money  expended  for  lobbying  purposes,  the  pro- 
motion or  defeat  of  legislation,  the  exploitation  of  propa- 
ganda, and  contributions  for  campaign  expenses  are  held  not 
to  be  an  ordinary  and  necessary  expense  in  the  operation 
and  maintenance  of  the  business  of  a  corporation,  and  are 
therefore  not  deductible  from  gross  income  in  arriving  at 
the  net  income  upon  which  the  income  tax  is  computed. — 
Treasury  Decision  2137 ;  also  Art.  143,  Reg.  33,  Revised. 

Tf  602— Earnings  of  Public  Utility  Paid  to  City,  Etc. 

In  case  of  a  pubHc  utility  constructed,  operated,  or  main- 
tained by  a  corporation  under  contract  with  any  city.  State, 
Territory,  or  the  District  of  Columbia,  with  an  agreement 
that  a  portion  of  the  net  earnings  of  such  public  utility  shall 
be  paid  to  the  city,  State,  Territory,  or  the  District  of  Col- 

369 


CORPORATIONS— Cont'd  DEDUCTIONS— Expenses 

umbia,  the  amount  so  paid  may  be  deducted  by  the  pubHc 
utility  company  as  a  necessary  expense  of  transacting  busi- 
ness.— Treasury  Decision  2090 ;  also  Art.  142,  Reg.  33,  Re- 
vised. 

^  603 — Expenses  Incurred  in  Sale  of  Capital  Stock. 

Any  and  all  expenses  incidental  to  or  connected  with  the 
selling  of  the  capital  stock  (common  or  preferred)  of  a  cor- 
poration for  the  purpose  of  raising  capital  to  be  by  it  in- 
vested in  property  or  employed  in  the  business  for  which  the 
corporation  is  organized  are  not  an  "expense  of  operation 
and  maintenance"  within  the  meaning  of  this  title,  and  such 
expense  is  not  an  allowable  deduction  from  the  gross  income, 
for  the  reason  that  such  an  expense  is  incurred  in  a  capital 
transaction ;  that  is,  the  raising  of  capital  to  be  invested  or 
employed  in  the  business. 

Such  expense,  like  the  discount  at  which  the  shares  of 
stock  may  be  sold,  has  the  effect  only  to  reduce  the  available 
capital  of  the  corporation  and  cannot  be  used  to  reduce  the 
income  from  operations ;  that  is  to  say,  any  expense  incident 
to  the  bringing  of  capital  into  the  company,  whether  it  be 
a  new  or  a  going  concern,  can  not  be  recouped  out  of  or 
charged  against  the  operating  income.  It  is  a  capital  loss  or 
expense  properly  chargeable  against  the  proceeds  of  the 
sale  of  the  stock  and  reduces  the  capital  rather  than  the 
earnings  of  the  company. — ^Art.  145,  Reg.  33,  Revised. 

^  804 — Expenses  Deductible  by  Tenant  Corporations. 

In  the  case  of  corporations  which  occupy  leased  prem- 
ises under  a  lease  contract  which  requires  such  corporations 
to  make  all  necessary  repairs  or  improvements,  which  re- 
pairs or  improvements  revert  to  the  owner  of  the  fee  at  the 
expiration  of  the  lease,  the  tenant  corporation  is  entitled  to 
charge  the  cost  of  all  such  repairs  and  improvements  to  the 
expense  of  doing  business.  This  expense  of  improvements, 
somewhat  permanent  in  character,  should,  however,  be  pro- 
rated over  the  number  of  years  constituting  the  term  of  the 
lease,  and  the  amount  deductbile  from  gross  income  of 
each  year  would  be  the  aliquot  part  of  the  cost  of  such  re- 
pairs and  improvements. — Treasury  Decision  2137. 

»70 


CORPORATIONS— Cont'd  DEDUCTIONS— Expenses 

If  605 — Additional  Deductions  by  Insurance  Companies. 

In  addition  to  the  other  deductions  from  gross  income 
enumerated  herein,  insurance  companies  are,  under  the  pro- 
visions of  the  Revenue  Act  of  1918,  allowed  the  following 
deductions : 

(a)  The  net  addition  required  by  law  to  be  made  within 
the  taxable  year  to  reserve  funds  (including  in  the  case  of 
assessment  insurance  companies  the  actual  deposit  of  sums 
with  State  or  Territorial  officers  pursuant  to  law  as  additions 
to  guarantee  or  reserve  funds) ;  and  (b)  the  sums  other 
than  dividends  paid  within  the  taxable  year  on  policy  and 
annuity  contracts; 

In  the  case  of  corporations  issuing  policies  covering  life, 
health,  and  accident  insurance  combined  in  one  policy  issued 
on  the  weekly  premium  payment  plan  continuing  for  life 
and  not  subject  to  cancellation,  in  addition  to  the  above, 
such  portion  of  the  net  addition  (not  required  by  law)  made 
within  the  taxable  year  to  reserve  funds  as  the  Commis- 
sioner finds  to  be  required  for  the  protection  of  the  holders 
of  such  policies  only ; 

In  the  case  of  mutual  marine  insurance  companies,  there 
shall  be  allowed  amounts  repaid  to  policyholders  on  account 
of  premiums  previously  paid  by  them,  and  interest  paid  upon 
such  amounts  between  the  ascertainment  and  the  payment 
thereof ; 

In  the  case  of  mutual  insurance  companies  (other  than 
mutual  life  or  mutual  marine  insurance  companies)  requir- 
ing their  members  to  make  premium  deposits  to  provide  for 
losses  and  expenses,  there  shall  be  allowed  the  amount  oi 
premium  deposits  returned  to  their  policyholders  and  the 
amount  of  premium  deposits  retained  for  the  payment  of 
losses,  expenses,  and  reinsurance  reserves ; 

^  605  (a) — Additions  and  Betterments  to  Property. 

Additions  and  betterments  to  property,  such  as  expendi- 
tures for  sidings  or  spur  tracks,  are  not  deductible. — Treas- 
ury Decision  2210. 

371  -^^ 


CORPORATIONS— Cont'd  DEDUCTIONS— Expenses 

^  60© — Cost  of  Improvements. 

Where  old  rails  are  replaced  with  new  or  heavier  rails, 
wooden  bridges  and  culverts  with  concrete  and  steel  bridges 
and  culverts,  the  rule  is  that  the  cost  of  renewals  with  like 
kind  and  quality  is  allowable,  but  excess  cost  is  not  allow- 
able as  a  deduction. — Treasury  Decision  2210. 

U  GOT — Expenditures  Included  in  Income. 

Amounts  expended  for  improving  and  adding  to  the  prop- 
erty, such  as  building  new  stations  and  new  shops,  installing 
new  machinery,  and  making  additions  to  equipment,  are 
included  as  income. — Treasury  Decisions  2210. 

ff  008 — Maintenance  Expense. 

Maintenance  means  the  upkeep  or  preserving  of  the  con- 
dition of  the  property  to  be  operated  and  does  not  mean 
additions  to  the  equipment,  additions  to  the  property,  or 
improvements  of  the  former  conditions  of  the  road.  Such 
expense  is  therefore  deductible. — Treasury  Decision  2210. 

Tf  609 — Payment  for  Labor  and  Materials. 

Payment  for  labor  and  materials  which  go  into  the  actual 
operating  of  the  road  and  the  property  are  deductible. — 
Treasury  Decision  2210. 

^  61 0 — Interest  Paid  or  Accrued  Within  the  Year. 

The  amount  of  interest  paid  or  accrued  within  the  taxable 
year  on  its  indebtedness,  except  on  indebtedness  incurred 
or  continued  to  purchase  or  carry  obligations  on  securities 
(other  than  obligations  of  the  United  States  issued  after 
September  24,  1917)  the  interest  upon  which  is  wholly 
exempt  from  the  normal  tax  under  the  income  tax  law. 
Law,  page  76,  line  15. 

f|611 — Bank  and   Trust   Companies — Interest   Deduction. 
Banks — Interest  Deposits — Money  Received  for 
Investment. 

In  the  case  of  a  bank,  banking  association,  loan  or  trust 
company,  interest  paid  within  the  year  on  deposits  or  on 
moneys  received  for  investment  and  secured  by  interest- 

^"  372 


CORPORATIONS— ContM  DEDUCTIONS—Expenses 

bearing  certificates  of  indebtedness  issued  by  such  bank, 
banking  association,  loan  or  trust  company  shall  be  deducted 
from  gross  income. 

IJ  81 2— Taxes. 

Taxes  paid  or  accrued  within  the  taxable  year  imposed 
(a)  by  the  authority  of  the  United  States,  except  income, 
war-profits  and  excess-profits  taxes ;  or  (b)  by  the  authority 
of  any  of  its  possessions,  except  the  amount  of  income, 
war-profits  and  excess-profits  taxes  allowed  as  a  credit 
under  Section  238 ;  or  (c)  by  the  authority  of  any  State  or 
Territory,  or  any  county,  school  district,  municipality,  or 
other  taxing  subdivision  of  any  State  or  Territory,  not  in- 
cluding those  assessed  against  local  benefits;  (d)  in  the 
case  of  a  domestic  corporation,  by  the  authority  of  any 
foreign  country,  except  the  amount  of  income,  war-profits 
and  excess-profits  taxes  allowed  as  a  credit  under  Section 
238:  Provided,  That  in  the  case  of  obligors  specified  in 
subdivision  (b)  of  Section  221  no  deduction  for  the  pay- 
ment of  the  tax  imposed  by  this  title  or  any  other  tax  paid 
pursuant  to  the  contract  or  provision  referred  to  in  that 
subdivision,  shall  be  allowed. 

^  G1 3 — General  Expenses. 

Expenses  of  operation  and  maintenance  shall  include  all 
expenditures  for  material,  labor,  fuel,  and  other  items  enter- 
ing into  the  cost  of  the  goods  sold  or  inventoried  at  the  end 
of  the  year,  and  all  other  expenses  incurred  in  the  operation 
of  the  business  except  such  as  are  ixaquired  by  the  Act  to  be 
segregated  in  the  return. — Art.  129,  Reg.  33,  Revised. 

^  61 4 — Bonuses  or  Additional  Compensation. 

Special  payments,  sometimes  denominated  gifts  or  bon- 
uses, made  by  corporations,  partnerships,  or  individuals  to 
officers  or  employes,  will  constitute  allowable  deduction 
from  gross  income  in  ascertaining  net  income  for  the  pur- 
pose of  the  income  tax,  when  such  payments  are  made  in 
good  faith  and  as  additional  compensation  for  the  services 
actually  rendered  by  the  officers  or  employes.  If  such  pay- 
ments, when  added  to  the  stipulated  salaries  do  not  exceed 
a  reasonable  compensation  for  the  services  rendered  they 

373 


CORPORATIONS— Cont'd  DEDUCTIONS— Expenses 

will  be  regarded  as  a  part  of  the  wage  or  hire  of  the  officer 
or  employe,  and  therefore  an  ordinary  and  necessary  ex- 
pense of  operation  and  maintenance,  and  as  such  will  be 
deductible  from  gross  income. 

Special  payments  made  to  officers  or  employes  who  are 
stockholders,  in  the  guise  of  additional  salaries  or  compen- 
sation, the  amount  of  which  is  based  upon  or  bears  a  close 
relationship  to  the  stockholders  of  such  officers  or  em- 
ployes or  the  capital  invested  by  them  in  the  business  of 
the  company,  will  be  regarded  as  a  special  distribution  of 
profits,  or  compensation  for  the  capital  invested,  and  not 
payment  for  services  rendered.  Payments  under  such  latter 
conditions  being  in  the  nature  of  dividends,  will  not  be 
deductible  from  gross  income. 

Salaries  of  officers  or  employes  who  are  stockholders 
will  be  subject  to  careful  analysis,  and  if  they  are  found 
to  be  out  of  proportion  to  the  volume  of  business  transacted, 
or  excessive  when  compared  with  the  salaries  of  like  officers 
or  employes  of  other  corporations  doing  a  similar  kind  or 
volume  of  business,  the  amount  so  paid  in  excess  of  reason- 
able compensation  for  the  services  will  not  be  deductible 
from  gross  income,  but  will  be  treated  as  a  distribution  of 
profits. — Art.  138,  Reg.  33,  Revised;  also  see  Treasury  De- 
cision 2696. 

Tl  61 5 — Redemption  of  Trading  Stamps. 

Corporations,  mercantile  or  otherwise,  which  issue  trad- 
ing stamps,  coupons,  etc.,  for  the  purpose  of  increasing  their 
business,  which  stamps  or  coupons  are  redeemable  in  mer- 
chandise, may  allowably  deduct  from  gross  income  as  a 
business  expense  the  amount  which  such  corporations 
actually  expended  for  such  stamps  or  coupons,  and  also  the 
actual  cost  to  the  corporations  of  the  merchandise  given  in 
redeeming  the  same. 

This  rule  contemplates  that  a  reserve  set  up  as  a  liability 
equal  to  the  redemption  value  of  the  stamps  or  coupons 
issued  is  not,  as  such,  an  allowable  deduction,  the  deduction 
being  hmited  to  the  cost  of  the  stamps  or  coupons  and  the 
merchandise  with  which  they  are  redeemed. — Art.  141, 
Reg.  33,  Revised. 

374 


CORPORATIONS— Cont'd  DEDUCTIONS— Expenses 

\\  616 — Life  Insurance  in  Favor  of  Corporations. 

That  premiums  paid  on  life  insurance  policies  covering 
the  lives  of  officers,  employes,  or  those  financially  inter- 
ested in  any  trade  or  business  conducted  by  an  individual, 
partnership,  corporation,  joint-stock  company  or  associa- 
tion, or  insurance  company,  shall  not  be  deducted  in  com- 
puting the  net  income  of  such  individual,  corporation,  joint- 
stock  company  or  association,  or  insurance  company,  or  in 
computing  the  profits  of  such  partnership. 

^  61 7 — Cost  of  Buildings  on  Leased  Ground. 

The  cost  of  erecting  permanent  buildings,  or  of  making 
permanent  improvements  on  ground  leased  by  a  company, 
is  held  to  be  an  additional  rental  and  is  therefore  a  proper 
deduction  from  gross  income,  provided  such  buildings  and 
improvements,  under  the  terms  of  the  lease,  revert  to  the 
owner  of  the  ground  at  the  expiration  of  the  lease.  In  such 
case,  however,  the  cost  will  be  prorated  according  to  the 
number  of  years  constituting  the  term  of  the  lease  and  the 
annual  deduction  will  be  an  aliquot  part  of  such  cost. — Art. 
140,  Reg.  33,  Revised. 

^  61 8 — No  Depreciation. 

The  cost  of  the  buildings  being  a  rental  charge  and  de- 
ductible on  the  prorated  basis,  the  lessee  corporation  will 
not  be  permitted  to  deduct  from  gross  income  any  depre- 
ciation with  respect  to  such  buildings,  but  the  cost  of  in- 
cidental repairs  necessary  to  keep  them  in  an  efficient  con- 
dition for  the  purposes  of  their  use,  may  be  deducted  as 
an  expense  of  operation  and  maintenance. 

If,  however,  the  life  of  the  improvement  is  less  than  the 
life  of  the  lease,  the  depreciation  may  be  taken  by  the 
lessee,  based  upon  the  cost  and  life  of  the  improvement. — 
Art.  140,  Reg.  33,  Revised. 

l[  61 9 — Rental — Tenant  Corporations  Making  Repairs,  Etc. 

Tenant  corporations  which  occupy  premises  under  a  lease 
which  requires  such  corporations  to  make  all  necessary  re- 
pairs or  improvements,  which  repairs  or  improvements  re- 

375 


CORPORATIONS— Cont'd  DEDUCTIONS— Expenses 

vert  to  the  owner  at  expiration  of  lease,  is  entitled  to  charge 
cost  of  such  repairs,  etc.,  to  expense  of  doing  business.  For 
method  of  prorating  such  expense,  see  H  617.. 

H  620 — New  Buildings,  Permanent  Improvements, 
Betterments,  Etc. 

No  deduction  shall  be  allowed  for  any  amount  paid  out 
for  new  buildings,  permanent  improvements,  or  better- 
ments, made  to  increase  the  value  of  any  property  or  estate, 
and  no  deduction  shall  be  made  for  any  amount  of  expenses 
of  restoring  property  or  making  good  the  exhaustion  there- 
of for  which  an  allowance  is  or  has  been  made,  except  in 
the  case  of  mines,  oil,  and  gas  wells,  other  natural  deposits 
and  timber. 

ti  621 — Commissions  to  Salesmen  Paid  in  Stock. 

Commissions  allowed  salesmen,  paid  in  stock,  may  be 
deducted  as  expense  if  so  charged  on  the  book  at  the  actual 
value  of  such  stock. 

li  622 — Additions  and  Betterments. 

Amounts  expended  in  additions  and  betterments  which 
constitute  an  increase  in  capital  investment  are  not  a  proper 
deduction. — Art.  132,  Reg.  33;  Revised. 

II  623 — Compensation  Paid  in  Stock. 

Compensation  paid  an  employe  in  capital  stock  of  the 
corporation  may  be  deducted  as  an  expense  if  so  charged 
on  books  at  the  actual  value  of  such  stock,  and  the  recipient 
of  such  stock,  if  he  be  a  taxable  person,  will  return  such 
stock  at  the  same  value  as  income. — Art.  139,  Reg.  33 ;  Re- 
vised. 

1[  624 — Pensions. 

Amounts  paid  for  pensions  to  retired  employes,  or  to 
their  families  or  others  dependent  upon  them,  or  on  account 
of  injuries  received  by  employes,  or  lump-sum  amounts 
paid  as  compensation  for  injuries,  are  proper  deductions  as 
"ordinary  and  necessary  expenses."  Such  deduction  shall 
be  limited  to  the  amount  not  compensated  for  by  insurance 
or  otherwise. 

376 


CORPORATIONS— Cont'd  DEDUCTION  S-^Expenses 

No  deduction  shall  be  made  for  contributions  to  a  pension 
fund  the  resources  of  which  are  held  by  the  corporation, 
the  amount  deductible  in  such  case  being  the  amount  actu- 
ally paid  to  the  employe. — Art.  136,  Reg.  33 ;  Revised. 

ti  625 — Salary  Paid  After  Death  of  Employe. 

When  the  amount  of  the  salary  of  an  officer  or  employe 
is  paid  for  a  limited  period  after  his  death  to  his  widow  or 
heirs,  in  recognition  of  the  services  rendered  by  the  individ- 
ual, no  services  being  rendered  by  the  widow  or  heirs,  such 
payment  is  not  "ordinary  and  necessary"  expense  of  trans- 
acting business  and  does  not  constitute  an  allowable  deduc- 
tion.—Art.  137,  Reg.  33 ;  Revised. 

1[  626 — Special  Compensation  to  Employes. 

When  deductible  and  not  deductible. — See  H  614. 

Special  payments  made  by  a  corporation  as  extra  com- 
pensation to  certain  of  its  employes  may  be  deducted  from 
gross  income,  if  it  is  clearly  shown  that  such  payments  are 
made  as  compensation  for  services  rendered. 

If  so-called  "compensation"  is  a  gratuity  or  voluntary 
payment,  for  which  no  service  is  rendered,  the  amounts  so 
paid  are  not  deductible.  In  cases  where  the  payments  are 
made  as  compensation  for  services  rendered,  the  employees 
receiving  the  same,  if  he  be  a  "taxable  person,"  will  be 
required  to  include  the  amount  of  such  compensation  in  his 
personal  income  tax  return. — Treasury  Decision  2152. 

|[  627 — Donations  Deductible — When. 

Donations  made  by  a  corporation  for  purposes  connected 
with  the  operation  of  the  property,  when  limited  to  char- 
itable institutions,  hospitals  or  educational  institutions, 
conducted  for  the  benefit  of  its  employes  or  their  depend- 
ents, shall  be  a  proper  deduction  as  ordinary  and  necessary 
expenses.  Such  deduction  should,  however,  be  reduced  by 
any  amount  repaid  to  the  corporation  by  the  employes. 

Donations  which  legitimately  represent  a  consideration 
for  a  benefit  flowing  directly  to  the  corporation  as  an  inci- 
dent of  its  business  are  allowable  deductions  from  gross 

377 


CORPORATIONS— Cont'd  DEDUCTIONS— Losses 

income  in  ascertaining  net  income  subject  to  the  income 
tax ;  for  example,  a  street  railway  corporation  donates  a  sum 
of  money  to  an  organization  intending  to  hold  a  convention 
in  the  city  in  which  it  operates,  with  the  expectation  that 
the  holding  of  such  convention  will  augment  its  income 
through  a  greater  number  of  people  using  the  cars.  In  such 
case  the  donations  would  be  an  allowable  deduction,  the 
deduction  to  be  reduced  by  any  portion  of  the  donation 
which  may  be  returned  to  the  corporation. — Art.  134,  Reg. 
33;  Revised. 

H  628 — Donations  Not  Deductible. 

Donations  made  to  employes  and  others,  and  which  do 
not  have  in  them  the  element  of  compensation,  are  consid- 
ered gratuities  and  are  not  allowable  deductions  from  gross 
income  as  expenses  of  operation  or  maintenance  or  under 
any  other  item. — Treasury  Decision  2090;  also,  Art.  135. 
Reg.  33,  Revised. 

^  629 — Reserves  for  Insurance  Not  Deductible. 

Funds  set  aside  by  a  corporation  for  insuring  its  own 
property  are  not  a  proper  deduction,  but  if  such  funds  are 
set  aside,  or  a  reserve  therefor  is  set  up,  any  loss  actually 
sustained  and  charged  to  such  funds  or  reserves  may  be 
deducted. — Art.  144,  Reg.  33 ;  Revised. 

11 630—  LOSSES. 

Losses  sustained  during  the  taxable  year  and  not  com- 
pensated for  by  insurance  or  otherwise.  Law,  page  76, 
line  52. 

^031— When  Deductible. 

The  deduction  for  losses  must  represent  losses  not  com- 
pensated for  by  insurance  or  otherwise  actually  sustained 
within  the  taxable  year. 

In  the  case  of  the  sale  of  assets — real,  personal,  or  mixed 
— the  loss  will  be  the  difference  between  the  cost  thereof, 
or  the  value  as  of  March  1,  1913,  if  acquired  before  that 
date,  and  the  price  at  which  disposed  of.  When  the  loss  is 
claimed  through  the  destruction  of  property  by  fire,  flood,  or 

378 


CORPORATIONS— Cont'd  DEDUCTIONS— Losses 

other  casualty  the"  amount  deductible  will  be  the  difference 
between  the  value  as  of  March  1,  1913,  or  the  cost  of  the 
property  and  the  salvage  value  thereof,  including  in  the 
latter  value  the  amount,  if  any,  that  has  been  or  should  have 
been  set  aside  and  deducted  in  the  current  or  previous  years 
from  gross  income  on  account  of  depreciation  and  which  has 
not  been  paid  out  in  making  good  the  depreciation  sustained. 

1[  632— Mines,  Oil  and  Gas  Wells,  Etc. 

In  the  case  of  mines,  oil  and  gas  wells,  other  natural  de- 
posits, and  timber,  a  reasonable  allowance  for  depletion  and 
for  depreciation  of  improvements,  according  to  the  peculiar 
conditions  in  each  case,  based  upon  cost  including  cost  of 
development  not  otherwise  deducted. 

In  the  case  of  such  properties  acquired  prior  to  March 
1,  1913,  the  fair  market  value  of  the  property  (or  the  tax- 
payer's interest  therein)  on  thai:  date  shall  be  taken  in  lieu 
of  cost  up  to  that  date. 

In  the  case  of  mines,  oil  and  gas  wells,  discovered 
by  the  taxpayer,  on  or  after  March  1, 1913,  and  not  acquired 
as  the  result  of  purchase  of  a  proven  tract  or  lease,  where 
the  fair  market  value  of  the  property  is  materially  dispro- 
portionate to  the  cost,  the  depletion  allowance  shall  be 
based  upon  the  fair  market  value  of  the  property  at  the 
date  of  the  discovery  or  within  30  days  thereafter. 

Such  reasonable  allowance  in  all  the  above  cases  to  be 
made  under  rules  and  regulations  to  be  prescribed  by  the 
Commissioner  with  the  approval  of  the  Secretary. 

In  the  case  of  leases  the  deductions  allowed  by  this  para- 
graph shall  be  equitably  apportioned  between  the  lessor 
and  lessee. 

]\  633 — Losses  On  Judgments. 

Any  amount  paid  pursuant  to  judgment  or  otherwise  on 
account  of  damages  is  deductible  from  gross  income  to  the 
extent  of,  and  when  the  amount  is  actually  paid,  less  any 
amount  of  such  damages  as  may  have  been  compensated 
for  by  insurance. — Art.  158,  Reg.  33 ;  Revised. 

379 


CORPORATIONS— Cont'd  DEDUCTIONS— Losses 

If  634 — Losses  in  Inventory— Previous — First  Time 
Ascertained. 

(a)  At  the  time  of  filing  return  for  the  taxable  year  1918 
a  taxpayer  may  file  a  claim  in  abatement  based  on  the  fact 
that  he  has  sustained  a  substantial  loss  (whether  or  not 
actually  realized  by  sale  or  other  disposition)  resulting  from 
any  material  reduction  (not  due  to  temporary  fluctuation) 
of  the  value  of  the  inventory  for  such  taxable  year,  or  from 
the  actual  payment  after  the  close  of  such  taxable  year  of 
rebates  in  pursuance  of  contracts  entered  into  during  such 
year  upon  sales  made  during  such  year.  In  such  case  pay- 
ment of  the  amount  of  the  tax  covered  by  such  claim  shall 
not  be  required  until  the  claim  is  decided,  but  the  taxpayer 
shall  accompany  his  claim  with  a  bond  in  double  the  amount 
of  the  tax  covered  by  the  claim,  with  sureties  satisfactory 
to  the  Commissioner,  conditioned  for  the  payment  of  any 
part  of  such  tax  found  to  be  due,  with  interest.  If  any  part 
of  such  claim  is  disallowed  then  the  remainder  of  the  tax  due 
shall  on  notice  and  demand  by  the  collector  be  paid  by  the 
taxpayer  with  interest  at  the  rate  of  1  per  centum  per 
month  from  the  time  the  tax  would  have  been  due  had  no 
such  claim  been  filed.  If  it  is  shown  to  the  satisfaction 
of  the  Commissioner  that  such  substantial  loss  has  been 
sustained,  then  in  computing  the  taxes  imposed  by  this  title 
and  by  Title  III.  the  amount  of  such  loss  shall  be  deducted 
from  the  net  income,  (b)  If  no  such  claim  is  filed,  but  it  is 
shown  to  the  satisfaction  of  the  Commissioner  that  during 
the  taxable  year  1919  the  taxpayer  has  sustained  a  substan- 
tial loss  of  the  character  above  described,  then  the  amount 
of  such  loss  shall  be  deducted  from  the  net  income  for  the 
taxable  year  1918  and  the  taxes  imposed  by  this  title  and  by 
Title  III.  for  such  year  shall  be  redetermined  accordingly. 
Any  amount  found  to  be  due  to  the  taxpayer  upon  the  basis 
of  such  redetermination  shall  be  credited  or  refunded  to  the 
taxpayer  in  accordance  with  the  provisions  of  Section  252. 

11  635— Bad  Debts. 

Debts  ascertained  to  be  worthless  and  charged  off  within 
the  taxable  year. — Law,  page  76,  line  54. 

380 


CORPORATIONS— Cont'd  DEDUCTIONS— Losses 

j[  63S~-Bad  Debts  or  Doubtful  Accounts.         * 

Losses  which  may  be  properly  deducted  from  gross  in- 
come on  account  of  bad  debts  or  doubtful  accounts  are  those 
losses  which  have  been  definitely  ascertained  to  have  oc- 
curred and  which  were  charged  off  during  the  year  for 
which  the  return  is  made.  It  is  not  essential  that  the  bad 
debt  or  account  shall  be  proved  worthless  by  legal  proceed- 
ings before  the  deduction  may  be  allowed  but  the  corporation 
must  not  only  be  satisfied  that  the  debt  or  account  is  worth- 
less, but  must  be  able  to  satisfy  the  Commissioner  or  col- 
lector of  internal  revenue  that  the  accounts  charged  off 
were  definitely  determined  at  the  time  to  be  worthless  and 
that  they  had  not  been  recognized  as  worthless  or  without 
value  prior  to  the  beginning  of  the  year  for  which  the  re- 
turn is  made. 

H  637— Bad  Debts—Loss  Must  Be  Definite. 

In  the  absence  of  legal  proceedings  to  determine  the  col- 
lectibility of  a  debt  or  account,  the  question  of  whether  or 
not  it  is  an  asset  without  value  will  depend  largely  upon 
the  judgment  of  the  creditor.  The  mere  writing  down  of 
the  value  of  an  account  does  not  constitute  such  a  loss  as 
may  be  allowably  deducted.  The  deduction  will  be  permis- 
sible only  when  the  debt  or  account  is  written  out  of  the 
assets  of  the  corporation. — Art.  151,  Reg.  33 ;  Revised. 

If  638 — Bad  Debts^ — Arising  from  Unpaid  Wages,  Etc. 

Bad  debts  arising  from  unpaid  wages,  salaries,  rents  and 
items  of  similar  taxable  income  will  not  be  allowed  as  de- 
ductions unless  the  income  which  they  represent  has  been 
included  in  a  return  of  gross  income  for  the  year  in  which 
the  deduction  as  a  bad  debt  is  sought  to  be  made  or  in  a 
previous  year  and  the  debts  themselves  have  been  actually 
ascertained  to  be  worthless  and  charged  off. — Art.  8,  Reg. 
33;  Revised. 

^  639 — Bad  Debts  Recovered. 

Bad  debts  or  accounts  charged  off  by  a  corporation  be- 
cause of  the  fact  that  they  were  determined  to  be  worth- 
less, and  subsequently  recovered,  constitute  income  for  the 

381 


CORPORATIONS— Cont'd  DEDUCTIONS— Losses 

year  in  which  recovered,  regardless  of  the  date  when  the 
amounts  were  charged  off.  Neither  the  date  at  which  the 
debt  was  charged  off  nor  the  fact  that  it  was  or  was  not 
deducted  from  gross  income  in  any  return  made  for  tax 
purposes,  will  in  any  way  affect  its  character  as  income  of 
the  year  in  which  recovered. — Art.  110,  Reg.  33;  Revised. 

^  640 — Voluntary  Removal  of  Buildings. 

Loss  due  to  the  voluntary  removal  or  demolition  of  old 
buildings,  the  scrapping  of  old  machinery,  equipment,  etc., 
incident  to  renewals  and  replacements  will  be  deductible 
from  gross  income,  in  an  amount  representing  the  differ- 
ence between  the  cost  of  such  property  demolished  or 
scrapped  and  an  amount  measuring  a  reasonable  allowance 
for  the  depreciation  which  the  property  had  undergone 
prior  to  its  demolition  or  scrapping ;  that  is  to  say,  the  de- 
ductible loss  is  only  so  much  of  the  original  cost,  less  sal- 
vage, as  would  have  remained  unextinguished  had  a  reason- 
able allowance  been  charged  off  for  depreciation  during  each 
year  prior  to  its  destruction. — Art.  155,  Reg.  33 ;  Revised. 

H  641 — Erection  of  New  Buildings. 

When  a  corporation  buys  real  estate,  upon  which  is  lo- 
cated a  building  or  buildings,  which  it  proceeds  to  raze,  with 
a  view  to  erecting  thereon  another  building  or  buildings,  it 
will  be  held  that  the  corporation  has  sustained  no  deduct- 
ible loss  by  reason  of  the  demolition  of  the  old  building  or 
buildings.  In  such  case  it  will  be  considered  that  the  value 
of  the  real  estate,  exclusive  of  old  improvements,  is  equal 
to  the  purchase  price  of  the  land  and  buildings. — Art.  156, 
Reg.  33;  Revised. 

H  642--Void— [Ed.] 

^  043 — Loss  Due  to  Retirement  of  Bonds. 

In  a  case  wherein  a  corporation,  under  the  terms  of  its  in- 
denture, securing  an  issue  of  bonds  is  required  annually  or  at 
certain  specified  periods  to  purchase  and  retire  a  certain 
number  of  its  bonds  and  in  doing  so  pays  more  than  par 
for  the  bonds,  the  loss  sustained  is  an  allowable  deduction 

382 


CORPORATIONS— Cont'd  DEDUCTIONS— Losses 

from  gross  income  for  the  year  in  which  such  purchase  is 
made,  under  the  following  conditions: 

First.  If  the  bonds  were  sold  at  par,  then  the  loss  is  the 
difference  between  par  and  the  price  at  which  they  were 
repurchased  for  retirement. 

Second.  If  the  bonds  were  sold  at  a  premium  and  such 
premium  was  accounted  for  as  income  for  the  year  in  which 
issued,  then  the  difference  between  par  and  the  repurchase 
price  may  be  deducted  as  loss,  but  if  the  premiums  at  which 
the  bonds  were  issued  had  not  been  carried  into  the  income 
account  then  the  loss  to  be  claimed  should  be  the  difference 
between  the  price  at  which  the  bonds  were  sold  and  the  price 
at  which  they  were  repurchased. 

Third.  If  the  bonds  were  sold  at  a  discount  and  the  dis- 
count was  charged  against  the  earnings  of  the  year  in  which 
issued,  the  difference  between  par  and  the  repurchase  price 
may  be  deducted  as  a  loss,  but  if  the  discount  on  the  bonds 
was  prorated  over  the  life  of  the  bonds  and  the  annual  pro- 
portion charged  against  the  yearly  income,  the  amount  to 
be  charged  off  as  a  loss  for  the  year  in  which  the  bonds  are 
repurchased  for  retirement  should  be  the  difference  between 
the  price  at  which  the  bonds  were  sold  and  the  repurchase 
price  minus  an  allowance  for  the  sum  that  had  been  charged 
off  annually  on  account  of  the  prorated  discount  on  such 
bonds. — Treasury  Decision  2137;  also  Art.  152,  Reg.  33, 
Revised. 

Tf  644 — Losses — ^Previous. 

If  for  any  taxable  year  beginning  after  October  31,  1918, 
and  ending  prior  to  January  1,  1920,  it  appears  upon  the 
production  of  evidence  satisfactory  to  the  Commissioner 
that  any  taxpayer  has  sustained  a  net  loss,  the  amount  of 
such  net  loss  shall  under  regulations  prescribed  by  the  Com- 
missioner with  the  approval  of  the  Secretary  be  deducted 
from  the  net  income  of  the  taxpayer  for  the  preceding  tax- 
able year ;  and  the  taxes  imposed  by  this  title  and  by  Title 
III.  for  such  preceding  taxable  year  shall  be  redetermined 
accordingly.  Any  amount  found  to  be  due  to  the  taxpayer 
upon  the  basis  of  such  redetermination  shall  be  credited  or 
refunded  to  the  taxpayer  in  accordance  with  the  provisions 

383 


CORPORATIONS— Cont^d       DEDUCTIONS— Depreciation 

of  section  252.  If  such  net  loss  is  in  excess  of  the  net  in- 
come for  such  preceding  taxable  year,  the  amount  of  such 
excess  shall  under  regulations  prescribed  by  the  Commis- 
sioner with  the  approval  of  the  Secretary  be  allowed  as  a 
deduction  in  computing  the  net  income  for  the  succeeding 
taxable  year. 

The  benefit  of  this  section  shall  be  allowed  to  the  members 
of  a  partnership  and  the  beneficiaries  of  an  estate  of  trust 
under  regulations  prescribed  by  the  Commissioner  with  the 
approval  of  the  Secretary. 

^  645 — Dividends  Deductible. 

Amounts  received  as  dividends  from  a  corporation  which 
is  taxable  under  this  title  upon  its  net  income,  and  amounts 
received  as  dividends  from  a  personal  service  corporation 
out  of  earnings  or  profits  upon  which  income  tax  has  been 
imposed  by  Act  of  Congress. 

^  646—  '  DEPRECIATION. 

A  reasonable  allowance  for  the  depreciation  of  property 

used  in  the  trade  or  business.    Law,  page  77,  hne  3. 

11 647 — Depreciation  Deductible. 

A  reasonable  allowance  for  the  exhaustion,  wear  and 
tear  and  obsolescence  of  property  arising  out  of  its  use  or 
employment  in  the  business  or  trade  during  the  taxable  year 
shall  be  deducted  from  gross  income. 

Depreciation  as  here  used  must  be  differentiated  from 
depletion,  and  other  losses  elsewhere  provided  for. 

The  deduction  for  depreciation  should  be  the  amount  of 
the  loss  occurring  during  the  year  to  which  the  return 
relates,  estimated  on  the  cost  of  the  physical  property  with 
respect  to  which  such  deduction  is  claimed,  which  loss  re- 
sults from  wear  and  tear  due  to  the  use  to  which  the  prop- 
erty is  put  and  which  loss  has  not  been  made  good  through 
expenditures  for  renewals,  replacements,  and  repairs,  de- 
ducted under  the  heading  of  expense  for  maintenance  and 
operation. 

384 


CORPORATIONS— Cont^d       DEDUCTIONS— Depreciation 

^  648 — Rate  for  Computing. 

No  definite  rate  has  been  fixed  by  which  an  allowable 
deduction  on  account  of  depreciation  in  the  value  of  any 
class  of  property  subject  to  wear  and  tear  and  obsolence  is 
to  be  computed,  but  it  is  contemplated  that  this  allowance 
shall  be  computed  upon  the  basis  of  the  cost  of  the  property 
and  the  probable  number  of  years  constituting  its  life. 

The  life  of  property  necessarily  depends  upon  its  char- 
acter, the  uses  to  which  it  is  put,  and  the  conditions  under 
which  it  is  used.  These  elements  being  taken  into  consid- 
eration, corporations  should,  as  a  result  of  experience  and 
observation,  very  closely  approximate  the  number  of  years 
constituting  the  life  of  the  property  and  upon  this  basis 
determine  the  rate  of  depreciation  which  annually  occurs. 

^  649 — Rate  Based  Upon  Life  of  Buildings. 

In  the  case  of  buildings  the  deduction  on  account  of  de- 
preciation shall  not  include  any  allowance  for  an  estimated 
loss  due  to  lessening  of  rental  value,  nor  shall  the  compu- 
tation of  the  deduction  be  influenced  by  the  changed 
environment  after  a  period  of  years,  nor  by  its  lack  of 
adaptability  to  the  use  originally  intended  nor  to  any  other 
outside  influence  affecting  its  value  but  an  allowable  de- 
preciation shall  be  determined  solely  upon  the  estimated 
life  of  such  buildings  after  making  due  allowance  for  ordi- 
nary repairs,  the  cost  of  which  may  be  deducted  as  expenses 
for  maintenance  and  operation. — Art.  162,  Reg.  33 ;  Revised. 

If  650 — Assets  Not  Subject  to  Wear  and  Tear. 

Assets  of  any  character  whatever  which  are  not  afl^ected 
by  use,  wear,  and  tear  (except  patents,  copyrights,  etc.)  are 
not  subject  to  the  depreciation  allowance  authorized  by  this 
Act.  Real  estate  as  such,  and  as  distinct  from  the  improve- 
ments thereon,  is  not  reduced  in  value  by  reason  of  wear 
and  tear,  and  it  therefore  follows  that  the  "allowance"  con- 
templated as  an  offset  to  depreciation  in  the  case  of  real 
estate  corporations  does  not  apply  to  the  ground,  but  is  in- 
tended to  measure  the  decline,  by  reason  of  wear  and  tear, 
in  the  value  of  the  improvements. — Treasury  Decision  2152 ; 
also  Art.  162,  Reg.  33 ;  Revised. 

385 


CORPORATIONS— Cont^d       DEDUCTIONS— Depreciation 

\]  651  — Buildings,  Machinery,  etc.,  Constructed  for  War 
Purposes. 

In  the  case  of  buildings,  machinery,  equipment,  or  other 
facilities,  constructed,  erected,,  installed  or  acquired  on  or 
after  April  6,  1917-,  for  the  production  of  articles  contrib- 
uting to  the  prosecution  of  the  present  war,  and  in  the  case 
of  vessels  constructed  or  acquired  on  or  after  such  date 
for  the  transportation  of  articles  or  men  contributing  to  the 
prosecution  of  the  present  war,  there  shall  be  allowed  a 
reasonable  deduction  for  the  amortization  of  such  part  of 
the  cost  of  such  facilities  or  vessels  as  has  been  borne  by 
the  taxpayer,  but  not  again  including  any  amount  other- 
wise allowed  under  this  title  or  previous  Acts  of  Congress 
as  a  deduction  in  computing  net  income.  At  any  time  with- 
in three  years  after  the  termination  of  the  present  war,  the 
Commissioner  may,  and  at  the  request  of  the  taxpayer  shall, 
re-examine  the  return,  and  if  he  then  finds  as  a  result  of  an 
appraisal  or  from  other  evidence  that  the  deduction  origi- 
nally allowed  was  incorrect,  the  taxes  imposed  by  this  title 
and  by  Title  III.  for  the  year  or  years  affected  shall  be 
redetermined;  and  the  amount  of  tax  due  upon  such  rede- 
termination, if  any,  shall  be  paid  by  the  taxpayer  upon 
notice  and  demand  by  the  collector,  or  the  amount  of  tax 
overpaid,  if  any,  shall  be  credited  or  refunded  to  the  tax- 
payer in  accordance  with  the  provisions  of  Section  252. 

If  652 — VaRie  to  Be  Estimated — When. 

In  determining  the  cost  of  the  real  estate  upon  which 
depreciable  property  is  located  it  frequently  occurs  that  no 
segregation  is  made  of  the  cost  of  buildings  as  separate  and 
distinct  from  the  cost  of  the  ground  upon  which  such 
buildings  stand.  In  such  cases  where  the  actual 
cost  of  the  building  or  improvements  at  the  time 
they  were  taken  over  by  the  corporation  can  not 
be  definitely  determined,  it  will  be  sufficient  for  the  purpose 
of  determining  the  rate  of  depreciation  to  be  used  in  com- 
puting the  amount  which  will  be  deductible  from  gross  in- 
come to  estimate  the  actual  value  at  the  time  acquired,  of 
buildings  or  improvements  if  acquired  after  March  1,  1913, 


CORPORATIONS— Cont'd       DEDUCTIONS— Depreciation 

or  the  fair  marketj  price  or  value  as  of  that  date  if  the 
property  was  acquired  prior  to  March  1,  1913,  the  value  in 
either  case  to  be  reduced  by  the  amount  of  depreciation 
previously  sustained. — Treasury  Decisions  2137  and  2152; 
also,  Art.  163,  Reg.  33;  Revised. 

ti  653 — Diversion  of  Fund. 

If  a  corporation  at  the  end  of  the  year  finds  it  has  a 
certain  net  income,  and,  without  making  any  provision  for 
depreciation,  distributes  such  net  income  among  its  stock- 
holders as  dividends,  it  will  be  estopped  from  claiming  in 
its  returns  of  annual  net  income  for  such  year  any  deduc- 
tion on  account  of  depreciation  unless  it  is  shown  conclu- 
sively that  the  property  account  has  been  reduced  by  the 
amount  of  depreciation  claimed,  or  unless  such  amount  has 
been  credited  to  a  depreciation  reserve  account,  and  such 
amount  was  in  fact  a  reasonable  allowance. 

The  depreciation  allowance  is  intended  to  provide  a  fund 
out  of  which  the  loss  due  to  use,  wear,  and  tear  may  be 
made  good,  and  the  fund  thus  created  can  not  be  diverted 
to  the  payment  of  dividends ;  that  is  to  say,  a  deduction 
made  under  the  guise  of  depreciation  can  not  measure  a  loss 
and  at  the  same  time  be  used  in  the  payment  of  dividends. 

The  fact  that  no  reserve  was  made  for  depreciation  indi- 
cates that  there  is  no  loss  on  this  account  to  be  provided  for. 
—Art.  161,  Reg.  33 ;  Revised. 

U  654 — Use  of  Depreciation  Reserve. 

Depreciation  set  up  on  the  books  and  deducted  from  gross 
income  can  not  be  used  for  any  purposes  other  than  in 
making  good  the  loss  sustained  by  reason  of  the  wear  and 
tear  of  the  property  with  respect  to  which  it  is  claimed. 

If,  however,  an  investment  is  made  in  extensions,  addi- 
tions, or  betterments  of  the  company's  own  property,  repre- 
senting a  part  or  the  whole  of  the  credit  balance  of  the 
depreciation  reserve  account,  such  investment  will  not  be 
considered  a  misuse  or  diversion  of  the  depreciation  deduc- 
tion otherwise  allowable. — Art.  164,  Reg.  33 ;  Revised. 

Investments  in  additions  and  extensions  are  primarily 
capital  investments  and  the  fact  that  the  corporation  is 

387 


CORPORATIONS— Cont'd       DEDUCTIONS—Depreciation 

investing  its  depreciation  funds  in  additions  and  better- 
ments or  improvements  would  seem  to  indicate  that  the 
amounts  set  aside  on  account  of  depreciation  were  in  excess 
of  a  reasonable  allowance  which  the  law  contemplates  a 
corporation  may  deduct  from  its  gross  income,  and  when 
it  shall  appear  that  by  reason  of  the  investing  of  its  depre- 
ciation funds  in  additions,  betterments,  and  improvements, 
it  actually  adds  to  the  value  of  its  capital  assets  it  will  be 
insisted  upon  that  the  amount  by  which  the  assets  are  in- 
creased on  this  account  shall  be  returned  as  income  and  be 
subject  to  the  income  tax. 

[I  655 — Depreciation  In  Excess  of  Cost. 

If  it  develops  that  by  reason  of  underestimating  the  life 
of  the  property  or  by  overestimating  the  rate  of  deteriora- 
tion an  amount  in  excess  of  the  yearly  depreciation  has  been 
taken,  the  rate  applicable  to  future  years  should  at  once  be 
reduced  and  the  balance  of  the  cost  of  the  property  not 
provided  for  through  a  depreciation  reserve  should  be  spread 
over  the  estimated  remaining  life  of  the  property. — Art. 
165,  Reg.  33 ;  Revised. 

^  656 — Reserves  for  Depreciation. 

Reserves  for  depreciation  constitute  proper  deductions 
from  gross  income  if  reasonable,  and  not  to  be  disallowed 
if  converted  into  other  forms  of  assets. 

^  657 — Depreciation  Must  Be  Charged  Off. 

Within  the  purview  of  this  item  depreciation,  to  an 
amount  measuring  the  decline  in  value  due  to  exhaustion, 
wear  and  tear  of  property  arising  out  of  its  use,  is  a  loss. 
This  loss,  in  order  to  constitute  an  allowable  deduction  from 
gross  income,  must  be  charged  off.  The  particular  manner 
in  which  the  amount  shall  be  charged  off  is  not  material, 
except  that  the  amount  measuring  a  reasonable  allowance 
for  depreciation  must  be  either  deducted  directly  from  the 
book  value  of  the  assets  or  credited  to  a  depreciation  reserve 
account,  and  as  such  shall  be  reflected  in  the  annual  balance 
sheet.  (See  Sec.  1001,  Act  of  Oct.  3,  1917.) —Art.  159, 
Reg.  33 ;  Revised. 

388 


CORPORATIONS— Cont'd       DEDUCTIONS— Depreciation 

U  658 — Shrinkage  in  Book  Values. 

Depreciation  in  book  values  of  capital  assets  shall  be 
treated  in  the  return  in  the  manner  prescribed  in  the  case 
of  loss  from  the  sale  of  capital  assets  (U  575),  but  amounts 
arbitrarily  charged  off  will  not  be  allowed  as  deductions 
except  so  far  as  they  represent  an  actual  shrinkage  in 
values  which  may  be  determined  to  have  taken  place  during 
the  year  for  which  the  return  is  made. 

Book  values  which  reflect  a  shrinkage  in  value  of  assets 
are  not  a  basis  for  determining  taxable  income. — Treasury 
Decision  2090. 

^  659 — Depreciation  in  Value  of  Stocks  and  Bonds. 

Depreciation  allowed  by  law  does  not  include  shrinkage 
in  value  of  stocks  and  bonds. 

^  660 — Shrinkage  in  Securities. 

A  corporation  possessing  securities,  such  as  stocks  and 
bonds,  can  not  allowably  deduct  from  gross  income  any 
amount  claimed  as  a  loss  on  account  of  the  shrinkage  in 
value  of  such  securities  through  fluctuations  of  the  market 
or  otherwise;  the  only  loss  to  be  allowed  in  such  cases  is 
that  actually  suffered  when  the  securities  mature  or  are 
disposed  of. 

In  the  case  of  banks  or  other  corporations  which  are 
subject  to  supervision  by  State  or  Federal  authorities,  and 
which,  in  obedience  to  the  orders  of  such  supervisory  of- 
ficers, charge  off  as  losses,  amounts  representing  an  alleged 
shrinkage  in  the  value  of  property,  real,  personal,  or  mixed, 
the  amounts  so  charged  off  do  not  constitute  allowable  de- 
ductions. Deductible  losses  are  those  only  which  are  de- 
termined upon  the  basis  of  a  closed  or  completed  transac- 
tion.—Treasury  Decisions,  2005,  2130  and  2152.  The  fore- 
going applies  only  to  owners  and  investors  and  not  to 
dealers  in  securities,  as  to  which  see  Treasury  Decision  2609, 
Art.  148,  Reg.  33;  Revised. 

TI  661  — Irrigation  Bonds — Losses  on. 

District  irrigation  bonds  generally  are  a  lien  upon  the 
real  estate  affected  by  the  irrigation  project,  and  until  a 
corporation  holding  such  bonds  has  taken  the  necessary 

389 


CORPORATIONS— Cont'd       DEDUCTIONS— Depreciation 

action  to  protect  its  interest  and  enforce  the  collection  of 
the  bonds  the  corporation  will  not  be  allowed  to  deduct  from 
gross  income,  as  a  loss,  the  face  value  or  any  estimated 
amount  supposed  to  represent  a  loss  or  shrinkage  in  the 
value  of  such  bonds.  Any  estimated  shrinkage  in  the  value 
of  bonds  or  other  securities  does  not  constitute  a  loss  with- 
in the  meaning  of  this  title.  So  long  as  the  value  of  a  se- 
curity is  uncertain  or  unknown  a  loss  can  not  be  definitely 
ascertained  and  is  therefore  not  deductible. — Treasury  De- 
cisions 2005,  2130  and  2152. 

H  662— Discount  on  Bonds  Issued  Prior  to  1909. 

Discount  on  bonds  issued  and  sold  prior  to  the  year  1909, 
if  such  discount  was  then  charged  against  surplus  or  against 
the  income  of  the  year  in  which  the  bonds  were  sold,  is 
held  not  to  be  deductible  from!  the  income  of  subsequent 
years,  for  the  reason  that  the  charging  off  prior  to  January 
1,  1909,  of  the  entire  amount  of  the  discount  constitutes  a 
closed  transaction,  and  such  transaction  can  not  be  reopened 
for  the  purpose  of  reducing  the  taxable  income  of  a  cor- 
poration for  subsequent  years  by  deducting  therefrom  an 
aliquot  part  of  the  discount.  (C.  &  A.  R.  R.  v.  U.  S.,  Court  of 
Claims.)— Art.  149,  Reg.  33,  Revised. 

f[  663 — Bond  Discount  and  Expense  to  Be  Amortized. 

If,  however,  the  bonds  were  sold  subsequent  to  January 
1,  1909,  at  a  discount,  and  the  amount  of  the  discount  was 
then  charged  off  on  the  books,  either  against  earnings  or 
surplus,  but  not  deducted  in  the  corporation's  return  of 
net  income,  such  discount  as  was  not  then  deducted  in  its 
entirety,  may  be  spread  over  the  life  of  the  bonds,  and  an 
ahquot  part  of  the  discount  may  be  deducted  from  the  gross 
income  of  each  year  until  the  bonds  mature  or  are  re- 
deemed. 

In  cases  wherein  a  corporation  sells  its  bonds  at  a  dis- 
count plus  a  commission  for  selling,  the  amount  of  such  dis- 
count and  commission,  together  with  other  expenses  inci- 
dental to  issuing  the  bonds,  constitute  a  loss,  the  aggregate 

390 


CORPORATIONS— Cont'd       DEDUCTIONS—Depreciation 

amount  of  which  loss  will,  for  thfe  purpose  of  an  income  tax 
return,  be  prorated  over  the  life  of  the  bonds  sold,  and  the 
amount  thus  apportioned  to  each  year  will  be  deductible 
from  the  gross  income  of  each  such  year  until  the  bonds 
shall  have  been  redeemed. 

If  a  corporation  having  sold  its  bonds  at  a  discount,  the 
discount  having  been  deducted  from  gross  income  later  re- 
purchases or  redeems  the  bonds  at  a  price  less  than  par, 
the  difference  between  the  price  at  which  they  are  redeemed 
and  their  par  value  will  be  returned  as  income.  If  bonds 
are  sold  at  a  premium  the  premium  must  be  returned  as  in- 
come.— Art.  150,  Reg.  33,  Revised. 

^  6e4--Good  Will. 

"Good  will"  represents  the  value  attached  to  a  business 
over  and  above  the  value  of  the  physical  property,  and  is 
such  an  intangible  asset  that  it  is  not  subject  to  wear  and 
tear,  and  no  claim  for  depreciation  in  connection  therewith 
can  be  allowed.  Any  loss  resulting  from  or  on  account  of 
an  investment  in  "good  will"  can  be  determined  only  when 
the  property  or  business  to  which  the  good  will  attaches  is 
sold  or  disposed  of,  in  which  case  the  profit  or  loss  will  be  de- 
termined upon  the  basis  of  the  value  of  the  assets  includ- 
ing good  will  if  acquired  prior  to  March  1,  1913,  or  their 
cost  if  acquired  subsequent  to  that  date. — Art.  167,  Reg. 
33,  Revised. 

^  665 — No  Deduction  for  Depreciation  of  Good  Will, 
Trade-marks,  and  Trade  Brands. 

No  deduction  will  be  allowed  for  the  depreciation  of  good 
will,  trade-marks,  and  trade  brands.  If  such  assets  shall  have 
been  purchased  at  a  determined  price  and  shall  be  later  sold 
at  a  price  less  than  such  cost,  or  less  than  their  determined 
fair  market  value  as  of  March  1,  1913,  if  acquired  prior  to 
that  date,  the  amount  by  which  the  selling  price  is  less 
than  the  cost  or  value,  as  the  case  may  be,  will  be  a  loss  de- 
ductible from  the  gross  income  of  the  year  in  which  such 
assets  were  sold. — Art.  168,  Reg.  33,  Revised. 

391 


CORPORATIONS— Cont'd       DEDUCTIONS— Depreciation 

U  eee — Patents,  Deduction  for  Return  of  Capital  Invested 
Therein. 

An  allowable  deduction  for  any  given  year  for  return  of 
capital  invested  in  patents  at  time  of  issue  will  be  an 
amount  equal  to  one-seventeenth  of  the  actual  cost,  in  cash 
or  its  equivalent,  of  such  patents.  Where  the  patent  has 
been  secured  from  the  Government,  its  cost  will  be  rep- 
resented by  the  various  Government  fees,  cost  of  drawings, 
experimental  models,  attorneys'  fees,  etc.,  actually  paid. 
Where  the  patent  has  been  purchased  for  a  cash  considera- 
tion, the  amount  paid  therefor  would  represent  the  capital 
invested  therein.  If  the  corporation  purchased  a  patent  and 
made  payment  therefor  in  stock  or  other  securities,  the  ac- 
tual cash  value  of  such  stocks  or  other  securities  at  the  time 
of  the  purchase  will  represent  the  cost  or  capital  invested  in 
the  patent.  If  the  patent  was  purchased  after  a  part  of  its 
life  had  expired,  the  cost  for  the  purpose  of  a  deduction  for 
return  of  capital  will  be  ratably  spread  over  the  remaining 
years  of  its  life.  If  the  patent  becomes  obsolete  prior  to 
its  expiration,  it  will  be  permissible  for  the  corporation  to 
deduct  from  gross  income  such  proportion  of  its  original 
cost  (less  any  amount  previously  charged  off)  as  the  num- 
ber of  years  of  its  remaining  life  bears  to  the  whole  number 
of  years  intervening  between  the  date  it  was  acquired  and 
the  date  it  legally  expires.  In  determining  the  amount  de- 
ductible on  account  of  the  expiring  life  of  patents  only  the 
actual  cost  thereof  and  not  an  estimated  value  as  of  March 
1, 1913,  or  any  other  date,  will  be  considered. — Art.  174,  Reg. 
33,  Revised. 

Ij  667 — Cost  of  Successful  Drawing,  Models,  Etc.,  Capital. 

When  a  corporation  has  made  expenditures  for  designs, 
drawings,  patterns  or  models  representing  work  of  an  ex- 
perimental nature,  and  such  designs,  drawings,  patterns,  or 
models  prove  to  be  satisfactory  and  result  in  the  produc- 
tion of  salable  goods,  they  will  be  treated  as  a  capital  asset, 
and  the  entire  cost  thereof,  including  experimental  and  de- 
velopment expenses,  will  be  capitalized,  in  which  case  no  part 
of  such  expenditures  shall  be  included  in  expenses  of  run- 

392 


CORPORATIONS— Cont'd       DEDUCTIONS— Depreciation 

ning  the  business  and  shall  not  be  treated  as  a  deduction 
from  gross  income. — Art.  175,  Reg.  33,  Revised. 

^  868 — Cost  of  Unsatisfactory  Models,  Drawings,  Etc.,  a 
Loss. 

If,  however,  the  designs,  drawings,  patterns,  or  models 
prove  by  actual  experience  to  be  unsatisfactory  and  do  not 
result  in  the  production  of  salable  goods  and  have  no  asset 
value,  such  expenditures  when  charged  off  may  be  included 
as  a  loss  incident  to  running  the  business  and  as  such 
deducted  from  gross  income,  provided  that  the  corporation 
in  taking  credit  for  such  expenditures  in  its  income  tax  re- 
turn shall  make  a  full  and  complete  explanation  with  respect 
to  the  same  and  to  the  satisfaction  of  the  Commissioner  of 
Internal  Revenue. — Art.  176,  Reg.  33,  Revised. 

^  660 — Obsolescence  of  Models,  Drawings,  Etc., 
as  a  Loss. 

If  designs,  drawings,  patterns,  or  models  result  in  the  pro- 
duction of  goods  which  prove  to  be  salable  for  a  certain 
length  of  time  and  then  become  obsolete  and  can  not  be  sold, 
the  amount  expended  for  such  designs,  drawings,  patterns, 
or  models,  less  any  amounts  previously  claimed  as  deprecia- 
tion with  respect  to  the  same  or  as  a  return  of  capital,  may 
when  charged  oif ,  be  included  in,  and  deducted  as  a  loss  in- 
cident to  running  the  business,  provided  full  and  complete 
information  is  reported  in  a  manner  satisfactory  to  the  Com- 
missioner of  Internal  Revenue. — Art.  177,  Reg.  33,  Revised. 

^  67© — Obsolescence  Deductible,  Cost  Less  Depreciation  and 
Salvage. 

Amounts  representing  losses  on  account  of  obsolescence  of 
physical  property  may  be  included  as  a  deduction  from  gross 
income  as  a  loss,  provided  such  amounts  have  been  recorded 
in  the  books  following  the  condemnation  and  withdrawal 
from  use  of  the  obsolete  property.  The  amount  of  obsoles- 
cence that  may  be  claimed  as  a  deduction  shall  be  ascer- 
tained by  deducting  from  the  cost  of  the  property  the  total 
amount  that  has  been  previously  claimed  and  deducted  on 
account  of  the  depreciation  of  the  property,  plus  residual 
value  at  time  of  obsolescence,  or  plus  the  amount  received 

393 


CORPORATIONS— Cont^d       DEDUCTIONS— Depreciation 

from  the  sale  of  the  property.  The  obsolescence  deduction 
must  not  include  the  accumulated  depreciation  applicable 
to  prior  years. — Art.  178,  Reg.  33,  Revised. 

K  671  — Obsolescence  When  No  Depreciation  is  Deducted. 

If  no  depreciation  has  been  charged  off  against  such  prop- 
erty and  deducted  from  gross  income  of  prior  years,  the 
amount  allowable  as  a  deduction  for  the  year  in  which  the 
property  becomes  obsolete  shall  be  ascertained  by  deducting 
from  the  cost  of  the  property  its  residual  value  plus  an 
amount  equal  to  the  depreciation  actually  sustained  during 
the  prior  period  and  which  might  have  been  deducted  when 
computed  at  the  rate  applicable  to  the  same  or  similar  prop- 
erty. The  amount  of  depreciation  thus  arrived  at  as  ap- 
plicable to  former  years  may  be  made  the  basis  of  amended 
returns  and  a  claim  for  the  refund  of  taxes  overpaid  by 
reason  of  the  fact  that  no  depreciation  deduction  was 
claimed  in  those  years. — Art.  179,  Reg.  33,  Revised. 

H  672— Sale  of  Patents. 

A  corporation  disposing  of  patents  by  sale  should  deter- 
mine the  profit  or  loss  arising  therefrom  by  computing  the 
difference  between  the  selling  price  and  the  value  as  of 
March  1,  1913,  if  acquired  prior  to  that  date,  or  between  the 
selling  price  and  the  cost,  if  acquired  subsequent  to  that 
date.  The  profit  or  loss  thus  ascertained  should  be  increased 
or  decreased,  as  the  case  may  be,  by  the  amounts  deducted 
on  account  of  depreciation  of  such  patents  since  March  1, 
1913,  or  since  the  date  or  purchase  if  acquired  subsequent  to 
that  date. — Art.  157,  Reg.  33,  Revised. 

^  673 — Rules  far  Timber-owning  Lumber  Companies. 

Corporations  owning  timber  land  and  logging  off  the  tim- 
ber and  manufacturing  it  into  lumber,  will,  if  the  timber  is 
acquired  prior  to  March  1,  1913,  be  permitted  to  exclude 
from  gross  income  either  through  a  deduction  from  gross  re- 
ceipts or  through  a  charge  into  the  cost  of  manufacturing 
the  timber  into  lumber,  an  amount  equivalent  to  the  fair 
market  price  or  value  of  the  standing  timber  as  of  March 
1, 1913. 

394 


CORPORATIONS— Cont'd       DEDUCTIONS— Depreciation 

In  order  to  secure  the  benefit  of  this  deduction  such  cor- 
porations must  set  up  on  their  books  as  of  March  1, 1913,  the 
fair  market  price  en  bloc,  of  all  the  timber  then  owned  by 
them,  and  then,  by  dividing  his  en  bloc  value  by  the  esti- 
mated number  of  feet  (board  measure)  in  the  entire  timber 
holdings,  the  per  unit  value  or  price  as  of  March  1,  1913, 
will  be  ascertained,  which  per  unit  price  or  value  will  be  the 
basis  for  measuring  the  amount  which  may  be  added  to  the 
cost  of  manufacture,  or  deducted  from  gross  income,  until 
the  en  bloc  value  of  the  entire  holding  as  of  March  1,  1913, 
shall  have  been  extinguished,  after  which  no  further  deduc- 
tion on  this  account  shall  be  allowed. 

The  same  rule  will  apply  in  the  case  of  timber  or  timber 
lands,  purchased  subsequent  to  March  1,  1913,  the  only  dif- 
ference being  that  actual  cost — that  is,  the  gross  purchase 
price — shall,  in  making  the  computation,  be  substituted  for 
en  bloc  price  or  value  as  of  that  date.  If  the  entire  market 
price  or  value  of  both  timber  and  lands  as  of  March  1, 
1913,  or  the  entire  cost,  if  acquired  subsequent  to  that  date, 
is  extinguished  through  a  deduction  from  gross  income  for 
timber  used,  or  through  a  per  unit  charge  to  cost  of  manu- 
facturing lumber,  then  the  entire  amount  realized  from  the 
logged-off  lands  or  for  other  salvage  will  be  returned  as  in- 
come of  the  year  in  which  such  lands  are  sold  or  disposed  of. 
""if  the  timber  or  timber  lands  are  sold  en  bloc,  the  gain  or 
loss  will  be  ascertained  on  the  basis  of  the  difference  be- 
tween the  fair-market  price,  or  cost,  and  the  selling  price, 
according  as  the  property  was  acquired  prior  or  subsequent 
to  March  1,  1913. 

The  fair  market  price  or  value  of  timber  or  timber  lands 
as  of  March  1, 1913,  is  the  price  at  which  the  property  in  its 
then  condition,  and  with  the  circumstances  then  surrounding 
it,  could  have  been  sold  for  cash  or  its  equivalent.  This  value 
must  not  be  speculative,  but  must  be  determined  without 
taking  into  account  any  prospective  profits  that  may  result 
from  the  manufacture  of  the  timber  into  lumber.  It  must 
be,  as  the  law  contemplates,  a  fair  market  value  and,  once 
determined,  must  be  set  up  on  the  books  and,  as  the  measure 
of  a  stumpage  deduction  for  income-tax  purposes,  must  re- 

395 


CORPORATIONS— Cont'd       DEDUCTIONS— Depreciation 

main  constant  and  can  not  be  increased  except  as  new  pur- 
chases are  made  at  a  higher  average  cost.  The  value  so  set 
up  as  of  March  1, 1913,  will  be  subject  to  the  approval  of  the 
Commissioner  of  Internal  Revenue. — Art.  173,  Reg.  33,  Re- 
vised. 

II  674 — Court  Decision  Relative  to  Depreciation  of  Property. 
Under  a  decision  of  the  United  States  District  Court, 
Western  District  of  Michigan,  Southern  District,  there  may- 
be deducted  on  account  of  depreciation,  the  difference  be- 
tween the  original  cost  price  of  property  and  its  increased 
fair  market  value  at  the  time  of  the  incidence  of  the  Special 
Excise  Tax  of  1909.  A  lumber  company  in  1913  had  paid 
certain  amounts  for  standing  merchantable  hardwood  tim- 
ber, pine  timber  and  cut-over  stump  land,  carrying  the  prop- 
erty so  acquired  on  its  books  at  cost  price.  In  its  excise  tax 
returns  for  1909  to  1912,  inclusive,  the  company  deducted 
from  gross  receipts  from  sales  of  timber  and  stump  lands, 
for  return  to  capital  assets,  an  amount  representing  the  dif- 
ference in  original  cost  and  what  was  admitted  to  be  a  fair 
market  value  at  the  time  of  the  incidence  of  the  special  ex- 
cise tax  of  1909.  The  Government  allowed  the  original  cost 
as  a  deduction,  but  assessed  an  additional  tax  on  the  increase 
of  value  deducted  by  the  company.  The  company  sued  to 
recover  the  additional  tax  paid  under  protest  and  received 
judgment  for  the  amount  of  excess  taxes  so  paid. 

^  675 — Depreciation  of  Improvements. 

In  addition  to  the  deduction  to  measure  the  loss  due  to  de- 
pletion, a  corporation  will  be  allowed  depreciation  on  im- 
provements at  mines,  oil  and  gas  wells  and  all  other  natural 
deposits  in  accordance  with  the  peculiar  conditions  in  each 
case  and  based  on  life  and  cost. 

^  676 — Corporations  Leasing  Oil  or  Gas  Territories. 

Corporations  leasing  oil  or  gas  territory  shall  base  their 
depletion  deduction  in  accordance  with  paragraph  677, 
which  shall  be  equitably  apportioned  between  the  lessor  and 
the  lessee. 

396 


CORPORATIONS— Cont'd  DEDUCTIONS— Interest 

^  677— Depletion— Mines,  Oil  and  Gas  Wells,  Other  Natural 
Deposits  and  Timber. 

In  the  case  of  mines,  oil  and  gas  wells,  other  natural  de- 
posits, and  timber,  a  reasonable  allowance  for  depletion  and 
for  depreciation  of  improvements,  according  to  the  peculiar 
conditions  in  each  case,  based  upon  cost  including  cost  of  de- 
velopment not  otherwise  deducted.  In  the  case  of  such 
properties  acquired  prior  to  March  1,  1913,  the  fair  market 
value  of  the  property  (or  the  taxpayer's  interest  therein) 
on  that  date  shall  be  taken  in  lieu  of  cost  up  to  that  date. 
In  the  case  of  mines,  oil  and  gas  wells,  discovered  by  the  tax- 
payer, on  or  after  March  1, 1913,  and  not  acquired  as  the  re- 
sult of  purchase  of  a  proven  tract  or  lease,  where  the  fair 
market  value  of  the  property  is  materially  disproportionate 
to  the  cost,  the  depletion  allowance  shall  be  based  upon  the 
fair  market  value  of  the  property  at  the  date  of  the  dis- 
covery, or  within  12  months  thereafter.  Such  reasonable 
allowance  in  all  the  above  cases  to  be  made  under  rules  and 
regulations  to  be  prescribed  by  the  Commissioner  with  the 
approval  of  the  Secretary.  In  the  case  of  leases,  the  deduc- 
tions allowed  by  this  paragraph  shall  be  equitably  appor- 
tioned between  the  lessor  and  lessee. 

INTEREST. 

1[  678 — What  Constitutes  Allowable  Interest  Deduction. 

All  interest  paid  or  accrued  within  the  taxable  year  on  its 
indebtedness,  except  on  indebtedness  incurred  or  continued 
to  purchase  or  carry  obligations  or  securities  (other  than 
obligations  of  the  United  States  issued  after  September  24, 
1917)  the  interest  upon  which  is  wholly  exempt  from  taxa- 
tion under  this  title  as  income  to  the  taxpayer. 

If  a  corporation  borrows  money  to  purchase  securities  the 
interest  from  which  is  not  subject  to  the  corporation  income 
tax,  the  interest  paid  on  such  borrowed  money  cannot  be 
used  as  a  deduction. 

See  also  H  679. 

^  679 — Interest  on  Indebtedness  as  Rental. 

Interest  paid  pursuant  to  contract  on  an  indebtedness  se- 
cured by  mortgage  on  real  estate  occupied  and  used  by  a 

397 


CORPORATIONS— Cont'd  DEDUCTIONS— Taxes 

corporation,  in  which  real  estate  the  corporation  has  no 
equity  or  to  which  it  is  not  taking  title,  is  an  allowable  de- 
duction from  gross  income  as  a  rental  charge,  payment  of 
which  is  required  to  be  made  as  a  condition  to  the  continued 
use  and  possession  of  the  property.  If,  however,  the  cor- 
poration has  an  equity  in  or  is  purchasing  for  its  own  use  the 
real  estate  upon  which  such  mortgage  is  a  prior  lien,  the  in- 
debtedness will  be  held  to  be  indebtedness  of  the  corporation 
within  the  meaning  of  the  law  and  the  interest  paid  on  such 
mortgage  will  be  deductible  only  to  the  extent  that,  includ- 
ing interest  on  other  obligations  of  the  corporation,  it  is 
within  the  limit  fixed  by  the  law. — Treasury  Decisions  2090 
and  1993 ;  also.  Art.  186,  Reg.  33 ;  Revised. 

|[  680 — Interest  on  Deposits. 

In  the  case  of  banks  and  banking  associations,  loan  or 
trust  companies,  interest  paid  within  the  year  on  deposits 
or  on  moneys  received  for  investment  and  secured  by  inter- 
est-bearing certificates  of  indebtedness  issued  by  such  bank, 
banking  association,  loan  or  trust  company,  may  be  allow- 
ably deducted  from  the  gross  income  of  such  corporation. — 
Art.  190,  Reg.  33 ;  Revised. 

^  681 — Different  Rates  of  Interest  on  Indebtedness. 

Interest  on  bonded  or  other  indebtedness  bearing  differ- 
ent rates  of  interest  may  be  deducted  from  gross  income 
during  the  year. 

fl  682 — Interest  Paid  by  Brokerage  Corporation. 

Interest  paid  by  a  brokerage  corporation  on  part  pur- 
chases of  securities  for  its  customers  is  allowable  as  interest 
payable  on  its  bonded  or  other  indebtedness. 

^  683—  TAXES. 

Taxes  paid  or  accrued  within  the  taxable  year  imposed 
(a)  by  the  authority  of  the  United  States,  except  income, 
war-profits  and  excess-profits  taxes ;  or  (b)  by  the  authority 
of  any  of  its  possessions,  except  the  amount  of  income,  war 
profits  and  excess  profits  taxes  allowed  as  a  credit  under 
Section  238 ;  or  (c)  by  the  authority  of  any  State  or  Ter- 

398 


CORPORATIONS— Cont'd  DEDUCTIONS— Taxes 

ritory,  or  any  county,  school  district,  municipality,  or  other 
taxing  subdivision  of  any  State  or  Territory,  not  including 
those  assessed  against  local  benefits  of  a  kind  tending  to 
increase  the  value  of  the  property  assessed;  or  (d)  in  the 
case  of  a  domestic  corporation,  by  the  authority  of  any 
foreign  country,  except  the  amount  of  income,  war  profits 
and  excess  profits  taxes  allowed  as  a  credit  under  Section 
238  (income,  war  profits  and  excess-profits  taxes  paid  to  a 
foreign  country) ;  or  (e)  in  the  case  of  a  foreign  corpora- 
tion, by  the  authority  of  any  foreign  country  (except  in- 
come, war  profits  and  excess  profits  taxes,  and  taxes  as- 
sessed against  local  benefits  of  a  kind  tending  to  increase 
the  value  of  the  property  assessed),  upon  the  property  or 
business :  Provided,  That  in  the  case  of  obligors  specified  in 
subdivision  (b)  of  Section  221,  no  deduction  for  the  payment 
of  the  tax  imposed  by  this  title  or  any  other  tax  paid  pur- 
suant to  the  contract  or  provision  referred  to  in  that  sub- 
division, shall  be  allowed. 

H  684— -Tax-Free  Bonds. 

In  the  case  of  bonds  or  other  forms  of  indebtedness  issued 
with  a  guaranty  that  the  interest  thereon  shall  be  free  from 
taxation  as  against  the  holder  the  corporation  paying  the 
tax  pursuant  to  its  guaranty,  whether  Federal,  State,  or  mu- 
nicipal, will  not  be  permitted  to  deduct  the  tax  so  paid.  The 
tax  assessable  upon  this  income  is  a  direct  liability  of  the 
recipient,  and  the  debtor  corporation  paying  it  does  so  vol- 
untarily or  at  least  in  pursuance  of  a  contract  voluntarily 
entered  into,  which  contract  is  in  nowise  binding  upon  or 
to  be  recognized  by  the  Government  in  determining  the  tax 
liability  of  the  corporation.  Hence  taxes  so  paid  are  not 
deductible  from  the  gross  income  of  the  debtor. — ^Treasury 
Decision  2161 ;  also.  Art.  193,  Reg.  33 ;  Revised. 

1|  685— Local  Benefits. 

So-called  "taxes,"  more  properly  assessments,  paid  for 
local  benefits,  such  as  street,  sidewalk  and  other  like  assess- 
ments, imposed  because  of  and  measured  by  some  benefit 
inuring  directly  to  the  property  against  which  the  assess- 
ment is  levied,  do  not  constitute  an  allowable  deduction  from 

399 


CORPORATIONS— Cont'd  DEDUCTIONS— Taxes 

gross  income.  Taxes  deductible  are  those  levied  for  the 
public  welfare  by  the  proper  taxing  authorities  at  a  like 
rate  against  all  property  in  the  territory  over  which  such 
authorities  have  jurisdiction. 

Special  assessments,  such  as  are  hereinbefore  contem- 
plated and  which  are  measured  upon  the  basis  of  the  benefit 
flowing  directly  to  the  property,  are  not  deductible,  even 
though  an  incidental  benefit  may  inure  to  the  public  wel- 
fare.—Treasury  Decision  2090;  also,  Art.  194,  Reg.  33; 
Revised.  '"'"^W^ 

^  686— Excess  Profits  Tax  as  a  Credit. 

That  in  assessing  income  tax  the  net  income  embraced 
in  the  return  shall  also  be  credited  with  the  amount  of  any 
war-excess  profits  tax  imposed  by  Title  III.  of  the  Revenue 
Act  of  1918,  and  assessed  for  the  same  calendar  or  fiscal 
year  upon  the  taxpayer. 

^  687— Bank  Stock  Taxes  Paid  for  Shareholders. 

Banks  paying  taxes  assessed  against  their  stockholders 
on  account  of  their  ownership  of  the  shares  of  stock  issued 
by  such  banks  can  not  deduct  the  amount  of  taxes  so  paid 
in  making  their  returns  for  the  purpose  of  the  income  tax 
imposed  by  this  title  unless  and  to  the  extent  that  the  laws 
of  the  State  in  which  they  do  business  by  specific  terms 
make  the  tax  a  direct  liability  of  such  banks  that  is  a  lien 
upon  its  property.  The  shares  of  stock  are  the  property 
of  the  stockholders,  and  to  the  extent  that  the  taxes  as- 
sessed on  the  value  of  the  shares  of  stock  are  property 
taxes  the  holders  are  primarily  liable  for  their  payment. 

The  fact  that  State  laws  make  it  the  duty  of  banks  to 
pay  the  tax  does  not  necessarily  make  the  tax  a  liabihty  of 
the  banks.  These  provisions  of  State  laws  are  intended  only 
to  provide  a  convenient  means  whereby  the  tax  assessed 
against  the  stock  on  the  basis  of  its  value  can  be  the  more 
readily  collected  by  the  tax-collecting  officers  and  do  not 
attempt  to  assert  liability  against  the  bank,  as  is  evidenced 
by  the  fact  that  in  most,  if  not  all,  cases,  the  tax  is  a  lien 
upon  the  stock.  For  this  purpose  the  Hability  of  the  bank 
is  limited  to  the  duty  to  collect  or  withhold  from  the  stock- 

400 


CORPORATIONS— Cont^d  DEDUCTIONS— Taxes 

holders  the  amount  of  taxes  due  and  to  pay  the  same  over 
to  the  proper  tax-collecting  offices.  Federal  statutes  pro- 
hibit States  from  imposing  any  tax  upon  national  banks 
except  upon  the  value  of  their  real  estate.  In  cases  where 
States  levy  a  tax  on  the  stock  of  such  banks  and  make  it 
the  duty  of  the  banks  to  pay  such  tax  for  the  stockholders, 
said  payments  are  not  deductible  from  the  gross  income  of 
such  banks. — Treasury  Decisions  2121,  2152. 

This  rule  applies  only  to  taxes  levied  upon  the  value  of 
the  capital  stock,  and  it  is  not  intended  to  so  operate  as  to 
prevent  banking  corporations  from  deducting  from  their 
gross  income  any  State  tax  imposed  against  the  corporation 
itself  on  the  value  of  its  real  estate,  furniture  and  fixtures, 
or  as  an  excise  or  a  franchise  tax ;  that  is,  a  tax  which  the 
corporation  is  required  to  pay  to  the  State  on  account  of  its 
own  property  or  business  in  order  that  it  may  transact  busi- 
ness within  the  State  is  deductible. — ^Treasury  Decisions 
2153,  2121. 

This  rule  hereinbefore  set  out  will  apply  in  the  case  of 
corporations  other  than  banks,  upon  the  value  of  whose 
stock  taxes  are  assessed  to  the  stockholders. — Art.  192,  Reg. 
33 ;  Revised. 

^  688 — Customs  Duties  Deductible  as  Expenses — ^Not 
Taxes. 

Import  duties  or  taxes  are  not  deductible  under  the  item 
of  taxes  paid  during  the  year,  but  should  be  included  in 
arriving  at  the  cost  of  goods  under  item  (expenses) . 

[In  private  letters  the  Department  has  held  that  customs  duties  are 
deductible  by  an  individual  as  taxes,  or  part  of  the  cost  price  if  the  indi- 
vidual is  engaged  in  the  importation  of  goods  and  merchandise. — Ed.] 

If  689— Import  or  Tariff  Duties. 

Import  or  tariff  duties  levied  by  the  act  of  Congress  and 
paid  to  the  proper  customs  officers,  stamp  taxes,  and  all 
other  taxes  (except  income  and  excess  profits  taxes)  im- 
posed by  internal-revenue  laws  and  paid  to  collectors  are 
deductible  as  taxes  imposed  under  authority  of  the  United 
States,  provided  they  are  not  added  to  and  made  a  part  of 
the  cost  of  articles  of  merchandise  with  respect  to  which 

401 


CORPORATIONS— Continued  CREDITS 

they  are  paid,  in  which  case  they  will  be  reflected  in  the 
cost  of  merchandise  and  can  not  be  separately  deducted. — 
Art.  195,  Reg.  33 ;  Revised. 


^  690— Credits  Allowed. 

That  for  the  purpose  only  of  the  tax  imposed  by  section 
230  (which  is  the  tax  on  net  incomes  of  corporations)  there 
shall  be  allowed  the  following  credits: 

(a)  The  amount  received  as  interest  upon  obligations  of 
the  United  States  and  bonds  issued  by  the  War  Finance 
Corporation  which  is  included  in  gross  income. 

(b)  The  amount  of  any  taxes  imposed  by  Title  III  of 
the-Revenue  Act  of  1918  for  the  same  taxable  year.  In  the 
case  of  a  corporation  which  makes  return  for  a  fiscal  year 
beginning  in  1917  and  ending  in  1918,  in  computing  the  tax 
as  provided  in  subdivision  (a)  of  Section  275  (tax  based  on 
fiscal  year  beginning  in  1917  and  ending  in  1918),  the  tax 
computed  for  the  entire  period  under  Title  II.  of  the  Revenue 
Act  of  1917  (excess-profits  tax),  shall  be  credited  against 
the  net  income  computed  for  the  entire  period  under  Title  I. 
of  the  Revenue  Act  of  1916  as  amended  by  the  Revenue  Act 
of  1917  and  under  Title  I.  of  the  Revenue  Act  of  1917  (In- 
come Tax),  and  the  tax  computed  for  the  entire  period 
under  the  war-profits  and  excess-profits  title  of  the  Revenue 
Act  of  1918  at  the  rates  prescribed  for  the  calendar  year 
1918  shall  be  credited  against  the  net  income  computed  for 
the  entire  period  under  the  income  tax  title  of  the  Revenue 
Act  of  1918. 

(c)  In  the  case  of  a  domestic  corporation  $2,000.. 

The  following  example  shows  how  these  credits  should 
be  treated  in  a  return  of  annual  net  income : 

A  corporation  with  a  net  income  of  $100,000 — for  the  cal- 
endar year  1918.  Included  in  gross  income  is  interest  to 
the  extent  of  $5,000  from  Liberty  Bonds  and  bonds  of  the 
War  Finance  Corporation. 

402 


CORPORATIONS— Continued  GENERAL 

The  amount  of  the  War  Excess  Profits  tax  is  $45,000. 

Net  income $100,000 

Credits : 
Interest  on  Liberty  Bonds  and  bonds  of 

the  War  Finance  Corporation $5,000 

War  excess-profits  tax 45,000 

Additional  credit 2,000 

Total  credits 52,000 

Taxable  income $48,000 


Corporation  income  tax  ($48,000  at  12%) $5,760 

Excess-profits  tax 45,000 

Total  tax $50,760 

^  691  — Foreign  Corporations  Subject  to  Tax. 

Foreign  corporations  are  subject  to  the  normal  tax  of 
12  per  cent,  upon  the  total  net  income  received  in  the  pre- 
ceding calendar  or  fiscal  year  from  all  sources  within  the 
United  States.  Such  income  includes  interest  on  bonds, 
notes,  or  other  interest-bearing  obligations  of  residents,  cor- 
porate or  otherwise,  and  also  the  income  derived  from  divi- 
dends on  capital  stock  or  from  the  net  earnings  of  resident 
corporations,  etc.,  whose  net  income  is  taxable  under  the 
law,  and  including  all  amounts  received  (although  paid 
under  a  contract  for  the  sale  of  goods  or  otherwise)  repre- 
senting profits  on  the  manufacture  and  disposition  of  goods 
within  the  United  States. 

While  the  dividends  received  must  be  included  in  gross 
income  they  are  not  subject  to  the  tax,  being  deducted  from 
gross  income  in  arriving  at  the  net  income  subject  to  tax. 

^  692 — Returns  of  Domestic  Corporations  Whose  Books  Are 
Kept  in  Foreign  Countries — Where  Filed. 

See  "Place  of  Filing  Returns,"  TI  507. 

403 


CORPORATIONS— Continued  GENERAL 

jf  693 — Deductions  From  Income  Allowed. 

Such  net  income  shall  be  ascertained  by  deducting  from 
the  gross  amount  of  its  income  received  within  the  year 
from  all  sources  within  the  United  States — 

jl  694 — Expenses  Within  United  States. 

All  the  ordinary  and  necessary  expenses  paid  or  incurred 
within  the  taxable  year  to  the  extent  that  they  are  con- 
nected with  income  arising  from  a  source  within  the  United 
States,  including  a  reasonable  allowance  for  salaries  or 
other  compensation  for  personal  services  actually  rendered, 
and  including  rentals  or  other  payments  required  to  be 
made  as  a  condition  to  the  continued  use  or  possession  of 
property  to  which  the  corporation  has  not  taken  or  is  not 
taking  title,  or  in  which  it  has  no  equity. 

The  proper  apportionment  and  allocation  of  the  deduc- 
tions under  this  caption  with  respect  to  sources  of  income 
within  the  United  States  shall  be  determined  under  rules 
and  regulations  prescribed  by  the  Commissioner  of  Internal 
Revenue. 

U  695 — Interest  on  Indebtedness. 

The  proportion  of  interest  paid  or  accrued  within  the 
taxable  year  on  its  indebtedness,  which  the  amount  of  its 
gross  income  from  sources  within  the  United  States  bears  to 
the  amount  of  its  gross  income  from  all  sources  within  and 
without  the  United  States,  except  on  indebtedness  incurred 
or  continued  to  purchase  or  carry  obligations  or  securities 
(other  than  obligations  of  the  United  States  issued  after 
September  24,  1917)  the  interest  upon  which  is  wholly  ex- 
empt from  taxation  under  this  title  as  income  to  the  tax- 
payer. 

^  696 — Source  Within  United  States. 

It  is  not  necessary  that  the  foreign  corporation  shall  be 
engaged  in  business  in  this  country  or  that  it  have  an  office, 
branch,  or  agency  in  the  United  States.  Liability  to  the 
tax  attaches  with  respect  to  the  income,  the  source  of  which 
is  in  the  United  States. 

"Source"  as  here  used  means  the  place  of  origin  of  the 
income. 

404 


CORPORATIONS— Continued  GENERAL 

^697— Taxes. 

In  the  case  of  a  foreign  corporation,  by  the  authority  of 
any  foreign  country  (except  income,  war-profits  and  excess- 
profits  taxes,  and  taxes  assessed  against  local  benefits  of  a 
kind  tending  to  increase  the  value  of  the  property  assessed) , 
upon  the  property  or  business. 

That  in  the  case  of  obligors  specified  in  subdivision  (b) 
of  section  221  (Payment  of  Tax  at  Source)  no  deduction 
for  the  payment  of  tax  imposed  by  this  title  or  any  other 
tax  paid  pursuant  to  the  contract  or  provision  referred  to 
in  that  subdivision  shall  be  allowed. 

H  698 — Bonds  Issued  With  Tax-Free  Covenant  Clause — 
Interest  From,  Not  Deductible. 

In  the  case  of  bonds  or  other  indebtedness  which  have 
been  issued  with  a  guaranty  that  the  interest  payable  there- 
on shall  be  free  from  taxation,  no  deduction  for  the  pay- 
ment of  the  tax  herein  imposed  or  any  other  tax  paid 
pursuant  to  such  guaranty  shall  be  allowed. 

jf  699— -Losses. 

Losses  sustained  during  the  taxable  year  and  not  com- 
pensated for  by  insurance  or  otherwise  are  deductible.  For 
apportionment  and  allocation,  see  1[  694. 

11  700— -Debts. 

Debts  ascertained  to  be  worthless  and  charged  off  within 
the  taxable  year  are  deductible.  For  apportionment  and 
allocation,  see  jf  694. 

11701— -Dividends. 

Amounts  received  as  dividends  from  a  corporation  which 
is  taxable  under  this  title  upon  its  net  income,  and  amounts 
received  as  dividends  from  a  personal  service  corporation  out 
of  earnings  or  profits  upon  which  income  tax  has  been  im- 
posed by  Act  of  Congress  are  deductible. 

1[  702 — Depreciation. 

A  reasonable  allowance  for  the  depreciation  of  property 
used  in  the  trade  or  business.  For  apportionment  and  allo- 
cation, see  K  694. 

405 


CORPORATIONS— Continued  GENERAL 

II  703 — No  Deductions  for  New  Buildings,  Permanent 
Improvements,  Betterments,  Etc. 

Any  amount  paid  out  for  new  buildings  or  for  permanent 
improvements  or  betterments  made  to  increase  the  value  of 
any  property  or  estate  shall  not  be  allowed  as  a  deduction. 

li  704 — Restoration  of  Property. 

Any  amount  expended  in  restoring  property  or  in  making 
good  the  exhaustion  thereof  for  which  an  allowance  is  or 
has  been  made  is  not  deductible. 

|[  705 — Amortization. 

In  the  case  of  buildings,  machinery,  equipment,  or  other 
facilities,  constructed,  erected,  installed,  or  acquired,  on  or 
after  April  6,  1917,  for  the  production  of  articles  contrib- 
uting to  the  prosecution  of  the  present  war,  and  in  the  case 
of  vessels  constructed  or  acquired  on  or  after  such  date 
for  the  transportation  of  articles  or  men  contributing  to 
the  prosecution  of  the  present  war,  there  shall  be  allowed 
a  reasonable  deduction  for  the  amortization  of  such  part 
of  the  cost  of  such  facilities  or  vessels  as  has  been  borne 
by  the  taxpayer,  but  not  again  including  any  amount  other- 
wise allowed  under  this  title  or  previous  Acts  of  Congress 
as  a  deduction  in  computing  net  income.  At  any  time  within 
three  years  after  the  termination  of  the  present  war,  the 
Commissioner  may,  and  at  the  request  of  the  taxpayer 
shall,  reexamine  the  return,  and  if  he  then  finds  as  a  result 
of  an  appraisal  or  from  other  evidence  that  the  deduction 
originally  allowed  was  incorrect,  the  taxes  imposed  by  this 
title  and  by  Title  III.  for  the  year  or  years  affected  shall 
be  redetermined ;  and  the  amount  of  tax  due  upon  such  re- 
determination, if  any,  shall  be  paid  upon  notice  and  demand 
by  the  collector,  or  the  amount  of  tax  overpaid,  if  any,  shall 
be  credited  or  refunded  to  the  taxpayer  in  accordance  with 
the  provisions  of  Section  252. 

^  706 — Depletion  and  Depreciation. 

In  the  case  of  mines,  oil  and  gas  wells,  other  natural  de- 
posits, and  timber,  a  reasonable  allowance  for  depletion  and 
for  depreciation  of  improvements,  according  to  the  peculiar 

406 


CORPORATIONS— Continued  GENERAL 

conditions  in  each  case,  based  upon  cost  including  cost  of 
development  not  otherwise  deducted.  In  the  case  of  such 
properties  acquired  prior  to  March  1,  1913,  the  fair  market 
value  of  the  property  (or  the  taxpayer's  interest  therein) 
on  that  date  shall  be  taken  in  lieu  of  cost  up  to  that  date. 
In  the  case  of  mines,  oil  and  gas  wells,  discovered  by  the 
taxpayer,  on  or  after  March  1,  1913,  and  not  acquired  as  the 
result  of  purchase  of  a  proven  tract  or  lease,  where  the  fair 
market  value  of  the  property  is  materially  disproportionate 
to  the  cost,  the  depletion  allowance  shall  be  based  upon  the 
fair  market  value  of  the  property  at  the  date  of  the  dis- 
covery, or  within  30  days  thereafter ;  such  reasonable  allow- 
ance in  all  the  above  cases  to  be  made  under  rules  and 
regulations  to  be  prescribed  by  the  Commissioner  with  the 
approval  of  the  Secretary.  In  the  case  of  leases  the  de- 
ductions allowed  by  this  paragraph  shall  be  equitably  ap- 
portioned between  the  lessor  and  lessee; 

If  707 — How  Deductions  Shall  Be  Evidenced. 

It  is  immaterial  whether  the  deductions  are  evidenced  by 
actual  disbursements  in  cash,  or  whether  evidenced  in  such 
other  way  as  to  be  properly  acknowledged  by  the  corporate 
officers  and  so  entered  on  the  books  of  the  corporation  as  to 
constitute  a  liability  against  the  assets  of  the  corporation 
making  the  return. 

Deductions  for  taxes  should  be  the  aggregate  of  the 
amounts  actually  paid  or  accrued  within  the  taxable  year, 
as  shown  on  the  books  of  the  corporation. 

^  708— Tax  Withheld  at  Source. 

In  making  its  return  a  foreign  corporation  may  take 
credit  against  the  tax  assessable  on  the  basis  of  the  net 
income  so  returned  for  any  tax  which  may  have  been  with- 
held at  the  source,  provided  the  income  upon  which  the  tax 
was  withheld  is  included  in  the  return  and  provided  that 
the  name  of  the  withholding  agent  is  given  in  the  return. 
—Art.  198,  Reg.  33,  Revised. 

Deductions  for  losses  should  be  confined  to  losses  sus- 
tained during  the  taxable  year  and  not  compensated  by  in- 
surance or  otherwise. 

407 


CORPORATIONS— Continued  RETURNS 

Except  as  the  same  may  be  modified  by  the  provisions  of 
the  Act,  limiting  certain  deductions  and  authorizing  others, 
the  net  income  as  returned  for  the  purpose  of  the  tax 
should  be  the  same  as  that  shown  by  the  books  or  the 
annual  balance  sheet. 

]\  70d — Inventories. 

That  whenever  in  the  opinion  of  the  Commissioner  of 
Internal  Revenue  the  use  of  inventories  is  necessary  in  order 
clearly  to  determine  the  income  of  any  taxpayer,  inventories 
shall  be  taken  by  such  taxpayer  upon  such  basis  as  the 
Commissioner  may  prescribe  as  conforming  as  nearly  as 
may  be  to  the  best  accounting  practice  in  the  trade  or  busi- 
ness and  as  most  clearly  reflecting  the  income. 

RETURNS. 

If  710 — Forms  of  Returns. 

Four  separate  revised  forms  of  annual  return  have  been 
provided  for  corporations  as  follows: 

Corporations. 

Form 

(For  all  corporations  except  railroad  and  in- 
surance companies) 1031 

(Revised) 
Insurance  Companies. 

(Including  mutual  life  and  mutual  marine) 1030 

(Revised) 
Mutual  Insurance  Companies. 

(Other  than  mutual  life  and  mutual  marine) 1030 A 

Railroad  Corporations. 
(Railroad  corporations) 1090 

TJ  711 — Consolidated  Returns. 

That  corporations  which  are  affiliated  within  the  meaning 
of  this  Section  shall,  under  regulations  to  be  prescribed  by 
the  Commissioner,  with  the  approval  of  the  Secretary,  make 
a  consolidated  return  of  net  income  and  invested  capital  for 
the  purposes  of  this  title  and  Title  III.,  and  the  taxes  there- 
under shall  be  computed  and  determined  upon  the  basis  of 
such  return :  Provided,  That  there  shall  be  taken  out  of  such 

408 


CORPORATIONS— Continued  RETURNS 

consolidated  net  income  and  invested  capital,  the  net  income 
and  invested  capital  of  any  such  affiliated  corporation  or- 
ganized after  August  1,  1914,  and  not  successor  to  a  then 
existing  business,  50  per  centum  or  more  of  whose  gross 
income  consists  of  gains,  profits,  commissions,  or  other  in- 
come, derived  from  a  Government  contract  or  contracts 
made  between  April  6,  1917,  and  November  11,  1918,  both 
dates  inclusive.  In  such  case  the  corporation  so  taken  out 
shall  be  separately  assessed  on  the  basis  of  its  own  invested 
capital  and  net  income  and  the  remainder  of  such  affiliated 
group  shall  be  assessed  on  the  basis  of  the  remaining  con- 
solidated invested  capital  and  net  income. 

In  any  case  in  which  a  tax  is  assessed  upon  the  basis  of 
a  consolidated  return,  the  total  tax  shall  be  computed  in  the 
first  instance  as  a  unit  and  shall  then  be  assessed  upon  the 
respective  affiliated  corporations  in  such  proportions  as 
may  be  agreed  upon  among  them,  or,  in  the  absence  of  any 
such  agreement,  then  on  the  basis  of  the  net  income  prop- 
erly assignable  to  each.  There  shall  be  allowed  in  comput- 
ing the  income  tax  only  one  specific  credit  of  $2,000  (as 
provided  in  Section  236) ;  in  computing  the  war-profits 
credit  (as  provided  in  Section  311)  only  one  specific  exemp- 
tion of  $3,000 ;  and  in  computing  the  excess-profits  credit  (as 
provided  in  Section  312)  only  one  specific  exemption  of 
$3,000. 

For  the  purpose  of  this  Section  two  or  more  domestic 
corporations  shall  be  deemed  to  be  affiliated  (1)  if  one  cor- 
poration owns  directly  or  controls  through  closely  affiliated 
interests  or  by  a  nominee  or  nominees  substantially  all  the 
stock  of  the  other  or  others,  or  (2)  if  substantially  all  the 
stock  of  two  or  more  corporations  is  owned  or  controlled  by 
the  same  interests. 

For  the  purposes  of  Section  238  a  domestic  corporation 
which  owns  a  majority  of  the  voting  stock  of  a  foreign  cor- 
poration shall  be  deemed  to  have  paid  the  same  proportion 
of  any  income,  war-profits  and  excess-profits  taxes  paid 
(but  not  including  taxes  accrued)  by  such  foreign  corpora- 
tion during  the  taxable  year  to  any  foreign  country  or  to 
any  possession  of  the  United  States  upon  income  derived 
from  sources  without  the  United  States,  which  the  amount 

409 


CORPORATIONS— Continued  RETURNS 

of  any  dividends  (not  deductible  under  Section  234)  re- 
ceived by  such  domestic  corporation  from  such  foreign  cor- 
poration during  the  taxable  year  bears  to  the  total  taxable 
income  of  such  foreign  corporation  upon  or  with  respect  to 
which  such  taxes  were  paid :  Provided,  That  in  no  such  case 
shall  the  amount  of  the  credit  for  such  taxes  exceed  the 
amount  of  such  dividends  (not  deductible  under  Section 
234)  received  by  such  domestic  corporation  during  the  tax- 
able year. 

^  712 — Forms  to  Be  Furnished. 

Under  the  authority  conferred  by  this  title,  forms  of  re- 
turn have  been  prescribed  in  which  the  various  items  speci- 
fied in  the  law  are  to  be  stated.  Blank  forms  of  this  return 
will  be  forwarded  to  collectors  and  should  be  furnished  to 
every  corporation,  not  expressly  exempted,  on  or  before 
January  1  of  each  year,  in  the  case  of  corporations  making 
their  next  returns  for  the  calendar  year;  on  or  before  the 
first  day  of  the  next  fiscal  year  in  the  case  of  corporations 
filing  returns  for  their  fiscal  year.  Failure  on  the  part  of  any 
corporation,  joint-stock  company,  association,  or  insurance 
company  liable  to  this  tax  to  receive  a  prescribed  blank 
form  will  not  excuse  it  from  making  the  return  required  by 
law  or  relieve  it  from  any  penalties  for  failure  to  make  the 
return  within  the  prescribed  time. 

Tf  71 3 — Failure  to  Receive  Returns. 

Corporations  not  supphed  with  the  proper  forms  for  mak- 
ing the  return  should  make  application  therefor  to  the  col- 
lector of  internal  revenue  in  whose  district  are  located  their 
principal  places  of  business*  in  ample  time  to  have  their  re- 
turns prepared,  verified,  and  filed  with  the  collector  on  or 
before  the  last  due  date  defined  by  the  law  and  these  regula- 
tions. 

'•■The  Principal  of  Business  of  a  Corporation  is  the  pince  or  office  in  which 
are  kept  the  books  of  account  and  other  data  from  which  the  return  is  to  be 
prepared. — Treasury  Decision  2090. 

^  714— Twenty-five  Per  Cent.  Additional  Tax. 

Failure  in  this  respect  subjects  the  corporation  to  not  only 
25  per  cent  additional  tax,  but  to  the  specific  penalty  im- 
posed by  the  law  for  deHnquency.    Each  corporation  should 

410 


CORPORATIONS— Continued  RETURNS 

carefully  prepare  its  return  so  as  to  fully  and  clearly  set 
forth  the  data  therein  called  for.  Imperfect  or  incorrect 
returns  will  not  be  accepted  as  meeting  the  requirements  of 
the  law.— Art.  216,  Reg.  33,  Revised. 

If  715 — Itemized  Statement  on  Form  1031. 

In  the  case  of  public-service  and  all  other  corporations  it  is 
desired  that  the  supplementary  statement  which  forms  a 
part  of  the  Return  Form  1031,  prescribed  by  the  Secretary 
of  the  Treasury  for  the  use  of  such  corporations  in  making 
the  returns  of  annual  net  income,  shall  be  prepared  as  far  as 
practicable  in  detail. 

It  is  not  expected  or  required,  however,  that  every  par- 
ticular item  going  to  make  up  either  gross  income  or  the  de- 
ductions therefrom  shall  be  set  out  in  the  supplementary 
statement.  It  will  be  sufficient  in  the  case  of  public-service 
corporations  and  other  similar  concerns  that  they  supply  the 
information  by  classes  rather  than  giving  the  items  in  de- 
tail, classifying  the  income  and  expenditures  in  the  same 
manner  as  is  required  as  to  these  items  by  the  Interstate 
Commerce  Commission. 

Ti  71 6 — Instructions  to  Corporations  With  Respect  to 
Making  Returns  of  Annual  Net  Income. 

The  officers  of  corporations  should  read  carefully  the  fol- 
lowing instructions,  as  well  as  those  given  on  the  Return 
Form  (1031),  before  inserting  the  figures  in  either  the  re- 
turn proper  or  the  supplementary  statement. 

Returns  must  be  filed  by  all  corporations,  not  specifically 
enumerated  as  exempt,  having  existence  during  all  or  any 
part  of  the  year,  and,  if  made  on  the  basis  of  a  calendar 
year,  must  be  filed  on  or  before  March  15 ;  if  on  the  basis  of 
a  fiscal,  other  than  the  calendar,  year  they  must  be  filed  on 
or  before  the  fifteenth  day  of  the  third  month  next  following 
the  close  of  the  fiscal  year. 

Dissolved  corporations,  making  returns  on  the  basis  of  a 
calendar  year,  will  make  final  return  covering  the  period 
from  January  1  to  date  of  dissolution.  Dissolved  corpora- 
tions making  return  on  the  basis  of  a  fiscal,  other  than  the 
calendar,  year  will  make  a  final  return  covering  the  period 

411 


CORPORATIONS— Continued  RETURNS 

from  the  beginning  of  the  fiscal  year  to  the  date  of  disso- 
lution. Date  of  dissolution  in  either  case  must  be  noted  on 
the  face  of  the  return  in  red  ink. 

New  corporations,  organized  during  the  year,  must  make 
return  covering  the  period  from  date  of  organization  to  De- 
cember 31,  unless  the  Collector  is  given  written  notice,  not 
less  than  30  days  prior  to  March  15,  designating  the  last  day 
of  some  month,  other  than  December,  as  the  closing  date 
of  the  fiscal  year.  In  this  event  a  return  will  be  made  on  or 
before  the  fifteenth  day  of  the  third  month  after  the  close  of 
the  fiscal  year  designated,  provided  the  period  from  date  of 
organization  to  the  closing  date  of  the  fiscal  year  does  not 
exceed  12  months.  Further  instructions  will  be  given  by 
the  collector. 

Address  in  the  heading  must  show  where  books  are  kept 
from  which  return  is  prepared,  and  the  return  will  be  filed 
in  the  district  in  which  this  address  shows  the  books  to  be 
kept. 

^  717 — In  the  Absence  of  Notice,  Fiscal  Year  Returns  Not 
Acceptable. 

A  return  made  on  the  basis  of  a  fiscal  year  other  than  the 
calendar  year  can  not  be  accepted  unless  such  fiscal  year 
shall  have  been  established  by  proper  notice  to  the  Collector 
of  Internal  Revenue  of  the  district  in  which  such  corpora- 
tion has  its  principal  place  of  business  (Treasury  Decision 
2090,  2152,  2137),  and  if  in  the  absence  of  such  notice  and 
designation  a  return  is  filed  subsequent  to  the  date  when  it 
was  required  to  be  filed  if  made  on  a  calendar-year  basis, 
it  will  be  considered  delinquent  and  the  corporation  will  be 
liable  to  the  penalty  imposed  for  failure  to  file  the  return 
within  the  prescribed  time. — Art.  203,  Reg.  33,  Revised. 

U  718 — Paid-up  Capital  Stock. 

Paid-up  capital  stock,  to  be  entered  under  item  1 ,  should 
represent  total  par  value  of  paid-up  stock  issued,  both  com- 
mon and  preferred,  outstanding  at  the  close  of  the  period 
covered  by  the  return.  It  is  immaterial  whether  stock  is 
paid  for  in  cash,  promissory  notes,  or  other  assets.  When 
stock  is  assessable  on  account  of  deferred  payments  or  is 

413 


CORPORATIONS— Continued  RETURNS 

payable  in  installments,  the  amount  actually  paid  on  such 
shares  will  constitute  the  actual  paid-up  capital  stock  of  the 
corporation,  and  the  amount  so  actually  paid  in  will  be  en- 
tered under  this  item. 

U  71 9 — Indebtedness. 

Indebtedness,  to  be  entered  under  item  2,  should  embrace 
all  outstanding  interest-bearing  indebtedness  for  which  the 
corporation  has  acknowledged  liabihty,  in  the  form  of  mort- 
gage, note,  bond,  or  other  paper,  said  paper  bearing  interest, 
not  including  indebtedness  wholly  secured  by  collateral  the 
subject  of  sale  in  the  ordinary  business  of  the  corporation. 
Such  latter  indebtedness  should  be  included  under  item  6c 
of  the  supplementary  statement,  at  the  lower  margin  of  the 
return  proper,  and  should  be  properly  explained. 

Tj  720 — Banks  and  Other  Financial  Institutions. 

Banks  and  other  financial  institutions  will  include  as 
Gross  Income  the  total  revenue,  gains,  or  profits  from  all 
sources,  as  shown  by  the  entries  on  the  books  of  account. 

^  721 — Manufacturing  Corporations. 

Manufacturing  corporations  will  ascertain  Gross  Income 
from  operations  through  the  inventory  computation  on  the 
back  of  the  form.  In  this  computation  "Sales"  should  repre- 
sent the  entire  sales  during  the  year,  whether  for  cash  or 
otherwise.  "Purchases"  should  include  all  purchases  of  raw 
material,  suppHes,  etc.,  during  the  same  period.  "Pur- 
chases" will  not,  however,  include  any  expenses  or  other 
items  claimed  as  deductions  shown  by  the  return.  (Pur- 
chases of  equipment,  office  furniture,  fixtures,  and  so  forth, 
are  considered  to  be  capital  investments  and  are  not  subject 
to  deduction  as  purchases  or  expenses.)  Such  items  are  to 
be  charged  to  capital  account  and  are  susceptible  to  depre- 
ciation charge,  which  may  be  taken  in  the  return  if.  such  ac- 
count is  set  up  on  the  books  of  the  corporation  and  so  en- 
tered on  the  books  as  to  constitute  a  liability  against  the 
assets  of  the  company.    "Inventories"  should  be  as  of  the  be- 

413 


CORPORATIONS— Continued  RETURNS 

ginning  and  close  of  the  period  covered  by  the  return  and 
will  embrace  finished  and  unfinished  products,  raw  materials, 
supplies,  etc. 

If  722 — Mercantile  Corporations. 

Mercantile  corporations  will  ascertain  "Gross  Income  from 
Operations"  in  the  same  manner  as  manufacturing  corpora- 
tions, except  that  inventories  will  embrace  merchandise  or 
stock  in  trade,  or  on  hand,  at  the  beginning  and  close  of  the 
period,  as  well  as  the  amount  of  the  gross  sales  and  pur- 
chases during  the  period. 

tl  723. — Other  Corporations. 

Other  corporations  will  include  as  gross  income  the  total 
revenue  derived  from  the  operation  and  management  of  the 
business  and  property  of  the  corporation,  together  with  all 
amounts  of  income,  gains,  or  profits  arising  or  accruing 
from  all  other  sources,  as  shown  by  the  books  of  account. 

Deductions. 
Tf  724 — Expenses,  General. 

General  expenses  should  be  segregated  and  entered  under 
the  proper  heading.  The  schedule  should  not  include  any 
items  that  have  been  taken  into  consideration  in  the  in- 
ventory computation  when  ascertaining  the  "Gross  Income 
from  Operations." 

The  schedule  should  embrace  the  expenses  of  non-produc- 
tive, supervisory,  executive  and  selling  labor,  commissions; 

Light,  heat,  and  power  expense; 

Ordinary  rentals ; 

Incidental  repairs,  whch  do  not  add  to  the  value  or  ap- 
preciably prolong  the  life  of  the  property,  or  which  do  not 
constitute  additions  and  betterments,  the  latter  being  prop- 
erly chargeable  to  property  account ; 

Total  salaries  paid  to  officers ; 

And  such  expenses  as  are  not  accounted  for  in  any  of  the 
above  items,  and  should  be  classified  under  three  or  four 
general  heads. 

414 


CORPORATIONS— Continued 

If  725 — Losses. 

Losses,  to  be  deductible,  must  be  definite,  absolute,  actu- 
ally sustained  during  the  period  and  will  not  include  shrink- 
age in  the  value  of  securities  or  other  assets. 

Appropriate  explanation  should  be  made  in  the  space  pro- 
vided on  the  back  of  the  form  of  each  loss  for  which  de- 
duction is  claimed.  Decrease  in  value  of  stock  inventory 
is  not  a  loss  contemplated  to  be  treated  here,  but  will  be 
taken  into  account  in  the  inventory  in  the  computation  of 
the  supplementary  statement.  Bad  debts  should  be  Hsted 
and  date  of  charging  off  stated  as  to  each.  If  the  space  pro- 
vided is  not  sufficient  to  make  such  list,  use  additional  paper 
and  securely  attach  same  to  the  return.  Bad  debts  are  not 
deductible  as  a  loss  unless  at  some  time,  either  through  in- 
ventory or  otherwise,  they  shall  have  been  taken  up  as 
income. 

K  728 — Depreciation  Deductions. 

Depreciation  deductions  should  be  appropriately  explained. 
If  depreciation  is  claimed  on  more  than  one  class  of  property 
at  different  rates,  the  cost  of  each  separate  class  will  be 
stated,  with  its  corresponding  probable  life,  the  amount 
charged  off  this  and  prior  years.  The  amount  deducted 
must  appear  on  the  books  of  the  corporation  as  a  liability 
against  the  assets,  and  must  be  reflected  in  the  annual  "Bal- 
ance Sheet."  Depreciation  on  merchandise  or  stock  in  trade 
must  not  be  deducted  here,  but  should  be  taken  into  consid- 
eration through  the  inventory  at  the  close  of  the  year.  De- 
duction as  depreciation  cannot  be  taken  for  such  wear  and 
tear  as  has  been  made  good  by  repairs.  The  depreciation 
deduction  cannot  be  cumulative,  but  will  consist  of  an 
amount  measuring  the  loss  due  to  use,  wear  and  tear  occur- 
ring during  the  period  for  which  the  return  is  made. 

11  727 — Interest  Deductions. 

Interest  deductions  should  include  only  that  paid  or  ac- 
crued within  the  taxable  year  on  its  indebtedness  except  on 
indebtedness  incurred  or  continued  to  purchase  or  carry 
obligations  or  securities  (other  than  obligations  of  the 
United  States  issued  after  September  24,  1917)  the  interest 

415 


CORPORATIONS— Continued 

upon  which  is  wholly  exempt  from  taxation  under  this  title 
as  income  to  the  taxpayer. 

^  728 — Receivers,  Trustees  or  Assignees  of  Corporations  to 
Make  Return. 

Section  13,  paragraph  C,  of  this  title  requires  receivers, 
trustees  in  bankruptcy,  or  assignees,  who  are  in  charge  of 
and  are  operating  the  property  and  business  of  corporations, 
to  make  returns  of  annual  net  income  and  pay  any  income 
tax  thereby  shown  to  be  due,  regardless  of  what  disposition, 
subject  to  the  orders  of  the  court,  may  be  made  of  such 
income. 

Notwithstanding  the  fact  that  the  powers  and  functions 
of  the  corporation  are  suspended  and  that  the  property  and 
business  are  for  the  time  in  control  and  custody  of  the  re- 
ceiver, trustee,  or  assignee,  subject  to  the  orders  of  the 
court,  such  receiver,  trustee,  or  assignee  stands  in  the  place 
of  the  corporate  officers  and  is  required  for  the  purpose  of 
this  title  to  perform  all  the  duties  and  assume  all  the  liabili- 
ties which  would  devolve  upon  the  officers  of  the  corporation 
were  they  in  control.  The  income  which  he  receives  on  ac- 
count of  the  business  transacted  is  the  income  of  the  cor- 
poration and,  no  matter  how  such  income  is  appHed,  it  is 
subject  to  the  tax  imposed  by  this  title  in  so  far  as  it  ex- 
ceeds the  deductions  or  allowances  authorized  by  law. 

The  receiver,  trustee,  or  assignee  acting  for  the  corpora- 
tion, is  required  to  make  a  true  and  accurate  return  of  an- 
nual net  income  covering  each  year  or  part  of  each  year 
during  which  he  is  in  custody  and  control  of  the  business  or 
properties  and  will  be  liable  to  all  the  penalties  imposed  by 
this  title  for  failure  to  meet  any  of  its  requirements. — Art. 
209,  Reg.  33,  Revised. 

^729 — Prescribed  Forms. 

Returns  made  under  this  Act  and  pursuant  to  these  in- 
structions must  be  made  on  the  forms  prescribed  by  this 
department  for  each  particular  year,  and  which  are  avail- 
able at  the  offices  of  collectors. 

416 


CORPORATIONS— Continued 

It  730— Tentative  Returns. 

In  the  absence  of  a  prescribed  form  a  statement  made  by  a 
corporation  disclosing  its  gross  income  and  deductions  there- 
from may  be  accepted  as  a  tentative  return,  and  if  filed 
within  the  prescribed  time  a  return  so  made  will  relieve  the 
corporation  from  liability  to  the  penalties  imposed  by  law, 
provided  that  upon  request  and  without  delay  such  tentative 
return  be  substituted  by  a  return  made  on  the  regular 
form. — Treasury  Decision  2137. 

][  731— Failure  to  Pay  Tax. 

If  any  tax  remains  unpaid  after  the  date  when  it  is  due, 
and  for  ten  days  after  notice  and  demand  by  the  collector, 
then,  except  in  the  case  of  estates  of  insane,  deceased,  or  in- 
solvent persons,  there  shall  be  added  as  part  of  the  tax 
the  sum  of  5  per  cent,  on  the  amount  due  but  unpaid,  plus 
interest  at  the  rate  of  1  per  cent,  per  month  upon  such 
amount  from  the  time  it  became  due. 

If  732— Failure  to  File  Return. 

In  case  of  any  failure  to  make  and  file  a  return  within  the 
time  prescribed  by  law,  or  prescribed  by  the  Commissioner 
of  Internal  Revenue  or  the  collector  in  pursuance  of  the  law, 
the  Commissioner  of  Internal  Revenue  shall  add  to  the  tax 
25  per  cent,  of  its  amount. 

If  733— Reasonable  Cause  and  Not  Willful  Neglect. 

When  a  return  is  filed  after  the  time  required  by  law 
(March  15th,  unless  extension  is  granted)  and  it  is  shown 
that  the  failure  to  file  was  due  to  a  reasonable  cause  and 
not  willful  neglect,  no  such  addition  shall  be  made  to  the  tax. 

Tf  734 — False  or  Fraudulent  Return. 

In  case  a  false  or  fraudulent  return  is  made,  the  Com- 
missioner of  Internal  Revenue  shall  add  to  the  tax  50  per 
cent,  of  its  amount. 

H  735— Specific  Penalty. 

Any  individual,  corporation,  or  partnership  required  under 
this  title  to  pay  or  collect  any  tax,  to  make  a  return  or  to 
supply  information,  who  fails  to  pay  or  collect  such  tax, 

417 


CORPORATIONS— Continued 

to  make  such  return,  or  to  supply  such  information  at  the 
time  or  times  required  under  this  title,  shall  be  liable  to  a 
penalty  of  not  more  than  $1,000. 

^  TSe—Willf uUy  Refuses  to  File  Return. 

Any  individual,  corporation  or  partnership,  or  any  officer 
or  employe  of  any  corporation  or  member  or  employe  of  a 
partnership,  who  willfully  refuses  to  pay  or  collect  such  tax, 
to  make  such  return,  or  to  supply  such  information  at  the 
time  or  times  required  under  this  title,  or  who  willfully 
refuses  to  pay  or  collect  such  tax,  to  make  such  return,  or 
to  supply  such  information  at  the  time  or  times  required 
imder  this  title,  or  who  willfully  attempts  in  any  manner  to 
defeat  or  evade  the  tax  imposed  by  this  title,  shall  be  guilty 
of  a  misdemeanor  and  shall  be  fined  not  more  than  $10,000 
or  imprisoned  for  not  more  than  one  year,  or  both,  together 
with  the  cost  of  prosecution. 

Tf  737 — Verification  of  Return. 

For  the  purpose  of  verifying  the  accuracy  of  a  return,  or 
for  making  one  where  none  is  made,  the  books  of  corpora- 
tions and  all  other  relative  data  shall  be  open  to  the  inspec- 
tion of  the  Commissioner  of  Internal  Revenue  or  his  duly 
authorized  agents. — Art.  221,  Reg.  33,  Revised. 

^  738— Tax  Not  to  Be  Re-collected  When  Once  Paid. 

That  where  any  tax  heretofore  due  and  payable  has  been 
duly  paid  by  the  taxpayer,  it  shall  not  be  re-collected  from 
any  withholding  agent  required  to  retain  it  at  its  source, 
nor  shall  any  penalty  be  imposed  or  collected  in  such  cases 
from  the  taxpayer,  or  such  withholding  agent  whose  duty  it 
was  to  retain  it,  for  failure  to  return  or  pay  the  same,  un- 
less such  failure  was  fraudulent  and  for  the  purpose  of  evad- 
ing payment. 

If  739 — Refund  of  Portions  of  Amounts  Accepted  in 
Compromise  Under  Law. 

On  March  4,  1915,  Congress  authorized  the  Commissioner 
of  Internal  Revenue  to  refund  to  corporations  all  amounts 
paid  by  them  in  compromise  on  account  of  their  failure  to 

418 


CORPORATIONS— Continued 

make  returns  in  the  income  tax  year  of  1913  so  paid  in  ex- 
cess of  $10 ;  also  to  refund,  as  to  said  tax  year,  all  amounts 
paid  as  penalties  by  corporations  required  to  make  return 
but  which,  in  their  nature,  are  not  subject  to  the  income  tax. 
— Treasury  Decision  2175. 

The  Act  covers  only  amounts  paid  as  offers  in  compromise 
and  accepted  by  the  United  States  for  the  year  1913  and  has 
no  reference  to  the  25  per  cent,  or  5  per  cent,  penalties  col- 
lected under  the  law. 

^  740—50  Per  Cent.  Penalties. 

If  a  party  Hable  to  tax  for  entire  year  falsely  states  that 
he  is  hable  for  only  a  portion  of  the  year,  return  so  made  is 
false  and  50  per  cent,  penalty  applies  in  full. 

11741—25  Per  Cent.  Penalty  for  Failure  to  File  Return  is 
Mandatory. 

Government  officers  have  no  discretion  to  remit  penalty 
for  failure  to  file  return. 

T[  742 — Penalty  for  Giving  Information  from  Withholding 
Returns. 

The  law  is  specific  and  mandatory  with  regard  to  safe- 
guarding from  publicity  the  information  acquired  by  reason 
of  its  requirements  relative  to  annual  returns  of  income. 
The  law  imposes  the  penalty  of  "fine,  imprisonment,  dis- 
missal from  office,  and  forfeiture  of  right  to  hold  office,"  for 
making  known  in  any  manner  not  provided  by  law  the 
amount  or  source  of  income,  or  any  particular  thereof,  set 
forth  or  disclosed  in  any  income  return  by  any  person. 

II  743 — False  Returns. 

There  is  no  necessity  to  construe  the  word  "false"  where 
it  is  used  with  reference  to  the  time  in  which  Commissioner 
shall  act,  to  mean  fraudulently  false. 

^  744 — New  Corporations — Fiscal  Year  Returns  of — How 
Made. 

The  Federal  income  tax  law  authorizes  corporations, 
joint-stock  companies,  etc.,  under  certain  conditions  to  make 
their  returns  on  the  basis  of  an  established  "fiscal  year"  or 

419 


CORPORATIONS— Continued 

consecutive  12-months  period,  which  may  be  other  than  the 
calendar  year. 

If  a  taxpayer  changes  his  accounting  period  from  fiscal 
year  to  calendar  year,  from  calendar  year  to  fiscal  year, 
or  from  one  fiscal  year  to  another,  the  net  income  shall,  with 
the  approval  of  the  Commissioner,  be  computed  on  the  basis 
of  such  new  accounting  period,  subject  to  the  following  pro- 
visions : 

If  a  taxpayer,  with  the  approval  of  the  Commissioner, 
changes  the  basis  of  computing  net  income  from  fiscal  year 
to  calendar  year  a  separate  return  shall  be  made  for  the 
period  between  the  close  of  the  last  fiscal  year  for  which 
return  was  made  and  the  following  December  31.  If  the 
change  is  from  calendar  year  to  fiscal  year,  a  separate  return 
shall  be  made  for  the  period  between  the  close  of  the  last 
calendar  year  for  which  return  was  made  and  the  date  desig- 
nated as  the  close  of  the  fiscal  year.  If  the  change  is  from 
one  fiscal  year  to  another  fiscal  year  a  separate  return  shall 
be  made  for  the  period  between  the  close  of  the  former  fiscal 
year  and  the  date  designated  as  the  close  of  the  new  fiscal 
year.  If  a  taxpayer  making  the  first  return  ior  income  tax 
keeps  his  accounts  on  the  basis  of  a  fiscal  year  he  shall  make 
a  separate  return  for  the  period  between  the  beginning  of 
the  calendar  year  in  which  such  fiscal  year  ends  and  the  end 
of  such  fiscal  year. 

^  745 — Computation  on  Fiscal  Year  Basis. 

In  all  the  above  cases  the  net  income  shall  be  computed 
on  the  basis  of  such  period  for  which  separate  return  is 
made,  and  the  tax  shall  be  paid  thereon  at  the  rate  for  the 
calendar  year  in  which  such  period  is  included,  and  the  cred- 
its allowed  shall  be  reduced  respectively  to  amounts  which 
bear  the  same  ratio  to  the  full  credits  provided  in  such  sub- 
divisions as  the  number  of  months  in  such  period  bears  to 
12  months. 

^  746 — Amended  Instructions  for  Guidance  in  Determining 
Fiscal  Year. 

Pursuant  to  this  provision  the  following  instructions  are 
issued  for  the  guidance  of  collectors  and  other  interested 
parties : 

420 


CORPORATIONS— Continued 

(As  amended  by  Treasury  Decisions  2029  and  2090.) 
For  income-tax  purposes,  in  the  absence  of  designation 
otherwise,  all  returns  are  required  to  be  made  on  the  basis 
of  the  calendar  year.  The  statute  provides  that  returns 
must  be  made  on  the  basis  of  a  calendar  year  unless  the  cor- 
poration, etc.,  involved  shall  designate  a  fiscal  year  other 
than  the  calendar  year  in  the  manner  provided  by  the  stat- 
ute. When  the  calendar  year  shall  have  passed,  a  return 
of  income  for  the  entire  period  of  such  calendar  year  is  then 
due  and  must  be  made  out  and  filed  with  the  proper  collector 
of  internal  revenue  on  or  before  March  15  then  next  follow- 
ing. This  is  true  even  of  corporations  and  institutions  mak- 
ing return  as  corporations,  except  that  such  corporations, 
etc.,  are  given  the  privilege  of  filing  with  the  collector  of 
internal  revenue  (with  whom  their  return  must  be  filed) 
not  less  than  thirty  days  (more,  but  not  less)  prior  to  March 
15  (the  date  when  the  return  on  the  basis  of  a  calendar 
year  is  to  be  filed) ,  a  notice,  in  writing,  setting  forth  that 
such  corporation,  etc.,  has  designated  the  last  day  of  some 
month  in  the  year  (other  than  the  last  day  of  December) 
as  the  day  of  the  closing  of  its  fiscal  year,  and  that  from  the 
date  so  desiganted  as  the  close  of  its  fiscal  year  its  books 
have  been  or  will  be  kept  on  the  basis  of  such  designated 
fiscal  year.  When  this  said  notice  is  filed  with  the  collector 
of  internal  revenue,  a  return  must  then  be  made  on  or  before 
March  15  for  such  part  of  the  calendar  year  elapsed  as  is 
not  included  in  the  said  designated  fiscal  year,  and  return 
for  the  full  designated  fiscal  year  must  be  made  and  filed  on 
or  before  the  15th  day  of  the  third  month  next  succeeding 
the  last  day  of  said  designated  fiscal  year.  This  rule  will 
apply  whether  the  designation  affects  the  future  or  past, 
provided  always  that  the  return  of  income  cannot  cover 
more  than  12  consecutive  months. 
Example : 

A  X  B  C  Y  Z 

Jan.  1      June  30   Dec.  31    Mar.  15    June  30   Aug.  29 
AB  is  calendar  year  and  C  is  March  15,  the  time  when  re- 
turn on  the  basis  of  the  calendar  year  must  be  filed.    At 

431 


CORPORATIONS—Continued 

any  time  not  less  than  30  days  prior  to  C  a  corporation  may 
file  with  the  collector  with  whom  its  return  of  income  must 
be  filed  a  notice  in  writing  setting  forth  that  said  corpora- 
tion, etc.,  has  designated  the  last  day  of  some  month  in  the 
year  (other  than  December  31)  as  the  day  of  the  close  of 
its  fiscal  year,  as  June  30,  represented  by  X ;  thereafter,  on 
March  15,  a  return  will  be  filed  for  the  period  AX.  XY  rep- 
resents the  first  designated  fiscal  year,  and  for  this  said 
fiscal  year  a  return  of  income  must  be  made  (covering  the 
period  XY)  subsequent  to  June  30  and  on  or  before  Sep- 
tember 15 ;  in  other  words,  the  15th  day  of  the  third  month 
next  following  the  close  of  the  fiscal  year.  Thereafter  re- 
turns of  income  will  be  made  and  filed  annually  subsequent 
to  June  30,  and  on  or  before  September  15. — Treasury  De- 
cision 2090. 

If  it  shall  appear  in  any  case  that  returns  have  been 
made  to  the  collector  on  the  basis  of  a  fiscal  year  not  desig- 
nated as  hereinbefore  indicated,  the  corporation  making 
such  returns  will  be  advised  that  such  returns  cannot  be 
accepted,  but  must  be  made  to  cover  the  business  of  the 
calendar  year. — Art.  215,  Reg.  33,  Revised. 


^  747 — Collectors  Must  Make  a  Record  of  the  Designation 
of  the  "Fiscal  Year." 

Collectors  of  internal  revenue  receiving  notices  of  the 
selection  and  designation  of  the  "fiscal  years,"  as  above  in- 
dicated, will  make  record  of  the  same,  recording  (a)  the 
name  of  the  corporation  or  like  organization,  (b)  the  date 
when  notice  was  given,  (c)  the  day  designated  for  the  clos- 
ing of  the  fiscal  year,  and  (d)  the  date  when  the  return 
under  such  designation  must  be  filed,     .     . 

(Remainder  superseded  by  Treasury  Decision  2001.) 

H  74a— Extension  Not  to  Exceed  30  Days. 

If  the  failure  to  file  a  return  or  list  is  due  to  sickness  or 
absence,  the  collector  may  allow  such  further  time,  not  ex- 
ceeding thirty  days,  for  making  and  filing  the  return  or  hst. 

422 


CORPORATIONS— Continued 

If  749 — Furthen  Extension  Than  30  Days  by  Commissioner 
of  Internal  Revenue. 

The  Commissioner  may  grant  a  reasonable  extension  of 
time  for  fihng  returns  whenever  in  his  judgment  good  cause 
exists  and  shall  keep  a  record  of  every  such  extension  and 
the  reason  therefor. 

^  750 — Returns  Properly  Mailed  in  Time  to  Reach 

Collector  Not  Subject  to  Penalty  Under  Certain 
Conditions. 

If  a  return  is  made  and  placed  in  the  United  States  mails 
in  due  course,  properly  addressed,  and  postage  paid,  in  ample 
time  to  reach  the  office  of  the  collector  or  deputy  collector 
on  or  before  the  last  due  date,  no  penalty  will  be  held  to  at- 
tach should  the  return  not  be  actually  received  by  such 
officer  until  subsequent  to  that  date.  In  cases  wherein  a 
question  may  be  raised  as  to  whether  or  not  the  return  was 
posted  in  ample  time  to  reach  the  collector's  office  on  or  be- 
fore the  date  due,  the  envelope  in  which  the  return  was 
transmitted  should  be  preserved  by  the  collector  of  internal 
revenue  and  forwarded  to  the  Commissioner  of  Internal  Rev- 
enue with  the  return. — Art.  220,  Reg.  33,  Revised. 

^751— "Last  Due  Date"  Defined. 

"Last  due  date,"  as  used  in  these  regulations,  is  con- 
strued to  mean  the  last  day  upon  which  a  return  is  required 
to  be  filed  in  accordance  with  the  provisions  of  the  law,  or 
the  last  day  of  the  period  covered  by  an  extension  of  time 
granted  by  the  collector  or  Commissioner  of  Internal  Rev- 
enue.— Art.  218,  Reg.  33,  Revised. 

If  752 — ^When  Due  Date  Falls  on  Sunday  or  Legal  Holiday. 

When  the  last  due  date  as  above  defined  falls  on  Sunday 
or  a  legal  holiday  the  last  due  date  for  fihng  returns  will  be 
held  to  be  the  day  following  such  Sunday  or  legal  holiday 
and  the  return  should  be  made  to  the  collector  not  later 
than  such  following  day,  or,  if  placed  in  the  mails,  it  should 
be  posted  in  ample  time  to  reach  the  collector's  office,  under 
ordinary  handling  of  the  mails,  on  or  before  the  date  on 
which  the  return  as  here  indicated  is  required  to  be  filed  in 
the  office  of  the  collector. — Art.  219,  Reg.  33,  Revised. 

423 


CORPORATIONS— Continued 

T[  753— -Return  of  Dividends. 

Every  corporation  subject  to  the  tax  imposed  by  this  title, 
and  every  personal  service  corporation  shall,  v^hen  required 
by  the  Commissioner  of  Internal  Revenue,  render  a  correct 
return,  duly  verified  under  oath,  of  its  payments  of  divi- 
dends, stating  the  name  and  address  of  each  stockholder, 
the  number  of  shares  owned  by  him,  and  the  amount  of  divi- 
dends paid  to  him. 

^  754 — Returns  by  Brokers. 

Every  individual,  corporation  or  partnership  doing  busi- 
ness as  a  broker  shall,  when  required  by  the  Commissioner 
of  Internal  Revenue,  with  the  approval  of  the  Secretary, 
render  a  correct  return  duly  verified  under  oath,  showing  the 
names  of  customers  for  whom  such  individual,  corporation, 
or  partnership  has  transacted  any  business,  with  such  de- 
tails as  to  the  profits,  losses  or  other  information  which  the 
commisioner  may  require,  as  to  ecah  of  such  customers,  as 
will  enable  the  Commissioner  of  Internal  Revenue  to  deter- 
mine whether  all  income  tax  due  on  profits  or  gains  of  such 
customers  has  been  paid. 

^  755 — Return  by  Corporations  Making  Payment  of  $1,000. 
All  individuals,  corporations,  and  partnerships,  in  what- 
ever capacity  acting,  including  lessees  or  mortgagors  of  real 
or  personal  property,  fiduciaries,  and  employers,  making 
payment  to  another  individual,  corporation,  or  partnership, 
of  interest,  rent,  salaries,  wages,  premiums,  annuities,  com- 
pensations, remunerations,  emoluments  or  other  fixed  or  de- 
terminable gains,  profits  and  income  (other  than  payments 
described  in  Sections  254  and  255),  of  $1,000  or  more  in  any 
taxable  year,  or  in  the  case  of  such  payments  made  by  the 
United  States,  the  officers  or  employes  of  the  United  States 
having  information  as  to  such  payments  and  required  to 
make  returns  in  regard  thereto  by  the  regulations  here- 
inafter provided  for,  shall  render  a  true  and  accurate  re- 
turn to  the  Commissioner,  under  such  rules  and  regula- 
tions and  in  such  form  and  manner  and  to  such  extent 
as  may  be  prescribed  by  him,  with  the  approval  of  the 
Secretary  of  the  Treasury,  setting  forth  the  amount  of 

424 


CORPORATIONS— Continued  PAYMENT  OF  TAX 

such  gains,  profits  and  income,  and  the  name  and  address 
of  the  recipient  of  such  payment.  Such  returns  may  be 
required,  regardless  of  amounts,  in  the  case  of  payments  of 
interest  upon  bonds  and  mortgages  or  deeds  of  trust  or  other 
similar  obligations  of  corporations,  and  in  the  case  of  col- 
lections of  items  (not  payable  in  the  United  States)  of  in- 
terest upon  the  bonds  of  foreign  countries  and  interest  from 
the  bonds  and  dividends  from  the  stock  of  foreign  corpora- 
tions by  individuals,  corporations,  or  partnerships  undertak- 
ing as  a  matter  of  business  or  for  profit  the  collection  of  for- 
eign payments  of  such  interest  or  dividends  by  means  of 
coupons,  checks  or  bills  of  exchange. 

When  necessary  to  make  effective  the  provisions  of  this 
section,  the  name  and  address  of  the  recipient  of  income 
shall  be  furnished  upon  demand  of  the  individual,  corpora- 
tion or  partnership  paying  the  income. 

The  provisions  of  this  section  shall  apply  to  the  calendar 
year  nineteen  hundred  and  eighteen  and  each  calendar  year 
thereafter,  but  shall  not  apply  to  the  payment  of  interest 
on  obligations  of  the  United  States. 

^  756 — Assessment  and  Payment  of  Taxes. 

Unless  the  tax  is  withheld  at  the  source  it  shall  be  paid  in 
four  installments,  each  consisting  of  one-fourth  of  the  total 
amount  of  the  tax.  The  first  installment  shall  be  paid  at 
the  time  fixed  by  law  for  filing  the  return,  namely  March 
15th,  and  the  second  installment  shall  be  paid  on  the  fif- 
teenth day  of  the  third  month,  the  third  installment  on  the 
fifteenth  day  of  the  sixth  month,  and  the  fourth  install- 
ment on  the  fifteenth  day  of  the  ninth  month,  after  the 
time  fixed  by  law  for  filing  the  return. 

]f  757 — Payments  Where  Extension  Is  Granted. 

Where  an  extension  of  time  for  fifing  a  return  is  granted 
the  time  for  payment  of  the  first  installment  shall  be  post- 
poned until  the  date  of  the  expiration  of  the  period  of  the 
extension,  but  the  time  for  payment  of  the  other  install- 
ments shall  not  be  postponed  unless  the  Commissioner  so 
provides  in  granting  the  extension.  In  any  case  in  which 
the  time  for  the  payment  of  any  installment  is  at  the  re- 

425 


CORPORATIONS— Continued  PAYMENT  OF  TAX 

quest  of  the  taxpayer  thus  postponed  there  shall  be  added 
as  part  of  such  installment  interest  thereon  at  the  rate  of  1/2 
of  1  per  centum  per  month  from  the  time  it  would  have 
been  due  if  no  extension  had  been  granted,  until  paid.  If 
any  installment  is  not  paid  when  due,  the  whole  amount  of 
the  tax  unpaid  shall  become  due  and  payable  upon  notice 
and  demand  by  the  collector. 

If  758 — Single  Payment. 

The  tax  may  at  the  option  of  the  taxpayer  be  paid  in  a 
single  payment  instead  of  in  installments,  in  which  case  the 
total  amount  shall  be  paid  on  or  before  the  time  fixed  by  law 
for  filing  the  return,  or,  where  an  extension  of  time  for  fiHng 
the  return  has  been  granted,  on  or  before  the  expiration  of 
the  period  of  such  extension. 


REFUND  OF  TAXES  FOUND  TO  HAVE  BEEN  OVER- 
PAID UNDER  ANY  PREVIOUS  OR 
THE  PRESENT  ACT. 

If  758(a)  - 

If  it  is  found  upon  examination  of  returns  made  under  the 
provisions  of  either  the  present  Act  or  any  previous  Act,  an 
amount  of  income,  war-profits  or  excess-profits  tax  has  been 
paid  in  excess  of  the  tax  properly  due,  then  notwithstanding 
the  provisions  of  section  3228  of  the  Revised  Statutes, 
(which  provides  that  claims  for  taxes  wrongfully  collected 
must  be  presented  within  two  years  after  the  cause  of 
action  accrued)  the  amount  of  the  excess  shall  be  credited 
against  any  income,  war-profits  or  excess-profits  taxes,  or 
installment  thereof,  then  due  from  the  taxpayer  under  any 
other  return,  and  any  balance  of  excess  shall  be  immediately 
refunded  to  the  taxpayer. 

Tf  758  (b)— Limitation  of  Time  for  Filing  Refund  Claim. 

No  credit  or  refund  with  respect  to  amounts  referred  to 
above  shall  be  allowed  or  made  unless  the  claim  therefor 
shall  have  been  filed  before  the  expiration  of  a  period  of  five 
years  from  the  date  the  return  was  due. 

426 


CORPORATIONS— Continued 

^  759 — Payment  of  Tax  at  Source. 

In  all  cases  where  the  tax  is  withheld  at  the  source  on 
income  paid  to  non-resident  aliens  and  on  interest  on  the 
bonds  containing  a  tax-free  clause,  the  returns  shall  be  filed 
on  or  before  March  1st  of  each  year  and  the  tax  on  same 
shall  be  paid  on  or  before  June  15th. 

H  760 — False  or  Fraudulent  Return. 

In  the  case  of  a  false  or  fraudulent  return  filed  by  a 
corporation,  the  Commissioner,  upon  the  discovery  thereof 
shall  make  a  return  at  any  time  after  the  return  is  filed, 
upon  information  obtained,  and  the  tax  may  be  collected 
at  any  time  after  it  becomes  due.    ^ 

Except  in  the  case  of  false  or  fraudulent  returns  with 
intent  to  evade  the  tax,  the  amount  of  tax  due  under  any 
return  shall  be  determined  and  assessed  by  the  Commis- 
sioner within  five  years  after  the  return  was  made,  and 
no  suit  or  proceeding  for  the  collection  of  any  tax  shall 
be  begun  after  the  expiration  of  five  years  after  the  date 
when  the  return  was  due  or  was  made. 

Tf  761— Past  Due  Taxes  Voluntarily  Paid. 

If  the  corporation  against  which  additional  tax  liability 
is  discovered  will  formally  accept  the  findings  of  the  exam- 
ining officer  and  agree  to  voluntarily  pay  the  additional 
tax  to  the  collector  of  internal  revenue  and  does  so  pay 
the  additional  tax,  amended  returns  or  waivers  will  not 
be  required. — Art.  234,  Reg.  33,  Revised. 

If  762— Refunds. 

That  if,  upon  examination  of  any  return  of  income  made 
pursuant  to  this  Act,  the  Act  of  August  5,  1909,  entitled 
"An  Act  to  provide  revenue,  equalize  duties,  and  encourage 
the  industries  of  the  United  States,  and  for  other  purposes," 
the  Act  of  October  3,  1913,  entitled  "An  Act  to  reduce  tariff 
duties  and  to  provide  revenue  for  the  Government,  and  for 
other  purposes,"  the  Revenue  Act  of  1916,  as  amended,  or 
the  Revenue  Act  of  1917,  it  appears  that  an  amount  of 
income,  war-profits  or  excess-profits  tax  has  been  paid  in 
excess  of  that  properly  due,  then,  notwithstanding  the  pro- 
visions of  Section  3228  of  the  Revised  Statutes,  the  amount 

427 


CORPORATIONS— Continued 

of  the  excess  shall  be  credited  against  any  income,  war- 
profits  or  excess-profits  taxes,  or  installments  thereof,  then 
due  from  the  taxpayer  under  any  other  return,  and  any 
balance  of  such  excess  shall  be  immediately  refunded  to  the 
taxpayer.  That  no  such  credit  or  refund  shall  be  allowed  or 
made  after  five  years  from  the  date  when  the  return  was 
due,  unless  before  the  expiration  of  such  five  years  a  claim 
therefor  is  filed  by  the  taxpayer. 

K  763— Uncertified  Checks. 

Under  rules  and  regulations  prescribed  by  the  Secretary 
of  the  Treasury,  collectors  of  internal  revenue  may  receive, 
at  par  with  an  adjustment  for  accrued  interest,  certificates 
of  indebtedness  issued  by  the  United  States,  and  uncer- 
tified checks  in  payment  of  income,  war-profits  and  excess- 
profits  taxes,  during  such  time  and  under  such  regulations 
as  the  Commissioner  of  Internal  Revenue,  with  the  approval 
of  the  Secretary  of  the  Treasury,  shall  prescribe;  but  if  a 
check  so  received  is  not  paid  by  the  bank  on  which  it  is 
drawn,  the  person  by  whom  such  check  has  been  tendered 
shall  remain  liable  for  the  payment  of  the  tax  and  for  all 
legal  penalties  and  additions,  the  same  as  if  such  had  not 
been  tendered. 

11  764— Failure  to  Pay  Tax  When  Due. 

Upon  failure  to  pay  the  tax  when  due  and  for  10  days 
after  notice  and  demand,  a  penalty  of  5  per  cent,  of  the 
amount  of  the  tax  unpaid  and  interest  at  the  rate  of  1  per 
cent,  per  month  until  paid  shall  be  added  to  the  amount 
of  such  tax. 

^  76B— 5  Per  Cent.  Penalty  Waived  Upon  Filing  Claim. 

To  any  amount  of  tax  which  is  subject  to  a  bona  fide 
claim  for  abatement  such  sum  of  5  per  cent,  shall  not  be 
added  and  the  interest  from  the  time  the  amount  was  due 
until  the  claim  is  decided  shall  be  at  the  rate  of  one-half  of 
1  per  cent  per  month. 

^  766 — Returns  to  Be  Public  Records. 

That  returns  upon  which  the  tax  has  been  determined 
by  the  Commissioner  shall  constitute  public  records;  but 

423 


CORPORATIONS— Continued 

they  shall  be  open  to  inspection  only  upon  order  of  the 
President  and  under  rules  and  regulations  prescribed  by 
the  Secretary  and  approved  by  the  President. 

^  767 — Information  to  States  Which  Impose  Income  Taxes. 

The  proper  officers  of  any  State  imposing  an  income  tax 
may,  upon  the  request  of  the  Governor  thereof,  have  access 
to  the  returns  of  any  corporation,  or  to  an  abstract  thereof 
showing  the  name  and  income  of  the  corporation,  at  such 
times  and  in  such  manner  as  the  Secretary  may  prescribe : 
Provided  further.  That  all  bona  fide  stockholders  of  record 
owning  1  per  centum  or  more  of  the  outstanding  stock  of 
any  corporation,  shall,  upon  making  request  of  the  Commis- 
sioner, be  allowed  to  examine  the  annual  income  returns  of 
such  corporation  and  of  its  subsidiaries. 

Any  stockholder  who  pursuant  to  the  provisions  of  this 
section  is  allowed  to  examine  the  return  of  any  corporation, 
and  who  makes  known  in  any  manner  whatever  not  provided 
by  law  the  amount  of  source  of  income,  profits,  losses,  ex- 
penditures, or  any  particular  thereof,  set  forth  or  disclosed 
in  any  such  return,  shall  be  guilty  of  a  misdemeanor  and 
be  punished  by  a  fine  not  exceeding  $1,000,  or  by  imprison- 
ment not  exceeding  one  year,  or  both. 

The  Commissioner  shall  as  soon  as  practicable  in  each 
year  cause  to  be  prepared  and  made  available  to  public 
inspection  in  such  manner  as  he  may  determine,  lists  con- 
taining the  names  and  the  post-office  addresses  of  all  in- 
dividuals making  income  tax  returns. 

^  768 — Regulations  Governing  the  Inspection  of  Returns 
by  Corporations. 

See  Treasury  Decision  2016. 

^  769 — Publicity  of  Supplementary  Statements — 

The  supplementary  statement  which  is  made  a  part  of 
the  return  form  prescribed  for  the  use  of  corporations  in 
making  returns  of  annual  net  income  is  by  express  terms 
made  a  part  of  the  return,  and  to  the  same  extent  that  the 
return  constitutes  a  public  record  and  is  open  to  inspection, 
to  that  extent  the  supplementary  statement  is  also  a  public 

439 


CORPORATIONS— Continued 

record  and  open  to  inspection  "only  upon  the  order  of  the 
President  under  rules  and  regulations  prescribed  by  the 
Secretary  of  the  Treasury  and  approved  by  the  President." 

If  770 — Certified  Copies  of  Returns. 

At  the  request  of  the  Attorney  General  or  a  United  States 
district  attorney,  certified  copies  of  returns  may  be  made 
by  the  Commissioner  of  Internal  Revenue  and  delivered  to 
the  United  States  district  attorneys  for  their  use  as  evi- 
dence in  the  prosecution  or  defense  of  suits  in  which  the 
collection  or  legality  of  the  income  tax  assessed  on  the  basis 
of  such  returns  is  involved,  or,  by  special  permission  of  the 
Secretary  of  the  Treasury,  such  certified  copies  of  returns 
may  be  furnished  as  evidence  in  any  suit  to  which  the 
United  States  Government  and  the  corporation,  etc.,  mak- 
ing the  returns  are  parties,  or  as  evidence  before  any  United 
States  grand  jury,  and  in  which,  in  the  opinion  of  the  At- 
torney General,  such  certified  copies  would  constitute 
material  evidence. — Treasury  Decision  2016 ;  also.  Art.  227, 
Reg.  33,  Revised. 

]|  771 — Disclosure  of  Return — Penalty. 

The  disclosure  by  a  collector,  deputy  collector,  agent, 
clerk,  or  other  officer  or  employe  of  the  United  States,  to 
any  person  not  legally  authorized  to  receive  the  same,  of 
any  information  whatever  contained  in  or  set  forth  by  any 
return  of  annual  net  income  made  pursuant  to  this  Act,  is, 
by  the  Act,  made  a  misdemeanor,  and  is  punishable  by  a 
fine  not  exceeding  $1,000,  or  by  imprisonment  not  exceeding 
one  year,  or  both,  in  the  discretion  of  the  court,  and  if  the 
offender  is  an  officer  or  employe  of  the  United  States  he 
shall  be  dismissed  and  be  incapable  thereafter  of  holding 
any  office  under  the  United  States  Government. — Art.  229, 
Reg.  33,  Revised. 

U  772— Publication  of  Statistics. 

That  the  Commissioner,  with  the  approval  of  the  Sec- 
retary, shall  prepare  and  publish  annually  statistics  reason- 
ably available  with  respect  to  the  operation  of  the  income, 
war-profits  and  excess-profits  tax  laws,  including  classifi- 
cations of  taxpayers  and  of  income,  the  amounts  allowed 

430 


CORPORATIONS— Continued 

as  deductions,  exemptions,  and  credits,  and  any  other  facts 
deemed  pertinent  and  valuable. 

^  773 — Citizens  of  United  States  Possessions. 

That  any  individual  who  is  a  citizen  of  any  possession 
of  the  United  States  (but  not  otherwise  a  citizen  of  the 
United  States),  and  who  is  not  a  resident  of  the  United 
States,  shall  be  subject  to  taxation  under  this  title  only  as 
to  income  derived  from  sources  within  the  United  States, 
and  in  such  case  the  tax  shall  be  computed  and  paid  in  the 
same  manner  and  subject  to  the  same  conditions  as  in  the 
case  of  other  persons  who  are  taxable  only  as  to  income 
derived  from  such  sources. 

^  774 — Bookkeeping. 

No  particular  system  of  bookkeeping  or  accounting  will 
be  required  by  the  department.  However,  the  business 
transacted  by  corporations  must  be  so  recorded  that  each 
and  every  item  set  forth  in  the  return  of  annual  net  income 
may  be  readily  verified  by  an  examination  of  the  books  of 
account. 

A  corporation  keeping  accounts  upon  any  basis  other  than 
that  of  actual  receipts  and  disbursements,  unless  such  other 
basis  does  not  clearly  reflect  its  income,  may,  subject  to 
regulations  made  by  the  Commissioner  of  Internal  Revenue, 
with  the  approval  of  the  Secretary  of  the  Treasury,  make 
its  return  upon  the  basis  upon  which  its  accounts  are  kept, 
in  which  case  the  tax  shall  be  computed  upon  its  income 
as  so  returned. 

%  775 — Accrued  Interest  Deductible  from  Gross  Income. 

The  above  provision  of  law  authorizes  corporations  keep- 
ing books  of  account  on  an  accrued  basis  to  deduct  from 
gross  income  in  returns  of  annual  net  income  the  accrual 
of  interest  for  the  return  year  within  the  limits  prescribed 
by  the  taxing  acts  when  shown  as  a  charge  against  accrued 
income  upon  the  books  of  account. — Treasury  Decision  2625. 

^  776 — Books  of  Account  Best  Guide  to  Income. 

The  books  of  a  corporation  are  assumed  to  reflect  the 
facts  as  to  its  earnings,  income,  etc.    Hence  they  will  be 

431 


CORPORATIONS— Continued 

taken  as  the  best  guide  in  determining  the  net  income  upon 
which  the  tax  imposed  by  this  Act  is  calculated.  Except  as 
the  same  may  be  modified  by  the  provisions  of  the  law, 
wherein  certain  deductions  are  limited,  the  net  income  dis- 
closed by  the  books  and  verified  by  the  annual  balance  sheet, 
or  the  annual  report  to  stockholders,  should  be  the  same  as 
that  returned  for  taxation. 

Tf  777 — Porto  Rico  and  Philippine  Islands. 

That  in  Porto  Rico  and  the  Philippine  Islands  the  income 
tax  shall  be  levied,  assessed,  collected,  and  paid  in  accord- 
ance with  the  provisions  of  the  Revenue  Act  of  1916  as 
amended. 

Returns  shall  be  made  and  taxes  shall  be  paid  under  Title 
I.  of  such  Act  in  Porto  Rico  or  the  Philippine  Islands,  as 
the  case  may  be,  by  (1)  every  individual  who  is  a  citizen 
or  resident  of  Porto  Rico  or  the  Philippine  Islands  or  de- 
rives income  from  sources  therein,  and  (2)  every  corpora- 
tion created  or  organized  in  Porto  Rico  or  the  Philippine 
Islands  or  deriving  income  from  sources  therein.  An  indi- 
vidual who  is  neither  a  citizen  nor  a  resident  of  Porto  Rico 
or  the  Philippine  Islands  but  derives  income  from  sources 
therein,  shall  be  taxed  in  Porto  Rico  or  the  Philippine 
Islands  as  a  non-resident  alien  individual  and  a  corporation 
created  or  oi:ganized  outside  Porto  or  the  Philippine  Islands 
and  deriving  income  from  sources  therein  shall  be  taxed  in 
Porto  Porto  Rico  or  the  Philippine  Islands. 

For  the  purpose  of  the  deductions  and  credits  provided 
in  Section  234  and  paragraph  6  of  Section  216,  a  tax  im- 
posed in  Porto  Rico  or  the  Philippine  Islands  upon  the  net 
income  of  a  corporation  shall  not  be  deemed  to  be  a  tax 
under  this  title. 

The  Porto  Rican  or  Philippine  Legislature  shall  have 
power  by  due  enactment  to  amend,  alter,  modify,  or  repeal 
the  income  tax  laws  in  force  in  Porto  Rico  or  the  Philippine 
Islands,  respectively. 

^  778 — Examination  of  Books. 

For  the  purpose  of  verifying  any  return,  made  pursuant 
to  this  Act,  the  Commissioner  of  Internal  Revenue  may,  by 

432 


CORPORATIONS— Continued 

any  duly  authorized  revenue  agent  or  deputy  collector,  cause 
the  books  of  such  corporation  to  be  examined,  and  if  such 
examination  discloses  that  the  corporation  is  liable  to  tax 
in  addition  to  that  previously  assessed,  or  assessable,  the 
same  shall  be  assessed  and  shall  be  payable  immediately 
upon  notice  and  demand.  For  the  purpose  of  such  exam- 
ination, the  books  of  corporations  shall  be  open  to  the  ex- 
amining officer,  or  shall  be  produced  for  this  purpose  upon 
summons  issued  by  any  properly  authorized  officer. 

if  779 — Additional  Assessments. 

In  cases  wherein  additional  assessments  are  made  as  a 
reults  of  any  examination  or  audit  of  the  return,  the  tax- 
payer shall  immediately  following  the  making  the  assess- 
ment, be  notified  of  the  amount  thereof,  and  such  taxes  shall 
be  paid  within  10  days  from  the  date  of  such  notice. — Art. 
230,  Reg.  33,  Revised. 


433 


THE    WAR-PROFITS    AND    EXCESS-PROFITS 

TAX  IMPOSED  BY  TITLE  III.  OF  THE 

REVENUE  ACT  OF  1918. 

^  780— Definitions. 

When  used  in  these  regulations  the  terms  defined  in  para- 
graphs 1  to  6,  following,  shall,  unless  otherwise  indicated 
by  the  context,  be  deemed  to  be  used  only  with  the  scope 
or  meaning  ascribed  to  them  respectively  in  such  articles. 

Tf  781 —Taxable  Year. 

1.  The  term  "taxable  year"  means  the  calendar  year,  or 
the  fiscal  year  ending  during  such  calendar  year,  upon  the 
basis  of  which  the  net  income  is  computed.  The  first  taxable 
year,  to  be  called  the  taxable  year  1918,  shall  be  the  calendar 
year  1918  or  any  fiscal  year  ending  during  the  calendar  year 
1918. 

If  782— Fiscal  Year. 

2.  The  term  "fiscal  year"  means  an  accounting  period  of 
twelve  months  ending  on  the  last  day  of  any  month  other 
than  December. 

If  783 — Personal  Service  Corporation. 

3.  The  term  "personal  service  corporation"  means  a  cor- 
poration whose  income  is  to  be  ascribed  primarily  to  the  ac- 
tivities of  the  principal  owners  or  stockholders  who  are 
themselves  regularly  engaged  in  the  active  conduct  of  the 
affairs  of  the  corporation  and  in  which  capital  (whether  in- 

435 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

vested  or  borrowed)  is  not  a  material  income-producing 
factor,  but  does  not  include  any  foreign  corporation,  nor 
any  corporation  50  per  centum  or  more  of  whose  gross  in- 
come consists  either  (1)  of  gains,  profits,  or  income  derived 
from  trading  as  a  principal,  or  (2)  of  gains,  profits,  commis- 
sions, or  other  income,  derived  from  a  Government  contract 
or  contracts  made  between  April  6,  1917,  and  November  11, 
1918,  both  dates  inclusive. 

If  784 — Paid  or  Accrued. 

4.  The  term  "paid,"  for  the  purposes  of  the  deductions 
and  credits  under  this  title,  means  "paid  or  accrued"  or 
"paid  or  incurred,"  and  the  terms  "paid  or  incurred"  and 
"paid  or  accrued"  shall  be  construed  according  to  the  method 
of  accounting  upon  the  basis  of  which  the  net  income  is  com- 
puted under  Section  212,  which  defines  net  income. 

T[  785— Dividends. 

5.  The  term  "dividend"  means  any  distribution  made  by  a 
corporation,  other  than  a  personal  service  corporation,  to 
its  shareholders  or  members,  whether  in  cash  or  in  other 
property,  or  in  stock  of  the  corporation,  out  of  its  earnings 
or  profits  accumulated  since  February  28,  1913,  or  any  such 
distribution  made  by  a  personal  service  corporation  out  of 
its  earnings  or  profits  accumulated  since  February  28,  1913, 
and  prior  to  January  1,  1918. 

^  786 — Prewar  Period. 

6.  The  term  "prewar  period"  means  the  calendar  years 
1911,  1912  and  1913,  or  if  a  corporation  was  not  in  existence 
during  the  whole  of  such  period,  then  as  many  of  such  years 
during  the  whole  of  which  the  corporation  was  in  existence. 

If  787 — Returns  and  Payments  of  Excess-Profits  Tax. 

Returns  are  to  be  made  by  corporations  which  are  not 
specifically  exempt  in  the  same  manner  and  at  the  same 

436 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

times  as  under  the  income  tax  provisions ;  and  payments  are 
to  be  made  likewise  in  the  same  manner  and  at  the  same 
times. 

^  788 — Due  Date  of  Return  on  Calendar  Year  Basis. 

Returns  for  the  calendar  year  1918  are  due  on  March 
15,  1919,  unless  an  extension  is  secured,  and  in  such  case 
on  the  date  of  the  expiration  of  the  extension. 

If  789 — Due  Date  of  Returns  on  Fiscal  Year  Basis. 

If  filed  on  the  basis  of  a  fiscal  year,  the  return  and  first 
payment  must  be  made  on  or  before  the  fifteenth  day  of  the 
third  month  following  the  close  of  the  fiscal  year. 

CORPORATIONS  SUBJECT  TO  THE  TAX. 

If  790 — Corporations. 

Every  domestic  corporation  which  has  for  the  taxable 
war-profits  and  excess-profits  tax  but  is  required  to  file  a 
year  a  net  income  of  less  than  $3,000  is  exempt  from  the 
return.  Corporations  organized  for  religious,  charitable,  or 
educational  purposes  the  profits  of  which  do  not  inure  to  any 
stockholder  or  individual  are  also  exempt. 

11791- 

Every  foreign  corporation  which  has  for  the  taxable  year 
a  net  income  from  sources  within  the  United  States  is,  un- 
less exempt  under  paragraph  790,  required  to  make  a  return 
and  to  pay  the  tax,  if  any. 

It  792 — Exemptions. 

The  f ollovv^ing  are  exempt  from  the  tax : 
(a)  Corporations  exempt  under  the  provisions  of  Section 
231,  Title  II.  of  the  Revenue  Act  of  1918,  from  the  tax 

437 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

imposed  by  such  title.    (The  corporation  income  tax.)    Law, 
page  79,  line  20. 

(b)  Any  corporation  having  a  net  income  of  less  than 
$3,000. 

(c)  Income  derived  from  the  mining  of  gold  (the  remain- 
ing portion  of  net  income  shall  be  subject  to  the  tax) .  Law, 
page  92,  line  11. 


RATES  AND  COMPUTATION  OF  TAX. 

H  793 — Classification  of  Net  Income. 

For  the  purposes  of  the  excess-profits  tax,  net  income 
which  is  subject  to  the  tax  is  that  which  is  derived  from  a 
trade  or  business  having  invested  capital. 

11  794— Rate  of  Tax. 

The  tax  upon  net  income  shall,  except  as  otherwise  pro- 
vided, be  computed  at  the  following  rates : 

30  per  cent,  of  the  amount  of  the  net  income  in  excess  of 
the  excess-profits  credit  (determined  under  Section  312, 
If  827)  and  not  in  excess  of  20  per  cent,  of  the  invested 
capital ; 

65  per  cent,  of  the  amount  of  the  net  income  in  excess  of 
20  per  cent,  of  the  invested  capital. 

II 795- 

The  sum,  if  any,  by  which  80  per  cent,  of  the  amount  of 
the  net  income  in  excess  of  the  war-profits  credit  (deter- 
mined under  Section  311,  H  828)  exceeds  the  amount  of  the 
tax  computed  under  the  first  and  second  brackets. 

438 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

11796- 

METHOD    OF    CALCULATING    THE    WAR    EXCESS 

PROFITS  TAX  ON  CORPORATIONS  UNDER  TITLE 

IIL  OF  THE  REVENUE  BILL  OF  1918. 


EXAMPLE  I. 

11797 — Corporation  Having  an  Invested  Capital  of 

$1,000,000  and  a  Net  Income  for  the  Calendar 
Year  1918  of  $500,000. 

FIRST  BRACKET— 

Invested  capital $1,000,000      Net  income $500,000 

8%      Excess-profits  credit 83,000 


8%  of  invested  capital__         $80,000      Amount  taxable $417,000 

Plus  specific  exemption-  3,000 


Excess-profits    credit $83,000 

Invested  capital $1,000,000 

20% 


20%  of  invested  capital  $200,000 

Excess-profits  credit 83,000 


Amount  of  net  income  in  excess  of  excess-profits  credit  and  not 

in  excess  of  20%  of  invested  capital,  taxable  at  30% $117,000 

30% 


Amoimt  of  tax  under  First  Bracket $35,100 

11798- 

SECOND  BRACKET— 

Net  income   $500,000 

20%  of  invested  capital 200,000 


Amount  of  net  income  in  excess  of  20%  of  invested  capital,  tax- 
able at  65% $300,000 

65% 


Amount  of  tax  under  Second  Bracket $195,000 

Plus  tax  under  First  Bracket 35,100 


Total  tax  under  First  and  Second  Brackets $230,100 

439 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 
II  799— 

THIRD  BRACKET— 

Assuming  the  corporation  had  an  average  capital  oi  $500,000  for  the  years 
1011-1912-1913  (the  pre-war  period)  and  an  average  net  income  during 
that  period  of  $100,000,  the  tax  under  the  third  bracket  would  be  as 
follows : 


War  Profits  Credit  consists 

of  Specific  Exemption $3,000 

Aver,  net  income  for  pre- 
war   period    100,000 

Plus  10%  of  the  difference 
in  the  capital  (Cap.  was 
$500,000)  (now  is  $1,000,- 
000)  50,000 


Capital  at  beginning  of 

year $1,000,000 

Pre-war  capital 500,000 


Increase  $500,000 


Total  War  Profits  Credit     $153,000 


10%  Increase  to  be  ad- 
ded   


$50,000 


Net  income $500,000 

War-profits  credit  153,000 


Net  income  in  excess  of  war-profits  credit. 


$347,000 
80% 


80%  of  net  income  in  excess  of  war-profits  credit $277,600 

Total  tax  under  First  and  Second  Brackets 230,100 


Amount  by  which  80%  of  the  net  income  in  excess  of  the 
war-profits  credit  exceeds  the  tax  as  computed  under  the 
First  and  Second  Brackets.  (This  amount  to  be  added  to 
the    tax.)    $47,500 

Plus  tax  under  First  and  Second  Brackets 230,100 


Total  tax  under  First,  Second  and  Third  Brackets $277,600 


11800— 

Section  302  limits  the  amount  of  tax  which  shall  be  imposed  under  the 
first,  second  and  third  brackets.  The  tax  must  in  no  case  exceed  the 
sum  of  the  following  amounts: 

$20,000  $500,000  $5,100 

3,000  20,000  384,000 


$17,000 
30% 

$5,100 


$480,000 
80% 

$384,000 
440 


$389,100 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 
IT  801- 

As  the  total  of  this  limiting  amount  is  greater  than  the  amount  of  tax 
already  computed  under  the  first,  second  and  third  brackets,  no  advantage 
is  gained  in  this  case  by  Section  302,  the  amount  of  tax  remaining  at 
$277,600. 

In  addition  to  the  War  Excess  Profits  Tax  the  Corporation  Income  Tax 
is  as  follows: 

As  the  net  income  is $500,000 

War  Excess  Profits  Tax  (Credit) 277,600 

Amount  subject  to  Corporation  Income  Tax $222,400 

Less  specific  exemption 2,000 

220,400 
Rate  of  Income  Tax 12% 

Amount  of  income  tax $26,448 

Plus  War  Excess  Profits  Tax 277,600 

Total  taxes $304,048 

11802— 

The  above  tax  of  $304,048  is  60  per  Cent  of  the  net  in- 
come of  $500,000. 

^803— When  Excess-Profits  Credit  Exceeds  20  Per  Cent, 
of  Invested  Capital. 

In  any  case  in  which  the  full  amount  of  the  excess-profits 
credit  determined  as  provided  in  Sections  311  and  312  is 
greater  than  20  per  cent  of  the  invested  capital  the  part  not 
so  allowed  shall  be  deducted  from  the  amount  in  the  second 
bracket. 

ILLUSTRATION: 

IT  804— 

Capital,  $20,000.  .     Net  Income  $30,000. 

Excess  profits  credit  8  per  cent,  of  capital  plus 

$3,000=   $4,600 

Amount  taxable  under  first  bracket. 

Difference  between  credit  and  20%  of  capital. 

20  per  cent,  of  capital=       4,000 
Amount  of  credit^        4,600 

As  the  excess  profits  credit  is  greater  than  the  amount 
taxable  in  the  first  bracket  there  is  nothing  to  tax  in  the 
first  bracket. 

441 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

H  805  — 

The  balance  of   the   credit   is   then   deducted  from  the 
amount  subject  to  tax  under  the  second  bracket. 
Amount  taxable  under  second  bracket. 

Difference  between  total  net  income  and  20 
per  cent,  of  capital. 

Net  income $30,000 

20  per  cent,  of  capital 4,000 

Difference    $26,000 

Subtract  balance  of  excess  profits  credit  not  used 

in  first  bracket I 600 

Amount  taxable  in  second  bracket $25,400 

^  806 — Limitation  of  Tax. 

The  tax  imposed  by  the  first,  second  and  third  brackets 
as  set  forth  in  Section  301  shall  in  no  case  be  more  than  30 
per  cent,  of  the  amount  of  the  net  income  in  excess  of 
$3,000,  and  not  in  excess  of  $20,000,  plus  80  per  cent,  of 
the  amount  of  the  net  income  in  excess  of  $20,000. 

EXAMPLE. 

Limitation  of  the  tax  on  a  net  income  of  $100,000, 

Net   Income. 
$20,000  $100,000  $5,100 

3,000  20,000  64,000 

17,000  80,000  $69,100 

30%  ,  80% 

$5,100  $64,000 

ILLUSTRATION: 

11807- 

Corporation  with  invested  capital  of  $50,000  and  a  net 
income  of  $25,000,  started  in  business  in  1910  with  an 
average  capital  of  $25,000  for  the  pre-war  period  (1911- 
1912-1913)  and  an  average  net  income  for  that  period  of 
$10,000. 

442 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 
COMPUTATION  OF  TAX. 

FIRST  BRACKET. 

30  per  centum  of  the  amount  of  the  net  income  in  excess 
of  the  excess-profits  credit  (determined  under  section  312) 
and  not  in  excess  of  20  per  centum  of  the  invested  capital. 

(Sec.  312.  That  the  excess-profits  credit  shall  consist  of 
a  specific  exemption  of  $3,000,  plus  an  amount  equal  to  8 
per  centum  of  the  invested  capital  for  the  taxable  year.  A 
foreign  corporation  shall  not  be  entitled  to  the  specific  ex- 
emption of  $3,000.) 

Invested  Capital $50,000      Net  Income $25,000 

8%      Excess  Profits  Credit—  7,000 


8%  of  Invested  Capital $4,000      Amount  taxable $18,000 

Specific  exemption 3,000 


Excess  Profits  Credit $7,000 

Invested  capital $50,000 

20% 


20%  of  invested  capital $10,000 

Excess-profits   credit    7,000 


Amount  of  net  income  in  excess  of  excess-profits  credit  and 
not  in  excess  of  20%  of  the  invested  capital  taxable  at  30%  $3,000 

30% 


Amount  of  tax  under  First  Bracket $900 

If  SOS- 
SECOND  BRACKET. 

65  per  centum  of  the  amount  of  the  net  income  in  excess 
of  20  per  centum  of  the  invested  capital. 

Net  Income   $25,000 

20%  of  Invested  Capital 10,000 

Amount  of  net  income  in  excess  of  20%  of  invested  capital,  tax- 
able at  65% $15,000 

65% 


Tax  under  Second  Bracket $9,750 

Plus  tax  under  First  Bracket 900 


Tax  under  First  and  Second  Brackets $10,650 

^  809(a)— 

THIRD  BRACKET. 

The  sum,  if  any,  by  which  80  per  centum  of  the  amount 
of  the  net  income  in  excess  of  the  war-profits  credit  (deter- 

443 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

mined  under  Section  311)  exceeds  the  amount  of  the  tax 
computed  under  the  first  and  second  brackets. 

TI810— 

(Sec.  311.  That  the  war-profits  credit  shall  consist  of  the 
sum  of 

(1)  A  specific  exemption  of  $3,000,  and 

(2)  An  amount  equal  to  the  average  net  income  of  the 
corporation  for  the  pre-war  period,  plus  or  minus,  as  the 
case  may  be,  10  per  centum  of  the  difference  between  the 
average  invested  capital  for  the  taxable  year.  If  the  tax 
is  computed  for  a  period  of  less  than  twelve  months  such 
amount  shall  be  reduced  to  the  same  proportion  thereof  as 
the  number  of  months  in  the  period  is  of  twelve  months. 

11811- 

(b)  If  the  corporation  had  no  net  income  for  the  pre- 
war period,  or  if  the  amount  computed  under  paragraph 
(2)  of  subdivision  (a)  is  less  than  10  per  centum  of  its 
invested  capital  for  the  taxable  year,  then  the  war-profits 
credit  shall  be  the  sum  of 

(1)  A  specific  exemption  of  $3,000,  and 

(2)  An  amount  equal  to  10  per  centum  of  the  invested 
capital  for  the  taxable  year. 

If  812— 

(c)  If  the  corporation  was  not  in  existence  during  the 
whole  of  at  least  one  calendar  year  during  the  pre-war 
period,  then  the  war-profits  credit  shall  be  the  sum  of 

(1)  A  specific  exemption  of  $3,000,  and 

(2)  An  amount  equal  to  the  same  percentage  of  the  in- 
vested capital  of  the  taxpayer  for  the  taxable  year  as  the 
average  percentage  of  net  income  to  invested  capital,  for 
the  pre-war  period  of  corporations  engaged  in  a  trade  or 
business  of  the  same  general  class  as  that  conducted  by  the 
taxpayer;  but  such  amount  shall  in  no  case  be  less  than  10 
per  centum  of  the  invested  capital  of  the  taxpayer  for  the 
taxable  year.  Such  average  percentage  shall  be  determined 
by  the  Commissioner  on  the  basis  of  data  contained  in  re- 
turns made  under  Title  II.  of  the  Revenue  Act  of  1917  and 

444 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

the  average  known  as  the  median  shall  be  used.  If  such 
average  percentage  has  not  been  determined  and  published 
at  least  30  days  prior  to  the  time  when  the  return  of  the 
taxpayer  is  due,  then  for  purposes  of  such  return  10  per 
centum  shall  be  used  in  lieu  thereof ;  but  such  average  per- 
centage when  determined  shall  be  used  for  the  purposes  of 
Section  250  in  determining  the  correct  amount  of  the  tax. 

11813- 

(d)  The  war-profits  credit  shall  be  determined  in  the 
manner  provided  in  subdivision  (b)  instead  of  in  the  manner 
provided  in  subdivision  (c)  in  the  case  of  any  corporation 
which  was  not  in  existence  during  the  whole  of  at  least  one 
calendar  year  during  the  pre-war  period,  if  (1)  a  majority 
of  its  stock  at  any  time  during  the  taxable  year  is  owned  or 
controlled,  directly  or  indirectly,  by  a  corporation  which 
was  in  existence  during  the  whole  of  at  least  one  calendar 
year  during  the  pre-war  period,  or  if  (2)  50  per  centum  or 
more  of  its  gross  income  (as  computed  under  Section  233 
for  income  tax  purposes)  consists  of  gains,  profits,  com- 
missions, or  other  income,  derived  from  a  Government  con- 
tract or  contracts  made  between  April  6,  1917,  and  Novem- 
ber 11,  1918,  both  dates  inclusive. 

tf814- 

(e)  A  foreign  corporation  shall  not  be  entitled  to  a  specific 
exemption  of  $3,000. 

War  Profits  Credit  as  determined  under  section  311  con- 
sists of: 

Specific  Exemption  $3,000 

Average  net  income  for  pre-war  period 10,000 

Plus  10%  of  the   difference   in  capital    (was  $25,000  pre-war 

period— taxable  year,  $50,000) 2,500 

$15,500 

Net  Income   $25,000 

War  Profits  Credit 15,500 

Net  Income  in  Excess  of  War  Profits  Credit $9,500 

80% 

80%  of  net  income  in  excess  of  War  Profits  Credit $7,600 

Total  tax  under  First  and  Second  Brackets 10,650 

445 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

As  the  tax  computed  under  the  first  and  second  brackets 
exceeds  the  tax  computed  under  the  third  bracket,  there  is 
no  addition  to  the  tax  to  be  made  under  the  third  bracket. 

1181  Bi- 
section 302  hmits  the  amount  of  tax  which  shall  be  im- 
posed under  the  first,  second  and  third  brackets.  The  tax 
must  in  no  case  exceed  the  sum  of  the  following  amounts: 
30  per  cent  of  the  amount  of  the  net  income  in  excess  of 
$3,000,  and  not  in  excess  of  $20,000,  plus  80  per  cent  of  the 
net  income  in  excess  of  $20,000. 

$20,000  $25,000  $5,100 

3,000  20,000  4,000 

$17,000  $5,000  $9,100 

30%  80% 

$5,100  $4,000 

As  the  excess-profits  tax  now  stands  it  is  $10,650  as  com- 
puted under  the  first  and  second  brackets,  but  as  the  limiting 
amount  as  shown  by  the  computation  under  Section  302  is 
$9,100,  the  actual  amount  of  the  excess-profits  tax  due  is 
the  latter  amount  of  $9,100. 

In  addition  to  the  excess-profits  tax  the  corporation  is 
liable  for  a  corporation  income  tax  upon  the  net  income, 
less  the  amount  of  the  excess-profits  tax  and  a  specific  ex- 
emption of  $2,000.  The  corporation  income  tax  would  be  as 
follows : 

Net  income $25,000 

Less  excess-profits  tax 9,100 

$15,900 
Less  specific  exemption 2,000 

Amount  subiect  to  corporation  income  tax $13,900 

12% 

Amount  of  corporation  income  tax $1,668 

Plus  amount  of  excess-profits  tax 9,100 

Total  tax  payable $10,768 

This  total  tax  of  $10,768  upon  a  net  income  of  $25,000  is 
43  per  cent. 

446 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

If  81 7 — Where  Tax  Cannot  be  Satisfactorily  Determined. 

Where  the  tax  is  determined  under  Section  328  the  same 
shall  be  deemed  to  be  an  amount  which  bears  the  same  ratio 
to  the  net  income  of  the  taxpayer  (in  excess  of  the  specific 
exemption  of  $3,000)  for  the  taxable  year,  as  the  average 
tax  of  representative  corporations  engaged  in  a  like  or  simi- 
lar trade  or  business  bears  to  their  average  net  income  in 
excess  of  the  specific  exemption  of  $3,000)  for  such  year. 

11818- 

In  the  case  of  a  foreign  corporation  the  tax  shall  be  com- 
puted without  deducting  the  specific  exemption  of  $3,000, 
either  for  the  taxpayer  or  the  representative  corporation. 

1f8ia— 

In  computing  this  tax  the  Commissioner  shall  compare 
the  taxpayer  only  with  representative  corporations  whose 
invested  capital  can  be  satisfactorily  determined  under 
Section  326,  and  which  are,  as  nearly  as  may  be,  similarly 
circumstanced  with  respect  to  gross  income,  net  income, 
profits  per  unit  of  business  transacted  and  capital  employed, 
the  amount  and  rate  of  war-profits  or  excess-profits,  and 
ail  other  relevant  facts  and  circumstances. 

11820— 

(b)  For  the  purposes  of  subdivision  (a)  the  ratios  be- 
tween the  average  tax  and  the  average  net  income  of  rep- 
resentative corporations  shall  be  determined  by  the  Com- 
missioner in  accordance  with  regulations  prescribed  by  him 
with  the  approval  of  the  Secretary. 

11821- 

In  cases  in  which  the  tax  is  to  be  computed  under  this 
section,  if  the  tax  as  computed  without  the  benefit  of  this 
section  is  less  than  50  per  centum  of  the  net  income  of  the 
taxpayer,  the  installments  shall  in  the  first  instance  be 
computed  upon  the  basis  of  such  tax ;  but  if  the  tax  so  com- 
puted is  50  per  centum  or  more  of  the  net  income,  the 
installments  shall  in  the  first  instance  be  computed  upon  the 

447 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

basis  of  a  tax  equal  to  50  per  centum  of  the  net  income. 
In  any  case,  the  actual  ratio  when  ascertained  shall  be  used 
in  determining  the  correct  amount  of  the  tax.  If  the  correct 
amount  of  the  tax  when  determined  exceeds  50  per  centum 
of  the  net  income,  any  excess  of  the  correct  installments 
over  the  amounts  actually  paid  shall  on  notice  and  demand 
be  paid  together  with  interest  at  the  rate  of  i^  of  1  per 
centum  per  month  on  such  excess  from  the  time  the  install- 
ment was  due. 

If  822— Computation  of  Tax  for  Fiscal  Year,  Part  of  Which 
Falls  Within  Calendar  Year  1917. 

If  a  corporation  (other  than  a  personal  service  corpora- 
tion) makes  a  return  for  a  fiscal  year  beginning  in  1917  and 
ending  in  1918,  the  tax  for  the  first  taxable  year  shall  be 
the  sum  of  the  same  proportion  of  a  tax  for  the  entire  period 
computed  under  the  Revenue  Act  of  1917  which  the  portion 
of  such  period  falling  within  the  calendar  year  1917  is  of 
the  entire  period,  and  the  same  proportion  of  a  tax  for  the 
entire  period  computed  under  the  Revenue  Act  of  1918  which 
the  portion  of  such  period  falling  within  the  calendar  year 
1918  is  of  the  entire  period. 

^  823 — Computation  of  Tax  for  Period  of  Less  Than  12 
Months. 

If  the  tax  is  computed  for  a  period  of  less  than  12  months, 
the  war-profits  credit  will  be  reduced  to  the  same  proportion 
thereof  as  the  number  of  months  in  such  period  bears  to  12 
months. 

11 824— Void— [Ed.] 

11825- 

Any  amount  heretofore  or  hereafter  paid  on  account  of 
the  tax  imposed  for  such  fiscal  year  by  Title  II.  of  the  Rev- 
enue Act  of  1917  shall  be  credited  toward  the  payment  of 
the  tax  imposed  for  such  fiscal  year  by  this  title,  and  if  the 
amount  so  paid  exceeds  the  amount  of  the  tax  imposed  by 
this  title,  the  excess  shall  be  credited  or  refunded  to  the 
corporation  in  accordance  with  the  provisions  of  Section  252. 

448 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

In  other  words,  the  amount  paid  for  the  period  between 
January  1,  1918,  and  the  end  of  the  fiscal  year  ending  in 
1918,  shall  be  a  credit  against  the  amount  of  the  tax  due 
as  ascertained  under  the  Revenue  Act  of  1918. 


COMPUTATION  OF  THE  DEDUCTION. 

^  826 — Trade  or  Business  Having  Invested  Capital. 

The  war-profits  credit  and  excess-profits  credit  used  in 
computing  the  rates  of  tax  under  Section  301  shall,  except 
in  cases  coming  within  the  conditions  specified  in  If  817 
and  818,  be  as  follows: 

^  827— Excess-Profits  Credit. 

The  excess-profits  credit  shall  consist  of  a  specific  exemp- 
tion of  $3,000  plus  an  amount  equal  to  8  per  cent,  of  the  in- 
vested capital  for  the  taxable  year. 

Example : 

Invested  capital $1,000,000 

8% 

$80,000 
Exemption  3,000 

Excess-profits  credit $83,000 

TI  828— War-Profits  Credit. 

The  war-profits  credit  shall  consist  of  a  specific  exemption 
of  $3,000  and  an  amount  equal  to  the  average  net  income  of 
the  corporation  for  the  prewar  period,  plus  or  minus,  as  the 
case  may  be,  10%  of  the  difference  between  the  average 

449 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

invested  capital  for  the  prewar  period  and  the  invested 
capital  for  the  taxable  year. 

ILLUSTRATION: 

Net  income  1911 $25,000 

1912 20,000 

1913 30,000 

3)  $75,000 

Average  prewar  net  income $25,000 

Invested  Capital: 

1911 $60,000 

1912 80.000 

1913 100,000 

3)  $240,000 

Average  prewar  capital $80,000 

Invested  capital  for  taxable  year $200,000 

Average  prewar  capital 80,000 

Difference    (increase)    $120,000 

10%  of  difference —         $12,000 

War-profits  credit: 

Specific  exemption $3,000 

Average  prewar  net  income 25,000 

10%  of  increase  in  invested  capital 12,000 

Total  war  profits  credit $40,000 

U  830 — No  Net  Income  for  Prewar  Period. 

If  the  corporation  had  no  net  income  for  the  prewar 
period,  for  if  the  amount  computed  under  Section  310(c) 
is  less  than  10  per  centum  of  its  invested  capital  for  the 
taxable  year,  then  the  war-profits  credit  shall  be  the  sum  of : 

(1)  A  specific  exemption  of  $3,000 ;  and 

(2)  An  amount  equal  to  10  per  centum  of  the  invested 
capital  for  the  taxable  year. 

U  831 — Corporation    Not    In    Existence    During    Prewar 
Period. 

If  the  corporation  was  not  in  existence  during  the  whole 
of  at  least  one  calendar  year  during  the  prewar  period,  then 
the  war-profits  credit  shall  be  the  sum  of: 

(1)  A  specific  exemption  of  $3,000 ;  and 

450 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

(2)  An  amount  equal  to  the  same  percentage  of  the  in- 
vested capital  of  the  taxpayer  for  the  taxable  year  as  the 
average  percentage  of  net  income  to  invested  capital,  for  the 
prewar  period,  of  corporations  engaged  in  a  trade  or  busi- 
ness of  the  same  general  class  as  that  conducted  by  the  tax- 
payer ;  but  such  amount  shall  in  no  case  be  less  than  10  per 
centum  of  the  invested  capital  of  the  taxpayer  for  the  tax- 
able year.  Such  average  percentage  shall  be  determined  by 
the  Commissioner  on  the  basis  of  data  contained  in  returns 
made  under  Title  II  of  the  Revenue  Act  of  1917,  and  the 
average  known  as  the  median  shall  be  used.  If  such  aver- 
age percentage  has  not  been  determined  and  published  at 
least  30  days  prior  to  the  time  when  the  return  of  the  tax- 
payer is  due,  then  for  purposes  of  such  return  10  per  centum 
shall  be  used  in  lieu  thereof;  but  such  average  percentage 
when  determined  shall  be  used  for  the  purposes  of  Section 
250  in  determining  the  correct  amount  of  the  tax. 

The  war-profits  credit  as  defined  in  Tf  828  shall  be  deter- 
mined in  the  manner  provided  in  Section  3 1 0  (b)  instead  of 
in  the  manner  provided  in  Section  310(c),  in  the  case  of 
any  corporation  which  was  not  in  existence  during  the 
whole  of  at  least  one  calendar  year  during  the  prewar 
period,  or  if  a  majority  of  its  stock  at  any  time  during 
the  taxable  year  is  owned  or  controlled,  directly  or 
indirectly,  by  a  corporation  which  was  in  existence 
during  the  whole  of  at  least  one  calendar  year  during 
the  prewar  period,  or  if  50  per  cent,  or  more  of  its  gross 
income  (as  computed  under  Section  233  for  income  tax  pur- 
poses) which  defines  Gross  Income,  consists  of  gains, 
profits,  commissions,  or  other  income,  derived  from  a  Gov- 
ernment contract  or  contracts  made  between  April  6,  1917, 
and  November  11,  1918,  both  dates  inclusive. 


^  832 — Foreign  Corporations. 

That  in  the  case  of  a  foreign  corporation  the  specific  ex- 
emption of  $3,000  shall  not  be  allowed  as  excess-profits  or 
war-profits  credits. 

451 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

^f  833 — Cases  in  Which  the  Commissioner  Shall  Determine 
the  Tax. 

In  the  following  cases  the  tax  shall  be  determined  as  pro- 
vided in  Section  328.    See  H  854,  also  Law  p.  96,  line  50. 

(b)  In  the  case  of  a  foreign  corporation. 

(c)  Where  a  mixed  aggregate  of  tangible  property  and 
intangible  property  has  been  paid  in  for  stock  and  bonds  and 
the  Commissioner  is  unable  satisfactorily  to  determine  the 
respective  values  of  the  several  classes  of  property  at  the 
time  of  payment,  or  to  distinguish  the  classes  of  property 
paid  in  for  stock  and  for  bonds,  respectively. 

11  834— 

(d)  Where  upon  application  by  the  corporation,  the  Com- 
missioner finds  and  so  declares  of  record  that  the  tax  if  de- 
termined without  benefit  of  this  Section  would,  owing  to  ab- 
normal conditions  affecting  the  capital  or  income  of  the  cor- 
poration, work  upon  the  corporation  an  exceptional  hard- 
ship evidenced  by  gross  disproportion  between  the  tax  com- 
puted without  benefit  of  this  Section  and  the  tax  computed 
by  reference  to  the  representative  corporations  specified  in 
Section  328  shall  not  apply  to  any  case  in  which  the  tax 
(computed  without  benefit  of  this  Section)  is  high  merely 
because  the  corporation  earned  within  the  taxable  year  a 
high  rate  of  profits  upon  a  normal  invested  capital  nor  in 
which  50  per  centum  or  more  of  the  gross  income  of  the  cor- 
poration for  the  taxable  year  (computed  under  Section  233 
of  Title  II)  which  defines  Gross  Income,  consists  of  gains, 
profits,  commissions,  or  other  income,  derived  on  a  cost- 
plus  basis  from  a  Government  contract  or  contracts  made 
between  April  6,  1917,  and  November  11,  1918,  both  dates 
inclusive. 

NET  INCOME  FOR  EXCESS-PROFITS  TAX. 

^  835 — Dividends  Received  From  a  Foreign  Corporation 
Which  is  Subject  to  Federal  Income  Tax. 

In  the  case  of  income  derived  by  a  corporation  from  divi- 
dends upon  the  stock  of  a  foreign  corporation,  part  of  whose 
net  income  is  subject  to  the  income  tax,  there  shall  be  de- 

453 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

ducted  only  that  proportion  of  the  dividends  received  upon 
such  stock  which  the  net  income  of  such  foreign  corpora- 
tion from  sources  within  the  United  States  is  of  its  entire 
net  income. 

H  836— 

The  net  income  for  the  calendar  years  1911  and  1912  shall 
be  computed  upon  the  same  basis  and  in  the  same  manner  as 
provided  in  Section  38  of  the  Act  entitled  "An  Act  to  pro- 
vide revenue,  equahze  duties,  and  encourage  the  industries 
of  the  United  States,  and  for  other  purposes,"  approved 
August  5,  1909,  except  that  taxes  imposed  by  such  Section 
and  paid  by  the  corporation  within  the  year  shall  be  in- 
cluded ; 

11837- 

For  the  calendar  year  1913  upon  the  same  basis  and  in 
the  same  manner  as  provided  in  Section  II  of  the  Act  en- 
titled "An  Act  to  reduce  tariff  duties  and  to  provide  reve- 
nue for  the  Government,  and  for  other  purposes,"  approved 
October  3,  1913,  except  that  taxes  imposed  by  Section  38  of 
such  Act  of  August  5,  1909,  and  paid  by  the  corporation 
within  the  year  shall  be  included,  and  except  that  the 
amounts  received  by  it  as  dividends  upon  the  stock  or  from 
the  net  earnings  of  other  corporations  subject  to  the  tax 
imposed  by  Section  II  of  such  Act  of  October  3,  1913,  shall 
be  deducted;  and 

If  838— 

For  the  taxable  year  upon  the  same  basis  and  in  the  same 
manner  as  provided  for  income  tax  purposes  in  Title  II  of 
this  Act. 

II 839— 

The  average  net  income  for  the  pre-war  period  shall  be 
determined  by  dividing  the  number  of  years  within  that 
period  during  the  whole  of  which  the  corporation  was  in 
existence  into  the  sum  of  the  net  income  for  such  years, 
even  though  there  may  have  been  no  net  income  for  one  or 
more  of  such  years. 

453 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

INVESTED  CAPITAL. 

1[  840 — Invested  Capital  Defined. 

Allowance  for  depletion,  depreciation,  and  obsolescence 
in  computation  of  invested  capital. — The  term  "invested 
capital"  as  used  in  the  Act  means  the  invested  capital  of 
the  present  owner.  The  basis,  or  starting  point,  in  the  com- 
putation of  invested  capital  is  found  in  the  amount  of  cash 
and  other  property  paid  in,  the  original  values  of  such  other 
property  being  determined  in  accordance  with  the  rules  and 
regulations.  But  the  computation  does  not  stop  with  such 
original  entries  or  amounts ;  it  must  take  properly  into  ac- 
count the  surplus  and  undivided  profits.  In  the  computa- 
tion of  surplus  and  undivided  profits,  however,  full  recog- 
nition must  first  be  given  to  expenses  incurred  and  losses 
sustained  from  the  original  organization  of  the  business 
concern  down  to  the  taxable  year,  including  among  such 
expenses  and  losses  a  reasonable  allowance  for  exhaustion, 
wear  and  tear,  or  obsolescence  of  property  originally  ac- 
quired for  cash  or  for  stock  or  shares  or  in  any  other  man- 
ner. If  value  appreciation  of  a  kind  not  subject  to  income 
tax  has  been  taken  up  in  the  accounts,  a  deduction  must  be 
made  in  respect  of  such  appreciation  so  taken  up.  In  the 
computation  of  the  invested  capital  for  any  year  full  effect 
must  also  be  given  to  any  liquidation  of  the  original  capital. 

^841 — Invested  Capital  Averaged. 

How  to  ascertain  average  invested  capital  for  the  year, 
averaged  monthly. — The  invested  capital  for  any  pre-war  or 
taxable  year  (or  where  the  tax  is  computed  upon  the  basis 
of  a  period  less  than  one  year) ,  for  such  period,  is  the  aver- 
age invested  capital  for  the  year  or  period  averaged  monthly, 
according  to  the  following  rules : 

Add  the  capital  for  each  of  the  several  months  during 
which  no  change  occurs,  and  the  average  capital  for  each 
month  in  which  a  change  occurs  and  divide  the  total  by  the 
number  of  months  in  the  year  or  period. 

To  ascertain  the  capital  for  any  month  in  which  a  change 
occurs  multiply  the  capital  as  of  the  first  day  of  the  month 
by  the  number  of  days  it  remains  constant  and  the  capital 

454 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

after  each  change  by  the  number  of  days  (including  the  day 
on  which  the  change  occurs)  during  which  it  remains  con- 
stant, add  the  products,  and  divide  the  sum  by  the  number 
of  days  in  the  month. 

If  842 — Items  Not  Allowed  to  be  Included  in  Invested 
Capital. 

The  law  specifies  certain  items  which  may  not  be  included 
in  invested  capital,  namely : 

11843— 

Stocks,  bonds  (other  than  obligations  of  the  United 
States) ,  or  other  assets,  the  income  from  which  is  not  sub- 
ject to  the  excess-profits  tax ;  or  borrowed  capital. 

Tf  844 — Borrowed  Capital. 

The  term  "borrowed  capital"  as  used  in  the  Act  includes 
not  only  cash  or  other  borrowed  property  which  can  be 
identified  as  such,  but  current  Habilities  and  temporary  in- 
debtedness of  all  kinds,  and  any  permanent  indebtedness 
upon  which  the  taxpayer  is  entitled  to  an  interest  deduc- 
tion in  computing  net  income.  A  corporation  which  under 
the  income  tax  law  is  allowed  to  deduct  only  a  part  of  the 
entire  interest  paid  upon  its  indebtedness,  may  include  in 
its  invested  capital  such  a  proportion  of  its  permanent  in- 
debtedness as  the  amount  of  interest  upon  such  indebtedness 
which  the  corporation  is  not  allowed  to  deduct  is  of  the 
total  amount  of  interest  paid  upon  such  indebtedness  during 
the  taxable  year. 

^  845 — Interest  on  Indebtedness  of  a  Corporation  That  is 
Not  Allowable  as  a  Deduction. 

As  an  illustration  of  the  above  paragraph,  assume  a  cor- 
poration borrows  $50,000  to  purchase  municipal  bonds,  the 
income  from  which  is  not  subject  to  tax;  the  interest  on 
this  indebtedness  say  at  5%  or  $2,500  is  not  allowable  as  a 
deduction,  therefore  the  corporation  is  in  effect  paying  a 
tax  on  $2,500  of  the  interest  received  from  the  municipal 
bonds  which  would  otherwise  be  exempt.  In  this  case  a 
corresponding  part  of  the  capital  invested  in  such  assets 
may  be  included  in  invested  capital. 

455 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

If  846 — When  Income  from  Tax-Free  Securities  Consists 
Partly  of  Trading  Profits  and  Partly  of  Interest, 
Dividends,  Etc. 

Whenever  income  consists  partly  of  gains  or  profits  sub- 
ject to  the  excess  profits  tax  arising  from  trading  in  stocks, 
bonds,  etc.,  the  dividends  or  interest  on  which  are  not  sub- 
ject to  such  tax,  and  partly  of  such  dividends  or  interest, 
there  shall  be  included  in  the  invested  capital  an  amount 
which  bears  the  same  ratio  to  the  total  amount  invested 
in  such  stocks  or  bonds  as  the  amount  of  such  gains  or 
profits  bears  to  the  total  amount  of  such  income. 

^  847 — Treatment  of  Stock  of  Foreign  Corporations  When 
Held  by  Domestic  Corporations. 

In  the  case  of  domestic  corporations  holding  stock  in  a 
foreign  corporation  part  of  whose  net  income  is  subject  to 
the  income  tax,  there  shall  be  included  in  invested  capital 
such  proportion  of  the  value  of  the  stock  in  such  foreign 
corporation  as  the  net  income  of  such  foreign  corporation 
from  sources  outside  the  United  States  is  of  its  entire  net 
income. 

H  848 — Construction  of  Terms  "Tangible  Property"  and 
"Intangible  Property." 

The  term  "intangible  property"  will  be  construed  to  mean 
property  of  a  character  similar  to  good  will,  trade-marks, 
patents,  copy-rights,  secret  processes,  formulae,  trade 
brands,  franchises,  etc.  With  respect  to  property  not 
clearly  of  such  a  character,  rulings  will  be  issued  as  oc- 
casion may  demand  to  indicate  whether  it  shall  be  regarded 
as  tangible  or  intangible. 

The  following  classes  of  property,  when  paid  in  for  stock 
or  shares  in  a  corporation  or  partnership,  will  be  regarded 
as  tangible  property  so  paid  in: 

Stocks. 

Bonds. 

Bills  and  accounts  receivable. 

Notes  and  other  evidences  of  indebtedness. 

Leaseholds. 

456 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

U  849 — Invested  Capital  of  Foreign  Corporations. 

When  used  with  reference  to  a  foreign  corporation  the 
term  "invested  capital"  means  that  proportion  of  the  entire 
invested  capital  v^hich  the  net  income  from  sources  within 
the  United  States  is  of  the  entire  net  income. 

^  850 — Corporation  Reorganized  After  January  1,  1911. 

That  in  the  case  of  the  reorganization,  consolidation,  or 
change  of  ownership  after  January  1,  1911,  of  a  trade  or 
business  now  carried  on  by  a  corporation,  the  corporation 
shall  for  the  purposes  of  this  title  be  deemed  to  have  been 
in  existence  prior  to  that  date,  and  the  net  income  and  in- 
vested capital  of  such  predecessor  trade  or  business  for  all 
or  any  part  of  the  pre-war  period  prior  to  the  organization 
of  the  corporation  now  carrying  on  such  trade  or  business 
shall  be  deemed  to  have  been  the  net  income  and  invested 
capital  of  such  corporation.  If  such  predecessor  trade  or 
business  was  carried  on  by  a  partnership  or  individual  the 
net  income  for  the  pre-war  period  shall,  under  regulations 
prescribed  by  the  Commissioner  with  the  approval  of  the 
Secretary,  be  ascertained  and  returned  as  nearly  as  may  be 
upon  the  same  basis  and  in  the  same  manner  as  provided  for 
corporations  in  Title  II,  including  a  reasonable  deduction  for 
salary  or  compensation  to  each  partner  or  the  individual  for 
personal  services  actually  rendered. 

If  851 —Reorganization  After  March  3,  1917. 

In  the  case  of  the  reorganization,  consolidation,  or  change 
of  ownership  of  a  trade  or  business,  or  change  of  ownership 
of  property,  after  March  3,  1917,  if  an  interest  or  control 
in  such  trade  or  business  or  property  of  50  per  centum  or 
more  remains  in  the  same  persons,  or  any  of  them,  then  no 
asset  transferred  or  received  from  the  previous  owner  shall, 
for  the  purpose  of  determining  invested  capital,  be  allowed 
a  greater  value  than  would  have  been  allowed  under  this 
title  in  computing  the  invested  capital  of  such  previous 
owner  if  such  asset  had  not  been  so  transferred  or  received : 
Provided,  That  if  such  previous  owner  was  not  a  corpora- 
tion, then  the  value  of  any  asset  so  transferred  or  received 

457 


WAR-PEOFITS  AND  EXCESS-PROFITS  TAX. 

shall  be  taken  at  its  cost  of  acquisition  (at  the  date  when 
acquired  by  such  previous  owner) ,  with  proper  allowance  for 
depreciation,  impairment,  betterment  or  development,  but 
no  addition  to  the  original  cost  shall  be  made  for  any  charge 
or  expenditure  deducted  as  expense  or  otherwise  on  or  after 
March  1, 1913,  in  computing  the  net  income  of  such  previous 
owner  for  the  purposes  of  taxation. 

If  852 — Corporations  Organized  Prior  to  July  I,  1919. 

In  the  case  of  the  organization  as  a  corporation  before 
July  1,  1919,  of  any  trade  or  business  in  which  capital  is  a 
material  income-producing  factor  and  which  was  previously 
owned  by  a  partnership  or  individual,  the  net  income  of 
such  trade  or  business  from  January  1,  1918,  to  the  date 
of  such  reorganization  may  at  the  option  of  the  individual 
or  partnership  be  taxed  as  the  net  income  of  a  corporation 
is  taxed  under  Titles  II  and  III ;  in  which  event  the  net  in- 
come and  invested  capital  of  such  trade  or  business  shall 
be  computed  as  if  such  corporation  had  been  in  existence 
on  and  after  January  1,  1918,  and  the  undistributed  profits 
or  earnings  of  such  trade  or  business  shall  not  be  subject 
to  the  surtax  imposed  in  Section  211,  but  amounts  dis- 
tributed on  or  after  January  1,  1918,  from  the  earnings  of 
such  trade  or  business  shall  be  taxed  to  the  recipients  as 
dividends,  and  all  the  provisions  of  Titles  II  and  III  relating 
to  corporations  shall,  so  far  as  practicable,  apply  to  such 
trade  or  business:  Provided,  That  this  paragraph  shall 
not  apply  to  any  trade  or  business  the  net  income  of  which 
for  the  taxable  year  1918  was  less  than  20  per  centum  of 
its  invested  capital  for  such  year:  Provided,  further.  That 
any  taxpayer  who  takes  advantage  of  this  paragraph  shall 
pay  the  tax  imposed  by  Section  1000  of  this  Act  and  by  the 
first  subdivision  of  Section  407  of  the  Revenue  Act  of  1916, 
as  if  such  taxpayer  has  been  a  corporation  on  and  after  Jan- 
uary 1,  1918,  with  a  capital  stock  having  no  par  value. 

^  853 — Computation  of  Invested  Capital,  Pre-War  Period. 

If  any  asset  of  the  trade  or  business  in  existence  both 
during  the  taxable  year  and  any  pre-war  year  is  included 
in  the  invested  capital  for  the  taxable  year  but  is  not  in- 

458 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

eluded  in  the  invested  capital  for  such  pre-war  year,  or  is 
valued  on  a  different  basis  in  computing  the  invested  capital 
for  the  taxable  year  and  such  pre-war  year,  respectively, 
then  under  rules  and  regulations  to  be  prescribed  by  the 
Commissioner  with  the  approval  of  the  Secretary  such  re- 
adjustments shall  be  made  as  are  necessary  to  place  the 
computation  of  the  invested  capital  for  such  pre-war  year 
on  the  basis  employed  in  determining  the  invested  capital 
for  the  taxable  year. 

|[  854 — Exceptional  Cases  in  Which  the  Invested  Capital 
Cannot  be  Satisfactorily  Determined. 

In  such  cases  the  taxpayer  may  submit  to  the  Commis- 
sioner of  Internal  Revenue  evidence  in  support  of  a  claim, 
and  the  tax  shall  be  the  amount  which  bears  the  same  ratio 
to  the  net  income  of  the  taxpayer  (in  excess  of  the  specific 
exemption  of  $3,000)  for  the  taxable  year  as  the  average 
tax  of  representative  corporations  engaged  in  a  like  or  simi- 
lar trade  or  business  bears  to  their  average  net  income  (in 
excess  of  the  specific  exemption  of  $3,000)  for  such  year. 
In  the  case  of  a  foreign  corporation  the  tax  shall  be  com- 
puted without  deducting  the  specific  exemption  of  $3,000 
either  for  the  taxpayer  or  the  representative  corporations. 

In  computing  the  tax  under  this  section  the  Commissioner 
shall  compare  the  taxpayer  only  with  representative  cor- 
porations whose  invested  capital  can  be  satisfactorily  de- 
termined under  Section  326  and  which  are,  as  nearly  as 
may  be,  similarly  circumstanced  with  respect  to  gross  in- 
come, net  income,  profits  per  unit  of  business  transacted 
and  capital  employed,  the  amount  and  rate  of  war-profits 
or  excess-profits,  and  all  other  relevant  .facts  and  circum- 
stances. 

11  855— 

Such  exceptional  cases  may  consist,  among  others,  of  the 
following : 

11856— 

Where,  through  defective  accounting  or  the  lack  of  ade- 
quate data,  it  is  impossible  accurately  to  compute  invested 
capital. 

459 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

11857- 

Where  upon  application  by  a  foreign  taxpayer  the  Com- 
missioner finds  that  the  expense  of  securing  the  data  neces- 
sary for  the  computation  of  the  invested  capital  would  be 
unreasonable  in  view  of  the  amount  of  tax  involved,  or  that 
it  is  impracticable  to  determine  either  the  "entire  invested 
capital"  or  the  "entire  net  income." 

U858— 

Where  a  mixed  aggregate  of  tangible  property  and  in- 
tangible property  has  been  paid  in  for  stock  or  for  stock 
and  bonds  and  the  Commissioner  is  unable  to  satisfactorily 
determine  the  respective  values  of  the  several  classes  of 
property  at  the  time  of  payment,  or  to  distinguish  the 
classes  of  property  paid  in  for  stock  and  for  bonds,  respec- 
tively. 

If  859— 

Long-established  business  concerns  which  by  reason  of 
ultra-conservative  accounting  or  the  form  and  manner  of 
their  organization  would  be  placed  at  a  serious  disadvantage 
in  competing  with  representative  concerns  in  a  like  or  simi- 
lar trade  or  business. 

11  860— 

Where  the  invested  capital  is  seriously  disproportionate 
to  the  taxable  income  as  compared  with  representative  cor- 
porations engaged  in  a  similar  trade  or  business.  Such 
cases  may  arise  through : 

11861- 

The  realization  in  one  year  of  the  earnings  of  capital  un- 
productively  invested  through  a  period  of  years  or  of  the 
fruits  of  activities  antedating  the  taxable  year;  or, 

II 862— 

Inability  to  recognize  or  properly  allow  for  amortization, 
obsolescence,  or  exceptional  depreciation  due  to  the  present 
war,  or  to  the  necessity  in  connection  with  the  present  war 
of  providing  plant  which  will  not  be  wanted  for  the  pur- 
poses of  the  trade  or  business  after  the  termination  of  the 
war. 

460 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

PRINCIPLES  OF  MODERN  ACCOUNTANCY  ADAPTED 

TO  THE  ADJUSTMENTS  OF  INVESTED  CAPITAL. 
II  863— 

The  question  of  "Invested  CapitaF*  is  a  complicated  one, 
and  in  order  that  the  taxpayer  may  benefit  to  the  full  extent 
of  the  law  it  is  quite  essential  that  he  have  more  than  a 
passing  knowledge  of  accounting  as  well  as  being  fully  ac- 
quainted with  the  law  and  Treasury  regulations  relating 
thereto.  If  the  corporation  making  the  return  is  not  fully 
acquainted  with  all  phases  of  the  law  governing  "Invested 
Capital,"  and  especially  sufficiently  versed  in  accounting 
principles  to  recognize  certain  features  which  may  be  taken 
advantage  of,  a  return  is  either  made  out  in  which  the  com- 
pany is  not  deducting  all  the  exemption  it  is  entitled  to, 
thereby  paying  too  high  a  tax,  or  the  return  is  made  out 
incorrectly  and  upon  examination  by  the  Treasury  Depart- 
ment an  amended  return  is  required  to  be  filed. 

Many  corporations  making  tax  returns  are  not  qualified 
to  take  full  advantage  of  "Invested  Capital"  allowed  them 
from  a  reading  of  the  law  and  Regulations  of  the  Treasury 
Department  because  of  the  misinterpretation  of  their  appli- 
cation by  the  taxpayer.  For  the  benefit  of  this  great  num- 
ber of  taxpayers  as  well  as  those  who  do  understand  thor- 
oughly the  application  of  the  law,  it  was  thought  the  clearest 
and  most  concise  way  of  presenting  this  subject  would  be 
by  way  of  a  practical  illustration  presenting  a  series  of 
balance  sheets  and  pointing  out  the  various  facts  in  these 
balance  sheets  in  their  relationship  to  "Invested  Capital." 

It  is  not  intended  to  bring  out  in  this  illustration  every 
point  in  corporation  accounting,  as  there  are  conditions 
which  arise  in  individual  corporations  which  of  necessity 
cannot  be  dealt  with  in  a  statement,  which  should  present 
conditions  common  to  all.  There  are  differences  of  opinion 
upon  this  subject  and  corporations  who  are  in  doubt  about 
any  feature  pertaining  to  this  subject  should  consult  some 
one  who  has  made  a  thorough  study  of  the  matter. 

1(864— 

The  illustration  presents  four  balance  sheets  as  noted 
below,  and  will  show  the  various  facts  relating  to  "Invested 

461 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

Capital,"  as  disclosed  in  the  balance  sheets  of  the  A  Com- 
pany as  at  January  1,  1918,  and  December  31,  1918.  The 
first  two  balance  sheets  show  the  condition  of  Company  A 
and  Company  B  prior  to  the  purchase  of  the  B  company 
by  the  A  company. 


uses- 
No.  1 — Balance  sheet  of  the  A  Company,  a  company  en- 
gaged in  the  business  of  mining  ore.    This  statement  pre- 
sents the  condition  of  the  A  Company  as  at  December  31, 
1917. 


1[  see- 
No.  2 — Balance  sheet  of  the  B  Company,  a  company  en- 
gaged in  the  business  of  reducing  iron  ore  to  pig  iron.    This 
statement  presents  the  condition  of  the  B  Company  as  at 
December  31, 1917. 


1fse7- 

No.  3 — Balance  sheet  of  the  A  Company  directly  after 
the  purchase  by  the  A  Company  of  the  B  Company.  This 
statement  presents  the  condition  of  the  A  Company  as  at 
January  1,  1918,  the  beginning  of  the  taxable  year. 


Tfses— 

No.  4 — Balance  sheet  of  the  A  Company  as  at  December 
31,  1918,  the  end  of  the  taxable  year. 

NOTE. — In  arriving  at  the  "Invested  Capital"  in  the  follo^ring  balance 
sheets  it  will  be  noted  that  reference  is  made  to  various  schedules  appear- 
ing on  Form  1103  (the  form  in  use  for  the  year  1917),  dealing  with  the 
adjustment  of  Invested  Capital.  The  subject  matter  referred  to  through- 
out this  article  is  in  accordance  with  the  new  Revenue  Act  of  1918,  and 
upon  the  issuance  of  the  new  forms  for  war-profits  and  excess-profits  tax 
for  the  year  1918  by  the  Department,  these  form  will  be  filled  out  to  con- 
form with  the  adjustments  relating  to  "Invested  Capital"  as  defined  in  the 
following  paragraphs. 

462 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 
Tf  869— 

(No.l) 

THE    A   COMPANY 
Balance  Sheet  As  At  December  31,  1917. 
ASSETS. 
Capital  Assets — 

Real  Estate,  Leases,  Claims,  Shafts,  Build- 
ings, Sidings,  etc $10,000,000.00 

Less  Reserve  for  Depreciation  &  Depletion      1,000,000.00 

$9,000,000.00 

Furniture  and  Fixtures 25,000.00 

Less  Reserve  for  Depreciation 5,000.00 

20,000.00 

9,020,000.00 


11  870— 

Current  Assets — 
Cash    $1,750,000.00 

Accounts  Receivable $1,000,000.00 

Less  Reserve  for  Bad  Debts         100,000.00 

900,000.00 

Notes  Receivable 1,500,000.00 

Accrued  Int.  on  Notes  Rec'able  40,000.00 

U.  S.  Liberty  Bonds  SVgS 100,000.00 

U.  S.  Liberty  Bonds  4s 100,000.00 

200,000.00 

Inventories: 

Iron  Ore 2,000,000.00 

Materials  and  Supplies 100,000.00 

2,100,000.00 

6,490,000.00 


11871- 

Good  Will  .  2,500,000.00 

Deferred  Charges — 

Prepaid  Insurance,  Taxes,  etc 100,000.00 

Discount  on  Bonds 180,000.00 

Organization  Expense  ($20,000.00  charged  off  150,000.00 

430,000.00 

$18,440,000.00 
463 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 
11  872- 

LIABILITIES. 
Capital  Stock — 

Authorized $50,000,000.00 

Issued   $10,000,000.00 

Add  Surplus 1,720,000.00 

$11,720,000.00 

Funded  Debt- 
First  Lien  6%  Gold  Bonds  (dated  Jan.  1,  1917)  2,000,000.00 

Current  Liabilities — 

Notes  Payable 1,600,000.00 

Accounts  Payable 2,000,000.00 

Dividend  Payable  Jan.  10,  1918 400,000.00 

Accrued  Interest  on  Bonds 60,000.00 

Accrued  Interest  on  Notes   Payable 60,000.00 

Reserve  for  Federal  Taxes 300,000.00 

4,420,000.00 

Deferred  Credits  (Pending  settlement  of  claims)  300,000.00 

$18,440,000.00 

11873  -  ~~ 

(No.  2) 

THE   B   COMPANY 
Balance  Sheet  As  At  December  31,  1917. 
ASSETS. 
Capital  Assets — 
Real  Estate,  Leases,  Claims,  Shafts,  Build- 
ings, Sidings,  etc $15,000,000.00 

Less  Reserve  for  Depreciation  &  Depletion      1,500,000.00 

$13,500,000.00 

Furniture  and  Fixtures 25,000.00 

Less  Reserve  for  Depreciation 5,000.00 

20,000.00 

$13,520,000.00 

11874- 

Current  Assets — 
Cash    2,000,000.00 

Accounts  Receivable 1,000,000.00 

Less  Reserve  for  Bad  Debts         100,000.00 

900,000.00 

Notes  Receivable 500,000.00 

Accrued  Int.  on  Notes  Rec'ble  10,000.00 

Inventories: 

Pig  Iron 1,500,000.00 

Materials  and  Supplies 200,000.00 

1,700,000.00 

6,110,000.00 

Deferred  Charges- 
Prepaid  Insurance,  Taxes,  etc 150,000.00 

Discount   on   Bonds 270,000.00 

Org'ization  Expenses  ($30,000.00  charged  off)         150,000.00 

~         670,000.00 

$19,200,000.00 
464 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

11875-. 

LIABILITIES. 
Capital  Stock — 

Authorized  and  Issued $10,000,000.00 

Add  Siirplus 1,000,000.00 

$11,000,000.00 

Funded  Debt- 
First  Lien  6%  Gold  Bonds  (dated  Jan.  1,  1917)  3,000,000.00 

Current  Liabilities — 

Notes  Payable 1,500,000.00 

Accounts  Payable 3,100,000.00 

Accrued  Interest  on  Bonds 90,000.00 

Accrued  Interest  on  Notes    Payable 10,000.00 

Reserve  foT  Federal  Taxes 300,000.00 

Total  Current  Liabilities 5,000,000.00 

Reserve  for  Improvements  and  Contingencies  200,000.00 

$19,200,000.00 

11876- 

(No.  3) 

THE   A   COMPANY 
Balance  Sheet  As  At  January  1,  1918. 
ASSETS. 
Capital  Assets —  /f 
Real  Estate,  Leases,  Claims,  Shafts,  Build- 
ings, Sidings,  etc $61,500,000.00 

Less  Reserve  for  Depreciation  &  Depletion      2,500,000.00 

$59,000,000.00 

Furniture  and  Fixtures 50,000.00 

Less  Reserve  for  Depreciation 10,000.00 

40,000.00 

Total  Capital  Assets 59,040,000.00 

Current  Assets — 

Cash    3,850,000.00 

Accounts  Receivable 2,000,000.00 

Less  Reserve  for  Bad  Debts         200,000.00 

1,800,000.00 

U.  S.  Liberty  B'ds  31/38  (First)       1,000,000.00 

U.  S.  Liberty  B'ds  4s  (Second)  100,000.00 

1,100,000.00 

Notes  Receivable 1,000,000.00 

Accrued  Interest  Receivable —  50,000.00 

Inventories : 

Iron  Ore  and  Pig  Iron 3,500,000.00 

Materials  and  Supplies 300,000.00 

3,800,000.00 

Total  Currents  Assets.- 11,600,000.00 

Good  Will  2,500,000.00 

Deferred  Charges — 

Prepaid  Insurance,  Taxes,  etc 250,000.00 

Discount   on  Bonds 4,450,000.00 

Organization  Expense 300,000.00 

5,000,000.00 

$78,140,000.00 
465 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 
11877- 

LIABILITIES. 
Capital  Stock — 

Authorized    500,000  shares $50,000,000.00 

Issued  200,000        "      $20,000,000.00 

Add:  Earned   Surplus 1,720,000.00 

Capital   Surplus 1,500,000.00 

3,220,000.00 

$23,220,000.00 

Funded  Debt — 

Ten-Year  6%  Convertible  Gold   Bonds  dated 

Jan.   1,  1918 40,000,000.00 

1st  Lien  6%  Gold   Bonds  A  Company  dated 

Jan.  1,  1918 2,000,000.00 

1st  Lien   6%   Gold   Bonds  B  Company  dated 

Jan.  1,  1918 3,000,000.00 

45,000,000.00 

Current  Liabilities — 

Accounts  Payable 5,100.000.00 

Notes  Payable 3,100,000.00 

Dividend  Payable  (Payable  Jan.  10) 400,000.00 

Accrued  Interest  on  Bonds 150,000.00 

Accrued  Interest  on  Notes  Payable 70,000.00 

Reserve  for  Federal  Taxes 600,000.00 

9,420,000.00 

Deferred  Credits — 

Earnings  in  Litigation 300,000.00 

Reserve  for  Improvements  and  Contingencies         200,000.00 

500,000.00 

$78,140,000.00 


TI87S- 

NOTE:  On  January  1,  1918,  the  A  Company  purchased  the  assets  and 
assumed  the  liabilities  of  the  B  Company:  i.  e.,  it  purchased  the  equity  of 
the  B  Company  by  issue  of  capital  stock.  From  the  accounting  viewpoint 
when  stock  is  issued  in  purchase  of  another  company,  the  surplus  of  the 
vendor  is  eliminated  when  such  assets  and  liabilities  are  entered  upon 
the  books  of  the  vendee.  If  the  value  of  the  stock  issued  represents  the 
sum  of  the  capital  stock  and  surplus  as  shown  by  the  books  of  the  vendor 
then  the  assets  and  liabilities  are  entered  at  the  same  figures  on  the  books 
of  the  vendee;  if  a  lesser  amount  is  issued  certain  of  the  assets  are 
reduced;  if  a  greater  amount,  either  "Good  Will"  or  "Capital  Assets"  is 
increased.  In  this  instance,  in  order  that  the  reader  may  readily  follow 
through  the  statements  from  one  balance  sheet  to  the  other,  the  stock  of 
the  A  Company  is  issued  at  a  premium  ($115.00  per  share)  in  order  that 
the  surplus  of  the  B  Company  may  be  entered  on  the  books  of  the 
A  Company.  This  is  called  "Capital  Surplus"  or  "Paid  in  Surplus."  This 
is  done  so  as  to  present  to  the  reader  "Earned  Surplus"  as  shown  by  the 
A  Company  as  at  December  31,  1917,  and  "Paid  in  Surplus"  as  at  January 
1,  1918.  This  brings  in,  under  Schedule  A  on  page  2  of  form  1103  "Capital 
Stock"  as  at  the  beginning  of  the  year  and  the  earned  surplus,  and  also 
the  capital  surplus.  If  stock  is  sold  for  cash  at  a  premium  it  is  very  clear 
tnat  such  premium  is  paid  in  surplus,  if,  however,  property  other  than 
cash  is  received  it  is  encumbent  upon  the  taxpayer  to  show  that  it 
actually  represents  value. 

(It  will  be  noted  that  Capital  Assets  increased  by  $36,000,000.00,  being 
purchase  of  properties  by  issue  of  10-year  6%  Conv.  Gold  Bonds  at  90.) 

466 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

(No.  4) 

THE   A   COMPANY 

Balance  Sheet  As  At  December  31,  1918. 

ASSETS. 
Capital  Assets — 
Real  Estate,  Leases,  Claims,  Shafts,  Build- 
ings, Sidings,  etc $70,500,000.00     _ 

Less  Reserve  for  Depreciation  &  Depletion      8,600,000.00 

$61,900,000.00 

Furniture  and  Fixtures 50,000.00 

Less  Reserve  for  Depreciation 20,000.00 

30,000.00 

Total  Capital  Assets 61,930,000.00 

Investments — 

The  Smith  Jones  Corporation  Common  Stock, 
2,000  shares  200,000.00 

The  Smith  Jones  Corporat'n  Preferred  Stock, 

8,000  shares  800,000.00 

Total  Investments 1,000,000.00 

Sinking  Fund  Trustee — 
Cash  and  Securities .  4,500,000.00 

Current  Assets — 

Cash    4,040,000.00 

Accounts  Receivable 5,000,000.00 

Less  Reserve  for  Bad  Debts         400,000.00 

4,600,000.00 

U.  S.  Lib.  Loan  Bonds  31/28  (1st)       1,000,000.00 

U.  S.  Lib.  Loan  Bonds  4s     (2nd)  100,000.00 

L.  S.  Lib.  Loan  Bonds  414  s  (4th)  500,000.00 

1,600,000.00 

Notes  Receivable 3,000,000.00 

Accrued  Interest  Receivable—  160,000.00 

Inventories : 

Iron  Ore  and  Pig  Iron 6,000,000.00 

Materials  and  Supplies 400,000.00 

6,400,000.00 

Total  Current  Assets—  19,800,000.00 

Good  Will,  Patents,  etc 2,500,000.00 

Deferred  Charges — 

Prepaid      Insurance,     Taxes     and      Sundiy 

Expenses  chargeable  to  future  operations  750,000.00 

Discount   on   Bonds 4,005,000.00 

Organization  Expenses 250,000.00 

Total  Deferred  Charges 5,005,000.00 

$94,735,000.00 

467 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 
11880-- 

LIABILITIES. 
Capital  Stock — 

Autkorized    500,000  shares $50,000,000.00 

Issued  320,000       "     $32,000,000.00 

Add:  Surplus  Jan.  1,  1918—       1,720,000.00 
Income  for  year 5,015,000.00 

6,735,000.00 
Less  Dividend 3,200,000.00 

3,535,000.00 

Add  Capital  Surplus 1,500,000.00 

5,035,000.00 

$37,035,000.00 

Funded  Debt— 

Ten-Year  6%  Conrertible  Gold  Bonds  dated 
Jan.  1,  1918 40,000,000.00 

1st  Lien  6%  Gold  Bonds  A  Company  dated 
Jan.  1,  1917 2,000,000.00 

1st  Lien  6%  Gold  Bonds  B  Company  dated 
Jan.  1,  1917 3,000,000.00 

45,000,000.00 

Current  Liabilities — 

Accounts  Payable 2,200,000.00 

Notes  Payable 1,500,000.00 

Dividend  Payable  (Payable  Jan.  31,  1919)—  555,000.00 

Accrued  Interest  on  Bonds 1,350,000.00 

Accrued  Interest  on  Notes  Payable 95,000.00 

Reserve  for  Federal  Taxes 2,000,000.00 

Total  Current  Liabilities 7,700,000.00 

Reserve  for  Sinking  Fund 4,500,000.00 

Deferred  Credits — 

Earnings  in  Litigation 200,000.00 

Reserve  for  Improvements  and  Contingencies         300,000.00 

Total  Deferred  Credits 500,000.00 

$94,735,000.00 

11881- 

The  Treasury  Department  blank  (Form  1103)  which 
deals  with  Corporation  War  Profits  and  Excess  Profits  Tax 
is  used  for  illustration  and  in  the  determination  of  this  tax 
certain  exemptions  or  deductions  are  allowed  from  net  in- 
come in  order  to  arrive  at  the  amount  of  taxable  income  and 
to  properly  determine  these  deductions,  it  becomes  neces- 
sary to  know  the  amount  of  capital  employed  in  the  business 
during  the  taxable  year. 

Proceeding  now  with  determining  the  amount  of  invested 
capital  during  the  year  1918  of  the  A  Company : 

468 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

SCHEDULE  A. 
^  882 — Capital  Stock  and  Surplus. 

In  taking  up  the  various  features  that  enter  into  the 
capital  employed  during  the  taxable  year,  naturally,  the 
first  consideration  is  given  to  the  Capital  Stock  and  Surplus 
as  at  the  beginning  of  the  taxable  year  (January  1,  1918) . 
In  this  instance  the  Capital  Stock  amounts  to  $20,000,000.00, 
the  Earned  Surplus  $1,720,000.00  and  Paid-in  Surplus 
$1,500,000.00,  and  is  entered  on  page  2  (form  1103).  The 
total  of  Schedule  A  is  transferred  to  page  1,  schedule  1, 
line  1. 

Tf  883 — Adjustments  During  the  Year. 

There  are  conditions  which  arise  in  practically  every  cor- 
poration whereby  certain  changes  are  made,  which  affect 
invested  capital  during  the  year;  in  fact,  the  capital  as 
shown  by  the  books  of  the  corporation  at  the  beginning  of 
the  year  may  be  subject  to  adjustment  (i.  e.,  the  amount  not 
allowed  as  invested  capital  in  accordance  with  the  regula- 
tions of  the  Treasury  Department).  These  adjustments 
may  be  either  by  Way  of  Additions,  schedule  B,  page  2, 
form  1103,  or  by  Way  of  Deductions,  schedule  C,  page  3, 
form  1103.  If  changes  are  made  during  the  year  such 
changes  are  entered  under  schedule  D,  page  3,  form  1103. 

If  884 — Reserves  Subject  to  Careful  Scrutiny. 

In  the  balance  sheets  of  practically  every  corporation 
there  will  appear  a  number  of  items  as  Reserves.  In  some 
instances  these  Reserves  are  allowable  deductions  against 
income,  such  as  Reserve  for  Depreciation  and  Reserve  for 
Depletion;  but  the  amounts  set  up  in  these  Reserves  are 
subject  to  very  careful  scrutiny  by  the  Income  Tax  Depart- 
ment. If  it  is  found  that  during  the  last  few  years  heavy 
depreciation  rates  had  been  set  up,  but  such  rates  had  not 
been  used  several  years  ago,  the  present  amount  charged 
against  income  would  probably  be  subject  to  adjustment 
when  deducting  from  income.  At  this  time  we  are  con- 
cerned merely  with  the  relationship  of  these  depreciation 
charges  to  invested  capital.  If  it  is  found  that  in  prior 
years  there  had  been  no  charge  against  income  for  deprecia- 

469 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

tion,  or  only  nominal  charges,  the  Treasury  Department 
would  probably  determine  that  the  amount  of  assets  repre- 
senting machinery,  plants,  etc.,  were  over-stated  and  would 
compel  an  adjustment  to  capital  assets  to  conform  with 
proper  depreciation  rates  covering  the  assets  in  question. 
Such  an  adjustment  should  be  entered  under  Schedule  C, 
line  7,  Depreciation  and  Depletion.  In  the  above  balance 
sheets  proper  Depreciation  and  Depletion  has  been  set  up 
but  attention  is  directed  to  it  while  under  the  subject  of 
Reserves. 

^  885 — Reserves  for  Bad  Debts,  Contingencies  and  Taxes. 

There  will  also  be  found  several  Reserves  which  are  not 
proper  deductions  against  income ;  such  as  Reserve  for  Bad 
Debts,  Reserve  for  Contingencies,  Reserve  for  Federal 
Taxes.  These  Reserves  represent  deductions  from  surplus, 
but  as  they  are  not  allowed  as  deductions  against  income  in 
determining  taxable  income;  for  the  purpose  of  "Invested 
Capital,"  the  amount  reserved  should  be  considered  as  part 
of  surplus  and  ordinarily  be  added  to  "Earned  Surplus," 
Schedule  A,  hne  6.  In  this  illustration,  however,  in  order 
to  show  under  Schedule  A  the  surplus  accounts  as  appearing 
in  the  balance  sheet,  the  Reserve  adjustments  are  shown  as 
additions  under  Schedule  B. 

SCHEDULE   B. 

|[  886 — Addition  to  Invested  Capital  of  Reserve  for  Taxes, 
Averaged. 

Reserve  for  Federal  taxes,  January  1,  1918,  was  $600,- 
000.00,  and  it  is  assumed  that  payment  was  made  on  June 
15,  1918,  the  latest  possible  date  for  payment  of  those 
taxes. 

Federal  Income  and  Excess  Profits  Taxes  are  not  charges 
against,  income  or  surplus  in  the  sense  of  being  a  cost  of 
doing  business;  they  constitute  a  sharing  of  the  corpora- 
tion's income  with  the  government,  and  while  it  is  the  gen- 
eral practice  to  provide  for  such  taxes  by  setting  up  the 
obligation  against  the  period  in  which  the  income  accrues, 
nevertheless,  the  sum  so  provided  constitutes  a  setting  aside 
of  surplus  which  is  employed  in  the  business  until  such 

470 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

time  as  actually  disbursed.  Therefore  the  amount  should 
be  added  to  surplus  as  of  January  1,  1918,  and  when  dis- 
bursed considered  as  a  reduction  of  capital  and  the  amount 
averaged  for  the  balance  of  the  year  and  entered  as  a  deduc- 
tion in  red  ink  under  Schedule  D.  In  this  instance,  as  stated 
above.  Surplus  in  the  amounts  shown  in  balance  sheet  is 
entered  in  Schedule  A,  and  this  Reserve  is  shown  in 
Schedule  B  as  an  addition ;  the  $600,000.00  being  employed 
in  the  business  from  January  1,  1918,  to  the  date  of  pay- 
ment, June  15,  1918,  a  period  of  51/2  months,  which  gives 
an  average  for  the  year  of  $275,000.00. 

If  887 — Reserve  for  Improvements  and  Contingencies. 

Reserve  for  Improvements  and  Contingencies  at  January 
1,  1918,  was  $200,000.00,  and  at  December  31,  1918,  $300,- 
000.00.  This  would  indicate  that  out  of  earnings  of  1918  an 
additional  amount  was  set  up  dependent  upon  the  amount 
charged  to  this  Reserve  during  the  year.  Assuming  that 
no  charges  were  made  against  this  Reserve,  it  would  then 
show  an  additional  amount  of  $100,000  reserved  from  the 
profits  of  1918,  but  as  this  additional  amount  was  taken 
from  the  earnings  of  the  taxable  year  it  cannot  be  taken  into 
consideration  for  the  taxable  year.  The  amount  therefore 
employed  during  the  year  is  the  amount  as  shown  January 
1,  1918,  viz.,  $200,000.00,  and  should  be  entered  in  Schedule 
B  as  an  addition. 

T[  888— Reserve  for  Bad  Debts. 

On  January  1,  1918,  the  amount  in  this  Reserve  was 
$200,000.00,  which  amount  was  charged  against  income  in 
1917;  the  Treasury  Department  rules  with  reference  to 
Bad  Debts  that  they  constitute  a  deduction  against  income 
when  ascertained  to  be  a  loss  and  actually  charged  off  on 
the  books  as  a  loss;  therefore  when  the  amount  shown  in 
Reserve  for  Bad  Debts  was  charged  against  income  on  the 
books  of  the  corporation  it  decreased  the  surplus  by  that 
amount,  but  as  the  Treasury  Department  does  not  allow  the 
deduction  against  income  until  actually  written  off  it  rep- 
resents part  of  the  surplus  until  the  bad  debt  is  charged 
against  the  Reser^^^e.    Assuming  that  on  October  1,  1918, 

471 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

a  bad  debt  was  charged  against  this  Reserve  of  $100,000.00 
there  would  be  an  employment  of  capital  in  the  business  of 
$200,000.00  for  nine  months  and  $100,000.00  for  three 
months,  which  averaged  over  the  year  would  give  an  addi- 
tional employment  of  capital  of  $175,000.00. 


If  889 — Organization  Expenses. 

Referring  to  balance  sheets  of  the  A  Company  and  the  B 
Company  as  at  December  31,  1917,  it  will  be  observed  that 
notation  is  made  that  this  account  decreased  by  the  sum  of 
$20,000.00  A  Company  and  $30,000.00  B  Company,  a  total 
sum  of  $50,000.00. 

Organization  Expense  is  not  an  allowable  deduction  wheii 
computing  taxable  income,  and  while  many  corporations 
having  in  mind  conservative  business  principles  charge  this 
against  income,  the  Treasury  Department  has  expressly 
ruled  against  it  as  an  allowable  charge  against  income  and 
requires  that  it  be  capitalized,  therefore  as  the  $50,000.00 
was  charged  against  income  and  reduced  the  surplus  by 
$50,000.00  it  should  now  be  added  back  as  Invested  Capital. 
It  should  be  borne  in  mind,  however,  that  in  this  illustration 
the  A  Company  purchased  the  B  Company,  and  the  Treas- 
ury Department  might  not  permit  going  back  into  the 
affairs  of  the  B  Company  to  make  an  adjustment  of  this 
nature,  claiming  because  of  the  purchase  by  the  A  Company 
of  the  B  Company  the  amount  of  Capital  is  measured  by  the 
Capital  issued  and  Paid-in  Surplus.  But  considering  that 
the  stockholders  of  the  B  Company  are  in  part  stockholders 
of  the  A  Company  so  that  in  point  of  fact  the  same  relation- 
ship is  still  in  being,  it  is  concluded  that  it  would  be  per- 
fectly proper  to  likewise  consider  the  Organization  Expenses 
charged  off  in  the  B  Company  as  an  addition  to  Capital. 
(This  should  be  considered  as  the  converse  to  Sec.  331.) 
It  is  impossible  to  absolutely  interpret  the  law  covering 
every  point;  the  object  is  to  bring  up  these  points  for  dis- 
cussion so  that  the  reader  will  take  up  any  question  of  this 
character  which  he  thinks  will  affect  Invested  Capital. 

472 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

SCHEDULE  C. 
If  890^Value  of  Donated  Stock. 

There  are  some  conditions  affecting  Invested  Capital  that 
do  not  appear  in  a  balance  sheet,  and  it  becomes  necessary 
at  times  to  investigate  entries  on  the  books  of  the  corpora- 
tion other  than  those  directly  shown  on  the  balance  sheet. 
Such  an  entry  would  be  donated  stock  and  its  subsequent 
sale.  Suppose  that  in  the  affairs  of  the  A  Company  certain 
stockholders  returned  to  the  company  shares  of  stock,  the 
par  value  of  which  was  $1,000,000.00,  and  these  shares  of 
stock  were  subsequently  sold  for  $750,000.00.  Under  this 
circumstance  the  Treasury  Department  takes  the  attitude 
that  stock  returned  to  the  corporation  as  a  gift  was  not 
issued  originally  for  real  value,  but  an  inflated  value  was 
placed  upon  the  assets  acquired,  and  the  actual  capital  re- 
ceived by  the  corporation  was  the  amount  from  the  sale  of 
the  donated  stock,  in  this  instance  $750,000.00.  It  is  there- 
fore necessary  to  enter  as  a  deduction  under  Schedule  C,  line 
4,  the  excess  amount  of  par  value  over  amount  received, 
viz.,  $250,000.00. 

H  891— Inflated  Value  of  Good  Will  or  Patents. 

It  will  be  noted  that  in  the  balance  sheet  of  the  A  Com- 
pany as  at  December  31,  1917,  "Good  Will"  is  entered  at 
$2,500,000.00.  In  investigating  the  make-up  of  this  amount 
it  is  found  that  the  Directors  on  July  1,  1917,  determined 
that  a  certain  patent  which  they  possessed  for  the  purpose 
of  mining  ore  was  extremely  valuable  and  added  $500,000.00 
to  the  actual  cost,  crediting  the  amount  to  Surplus.  In  the 
first  instance  the  credit  to  Surplus  is  mis-stated,  the  amount 
should  have  been  credited  to  Capital  Surplus.  The  Treasury 
Department  will  not  allow  this  increased  valuation  of 
$500,000.00  as  Invested  Capital,  and  it  should  be  entered  in 
Schedule  C,  line  2. 

II 892 — Overvaluation  of  Stock. 

It  will  be  noted  in  the  foot-note  in  connection  with  balance 
sheet  as  of  January  1, 1918,  that  stock  was  issued  at  $115.00 
per  share,  a  total  value  of  $11,500,000.00,  however,  the 

473 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

equity  of  the  B  Company  as  measured  by  its  Capital  Stock 
and  Surplus  was  $11,000,000.00,  so  that  the  value  of  the  B 
Company  as  taken  over  on  the  books  of  the  A  Company  was 
$500,000.00  in  excess  of  the  book  value. 

It  is  obvious  that  if  the  value  of  the  stock  of  the  A  Com- 
pany was  $115.00  per  share,  and  if  the  directors  of  the  A 
Company  valued  the  equity  of  the  B  Company  at  $11,500,- 
000.00,  it  was  perfectly  in  order  for  them  to  issue  100,000 
shares  of  stock,  thereby,  in  fact,  paying  $11,500,000.00  for 
the  equity  of  the  B  Company,  however,  the  law  (Sec.  331) 
states  that  in  any  amalgamation,  consolidation  or  change  of 
ownership,  if  an  interest  in  such  trade  or  business  of  50% 
or  more  remains  in  the  same  persons  then  no  asset  trans- 
ferred shall  be  allowed  at  a  greater  value  than  allowed  to 
the  previous  person,  therefore  under  C-5  it  will  be  neces- 
sary to  write  back  this  over-valuation  of  $500,000.00. 

SCHEDULE  D. 

T[  893— Capital  Stock. 

Under  date  of  January  1,  1918,  the  Capital  Stock  issued 
amounted  to  $20,000,000.00,  and  on  December  31,  1918, 
amount  issued  had  increased  to  $32,000,000.00,  an  addi- 
tional issue  during  the  taxable  year  of  $12,000,000.00.  As- 
suming that  this  additional  amount  of  capital  was  issued  on 
July  1,  1918,  the  average  of  this  additional  capital  em- 
ployed during  the  year  would  be  $6,000,000.00,  and  should 
be  entered  as  an  addition  to  Invested  Capital. 

^  894— Dividends. 

Dividends  paid  out  of  earnings  or  profits  during  the  first 
60  days  of  the  taxable  year  shall  be  deemed  to  have  been 
paid  from  earnings  or  profits  of  the  preceding  years,  not  out 
of  current  earnings. — Law,  page  53,  line  54. 

Dividends  paid  at  any  time  after  the  first  60  days  shaU 
be  deemed  to  have  been  paid  out  of  current  earnings  from 
the  first  of  the  taxable  year  up  to  the  date  of  payment. — 
Law,  Page  53,  Line  57. 

It  will  be  noted  on  balance  sheet  as  of  January  1,  1918, 
under  Current  Liabilities  there  is  "Dividend  Payable'*  of 
$400,000.00  payable  January  31,  1918.    This  covers  dividend 

474 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

of  the  A  Company  declared  in  1917,  and  was  charged  against 
surplus  of  that  company ;  however,  it  is  capital  employed  in 
the  business  until  such  time  as  actually  disbursed,  there- 
fore this  $400,000.00  is  employed  in  the  business  for  the 
month  of  January  or  1-12  of  the  year,  an  average  during 
the  year  of  $33,333.33.  In  some  corporations  this  would 
be  a  very  large  amount. 
II 895— Void— [Ed.] 
^f  896 — Deduction  of  Dividends  From  Invested  Capital. 

Let  us  further  assume  that  on  March  10,  1918,  there  was 
a  declaration  of  dividends  of  21/2%  or  $500,000.00  and  hav- 
ing in  mind  the  law  which  states  that  dividends  paid  at  any 
time  after  the  first  sixty  days  of  the  taxable  year  are  con- 
sidered as  made  from  earnings  of  the  taxable  year  to  the 
date  of  distribution,  and  assuming  that  net  income  from 
January  1,  1918,  to  March  10,  1918,  was  $100,000.00  the 
balance  of  the  dividend  must  then  apply  against  surplus 
accumulated  prior  to  this  year,  thereby  reducing  the  sur- 
plus as  of  January  1,  1918.  Therefore,  surplus  account 
would  be  reduced  by  $450,000.00,  and  it  would  affect 
the  capital  employed  during  the  year  for  9  and  21-31 
months,  or  an  average  amount  of  $362,916.66.  This  rep- 
resents a  reduction  in  capital  employed  and  should  be  en- 
tered in  red  ink. 

Tf  897 — ^Reserve  for  Sinking  Fund  Merely  a  Segregation  of 
Surplus. 

It  will  be  observed  that  in  the  balance  sheet  of  December 
31,  1918,  there  is  a  reserve  for  sinking  fund  amounting  to 
$4,500,000.00.  This  is  not  a  deduction  from  income,  but 
merely  a  segregation  of  the  surplus  account  for  the  purpose 
of  eventually  retiring  bonds  in  accordance  with  the  mort- 
gage agreement.  It  is  a  setting  aside  of  surplus  into  a  sepa- 
rate account  so  that  the  directors  cannot  use  such  amount 
for  the  payment  of  dividends.  It,  however,  is  set  up  out  of 
income  of  the  year  1918,  and  does  not  affect  invested  capital 
for  the  year  1918;  it  should,  however,  be  taken  into  con- 
sideration in  the  following  year,  1919,  and  subsequent  years, 
so  long  as  the  reserve  for  sinking  fund  appears  on  the  books 
of  the  corporation.    The  sequence  to  the  reserve  for  sinking 

475 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

fund  is  the  account  on  the  opposite  side  called  "Sinking 
Fund  Cash  Account  and  Securities."  In  this  account  there 
will  be  set  aside  cash  which  will  be  on  deposit  drawing  in- 
terest, or  this  cash  is  invested  in  securities  which  will  bring 
in  a  return,  an  income.  Should  this  cash  be  invested  in 
either  stocks  or  bonds,  the  income  of  which  is  not  subject  to 
War  Excess  Profits  Tax,  then  under  those  circumstances  the 
amount  from  the  date  of  investment  would  be  considered  as 
a  deduction  from  invested  capital. 

NOTE. — On  pages  2  and  3  of  the  old  Form  1103  the  matter  of  Deprecia- 
tion and  Depletion  was  taken  up  and  if  it  was  found  that  sufficient  depre- 
ciation had  not  been  deducted  during  the  life  of  the  different  properties 
there  had  to  be  an  adjustment  made  in  the  amount  entered  under  Schedule 
C,  line  7.  In  this  instance  in  the  year  1917  there  was  a  Reserve  for  Depre- 
ciation set  up  on  Furniture  and  Fixtures  at  the  rate  of  20%.  Such  a  rate 
might  be  considered  too  high,  in  which  event  there  must  of  course  be  an  ad- 
justment made  in  the  depreciation  charged  against  income  and  the  excess 
amount  charged  off  should  be  added  back  as  additional  capital  and  entered 
under  Schedule  B. 

|[  898 — Corporations  Which  Shall  Not  Have  the  Benefit  of 
Comparison  With  Similar  Corporations. 

In  the  case  of  corporations  where  the  tax  is  large  merely 
because  the  corporation  earned  a  high  rate  of  profits  upon 
a  normal  invested  capital,  or  where  50  per  centum  or  more 
of  the  gross  income  consists  of  gains,  profits,  commissions, 
or  other  income,  derived  on  a  cost-plus  basis  from  Govern- 
ment contracts  made  between  the  date  of  declaration  of  war 
(April  6,  1917),  and  the  signing  of  the  armistice  (Novem- 
ber 11,  1918),  both  dates  inclusive,  shall  not  be  accorded 
the  privilege  of  comparison  with  corporations  engaged  in  a 
similar  business  even  though  the  tax  be  disproportionately- 
high. 

U  89a— Invested  Capital. 

In  computing  invested  capital,  every  corporation  subject 
to  the  excess-profits  tax  shall  add  together  its  paid-in  capital 
and  its  paid-in  or  earned  surplus  and  undivided  profits 
(under  whatever  name  the  same  may  be  called)  as  shown 
by  its  books  at  the  beginning  of  the  taxable  year.  The 
total  thus  obtained  shall  be  adjusted  for  any  asset  or  item 
which  it  covers  that  is  not  carried  on  the  books  at  the  valua- 
tion prescribed  by  law.    When  necessary,  adjustment  (addi- 

476 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

tion  or  subtraction)  shall  be  made  in  respect  of  the  fol- 
lowing: 

^900 — Adjustments  of  Invested  Capital. 

Stock  or  shares  issued  in  the  purchase  of  intangible  prop- 
erty prior  to  March  3,  1917,  which  cannot  be  included  in 
an  amount  exceeding  (a)  25  per  cent  of  the  par  value  of 
the  total  stock  or  shares  outstanding  on  that  date,  (b)  the 
actual  value  of  such  intangible  property  at  the  date  ac- 
quired, or  the  par  value  of  the  stock  or  shares  issued  in  pay- 
ment therefor,  whichever  is  the  lowest. 

^  901 — Limitation  on  Value  of  Intangible  Assets. 

The  addition  to  invested  capital  due  to  fixing  the  value 
of  intangible  assets  must  in  no  case  exceed  in  the  aggregate 
25  per  cent,  of  the  total  stock  or  shares  of  the  corporation 
outstanding  at  the  beginning  of  the  taxable  year. 

In  cases  where  the  Commissioner  of  Internal  Revenue  is 
unable  to  determine  the  invested  capital  because  of  stock  or 
shares  having  been  issued  for  a  mixed  aggregate  of  tangible 
and  intangible  property  the  tax  shall  be  the  amount  which 
bears  the  same  ratio  to  the  net  income  of  the  taxpayer  (in 
excess  of  the  specific  exemption  of  $3,000)  for  the  taxable 
year,  as  the  average  tax  of  representative  corporations  en- 
gaged in  a  like  or  similar  trade  or  business,  bears  to  their 
average  net  income  (in  excess  of  the  specific  exemption  of 
$3,000)  for  such  year.  In  the  case  of  a  foreign  corporation 
the  tax  shall  be  computed  without  deducting  the  specific 
exemption  of  $3,000  either  for  the  taxpayer  or  the  repre- 
sentative corporations. 

In  computing  the  tax  under  this  Section  the  Commissioner 
shall  compare  the  taxpayer  only  with  representative  cor- 
porations whose  invested  capital  can  be  satisfactorily  deter- 
mined and  which  are,  as  nearly  as  may  be,  similarly  circum- 
stanced with  respect  to  gross  income,  net  income,  profits  per 
unit  of  business  transacted  and  capital  employed,the  amount 
and  rate  of  war-profits  or  excess-profits,  and  all  other  rel- 
evant facts  and  circumstances. 

Patents  and  copyrights  paid  in  for  stock  or  shares  prior 

477 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX, 

to  March  3,  1917,  must  be  valued  at  the  amount  which  is 
lowest  under  the  following  methods : 

(1)  The  actual  cash  value  of  the  patents  or  copyrights 
at  the  date  of  acquisition ; 

(2)  The  par  value  of  the  stock  issued  therefor; 

(3)  Must  not  exceed  in  any  case  in  the  aggregate  25  per 
centum  of  the  par  value  of  the  stock  of  the  corporation  out- 
standing at  the  beginning  of  the  taxable  year. 

Tf  902 — Stock  or  Shares  Issued  for  Tangible  Property  Other 
Than  Cash. 

The  cash  value  of  tangible  property,  other  than  cash,  paid 
in  for  stock  or  shares  must  not  exceed  the  par  value  of  the 
stock  or  shares  specifically  issued  therefor,  unless  the  actual 
cash  value  of  such  tangible  property  at  the  time  paid  in  is 
shown  to  the  satisfaction  of  the  Commissioner  to  have  been 
clearly  and  substantially  in  excess  of  such  par  value,  in 
which  case  such  excess  shall  be  treated  as  paid-in  surplus. 

When  any  stock  is  returned  to  the  corporation  as  a  gift  or 
for  a  consideration  substantially  less  than  its  par  value,  the 
stock  so  returned  shall  not  be  treated  as  a  part  of  the  stock 
issued  or  exchanged  for  such  property.  The  proceeds  de- 
rived in  cash  or  its  equivalent  from  the  resale  of  the  stock 
so  returned  shall,  however,  be  included  in  the  invested 
capital  if  retained  and  employed  in  the  business. 

TI  903 — Reconstruction  of  Surplus  and  Undivided  Profits 
Accounts. 

Where  through  failure  to  provide  for  depletion,  deprecia- 
tion, obsolescence,  or  other  expenses  or  losses,  or  where  for 
any  other  cause  or  reason  the  books  of  account  of  the  tax- 
payer do  not  show  the  true  paid-in  or  earned  surplus  and  un- 
divided profits,  in  the  computation  of  invested  capital  such 
adjustments  shall  be  made  as  are  necessary  to  arrive  at  a 
statement  of  the  correct  amount. 

Where  a  taxpayer  claims  additions  to  the  capital  account, 
the  books  of  account  will  be  presumed  to  show  the  true  facts 
and  the  burden  of  proof  will  rest  upon  the  taxpayer.    Such 

478 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

additions  will  be  accepted  only  to  the  extent  and  under  the 
conditions  stated  below: 

11904— 

Amounts  which  have  been  expended  in  the  past  for  the 
acquisition  of  plant,  equipment,  tools,  patterns,  furniture, 
fixtures,  or  Hke  tangible  property,  having  a  useful  Hfe  ex- 
tending substantially  beyond  the  year  in  which  the  expendi- 
ture was  made,  and  which  have  been  charged  as  current  ex- 
pense, may  (less  proper  reduction  for  depreciation  or  obsol- 
escence) be  added  to  the  surplus  account  in  computing  in- 
vested capital  when  such  assets  are  still  owned  and  in  active 
use  by  the  taxpayer  during  the  taxable  year.  Special  tools, 
patterns,  and  similar  assets  shall  not  be  assigned  any  value 
if  their  cost  has  been  recovered  through  having  been  in- 
cluded in  the  price  of  goods.  If  their  cost  has  not  been  so 
recovered  and  they  are  held  for  only  occasional  use,  they 
shall  not  be  assigned  a  value  in  excess  of  the  fair  value  based 
upon  the  earnings  actually  arising  from  their  current  use. 
Assets  of  this  kind  not  in  current  use  shall  not  be  valued 
at  more  than  their  nominal  or  scrap  value. 

U  905 — Valuation  of  Intangible  Property. 

If  good  will,  trade-marks,  trade  brands,  franchises  of  a 
corporation  or  other  intangible  property  has  been  purchased 
with  stock  or  shares  issued  prior  to  March  3,  1917,  the 
amount  that  may  be  included  in  invested  capital  must  not 
exceed  (a)  25  per  cent,  of  the  par  value  of  the  total  stock  or 
shares  outstanding  on  that  date,  nor  (b)  the  actual  value  of 
the  assets  at  the  date  acquired,  nor  (c)  the  par  value  of  the 
stock  issued  in  payment  for  the  assets,  whichever  is  lowest. 

If  906 — Application  of  25  Per  Cent  Limitation  Upon 
Intangible  Property. 

The  25  per  cent,  limitation  upon  intangible  property  pur- 
chased prior  to  March  3,  1917,  for  or  with  stock  or  shares 
of  the  corporation,  applies  not  to  each  item  or  class  of  in- 
tangible property  separately,  but  to  the  aggregate  amount 
of  all  such  property  so  purchased.  Such  intangible  prop- 
erty may  be  included  in  the  invested  capital  only  up  to  an 

479 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

amount  not  exceeding  25  per  cent  of  the  total  stock  or 
shares  of  the  corporation  on  March  3,  1917,  even  though 
the  aggregate  amount  of  such  intangible  property  be 
greater  in  value  than  such  25  per  cent,  of  the  par  value  of 
the  total  stock  or  shares. 

^807- 

Intangible  property  bona  fide  purchased  prior  to  March 
3,  1917,  with  stock  having  no  par  value  may  be  included 
in  invested  capital  at  a  value  not  exceeding  the  actual  cash 
value  of  such  intangible  property  at  the  time  of  the  pur- 
chase and  in  an  amount  not  exceeding  25  per  cent  of  the 
total  shares  of  stock  outstanding  on  March  3,  1917,  meas- 
ured by  their  value  as  at  the  date  or  dates  of  issue. 

1 908— 

In  the  case  of  any  intangible  assets  acquired  prior  or  sub- 
sequent to  March  3,  1917,  the  aggregate  amount  which 
may  be  included  in  invested  capital  shall  not  exceed  25  per 
centum  of  the  par  value  of  the  stock  or  shares  outstanding 
at  the  beginning  of  the  taxable  year. 

^  909 — Surplus  or  Undivided  Profits  Earned  During  Any 
Year  Excluded  in  Computing  Invested  Capital 
for  Such  Year. 

Profits  earned  during  any  taxable  year  or  pre-war  year 
shall  not  be  included  in  the  computation  of  the  invested 
capital  for  such  year,  even  though  set  up  as  "surplus"  upon 
the  books  or  distributed  in  the  form  of  stock  dividends. 

^  91 0 — Scope  of  Phrase  "Surplus  and  Undivided  Profits." 

Section  326,  Article  (3)  authorizes  the  inclusion  in  in- 
vested capital  of  earned  surplus  and  undivided  profits  used 
or  employed  in  the  business.  Inasmuch  as  all  the  income 
of  a  corporation  shall  be  deemed  to  be  received  from  its 
trade  or  business,  all  the  surplus  and  undivided  profits  of  a 
corporation  (exclusive  of  undivided  profits  earned  during 
the  year),  from  whatever  source  derived,  will,  unless  in- 
vested in  stocks,  bonds  (other  than  obligations  of  the  United 
States) ,  or  other  assets,  the  income  from  which  is  not  sub- 

iSC, 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

ject  to  the  excess-profits  tax,  be  deemed  to  be  used  or  em- 
ployed in  the  business  and  may  be  included  in  the  invested 
capital. 

^911— When  Excess  Value  of  Tangible  Property  May  Be 
Included  in  Surplus. 

Where  it  can  be  shown  by  evidence  satisfactory  to  the 
Commissioner  of  Internal  Revenue  that  tangible  property 
has  been  conveyed  to  a  corporation  by  gift  or  at  a  value,  ac- 
curately ascertainable  or  definitely  known  as  at  the  date  of 
conveyance,  clearly  and  substantially  in  excess  of  the  cash 
or  the  par  value  of  the  stock  or  shares  paid  therefor,  then 
the  amount  of  the  excess  shall  be  deemed  to  be  paid  in 
surplus.  The  adopted  value  shall  not  cover  mineral  deposits 
or  other  properties  discovered  or  developed  after  the  date  of 
conveyance,  but  shall  be  confined  to  the  value  accurately 
ascertainable  or  definitely  known  at  that  time. 

Evidence  tending  to  support  a  claim  for  a  paid-in  surplus 
under  these  circumstances  must  be  as  of  the  date  of  convey- 
ance, and  may  consist,  among  other  things,  of  (1)  an  ap- 
praisal of  the  property  by  disinterested  authorities,  (2)  the 
assessed  value  in  the  case  of  real  estate,  and  (3)  the  market 
price  in  excess  of  the  par  value  of  the  stock  or  shares. 

If  912— Balance  Sheet  Must  Conform  to  Reflect  Capital 
Adjustments. 

Whenever  any  corrections  are  made  in  respect  of  the 
capital  stock  and  surplus,  corresponding  corrections  must 
be  made  in  the  respective  asset  items  in  the  balance  sheet 
of  the  taxpayer. 

After  making  any  adjustments  required  the  adjusted  to- 
tal of  the  capital  and  surplus  account  will  represent  the  in- 
vested capital  at  the  beginning  of  the  taxable  year,  except 
that  in  any  case  where  the  admissible  assets  (and  these 
include  all  assets  except  stocks,  bonds — other  than  obli- 
gations of  the  United  States — ^the  income  of  which  is  not 
subject  to  excess-profits  tax)  are  less  than  the  amount  of 
such  adjusted  total,  then  the  invested  capital  must  be  fur- 
ther reduced  to  an  amount  equal  to  the  sum.  of  the  admis- 
sible assets. 

481 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

If  91 3 — Average  Adjustments. 

If  there  has  been  any  change  made  during  the  taxable 
year  in  the  amount  of  the  invested  capital,  the  monthly  av- 
erage shall  be  taken,  but  in  no  case  may  the  invested  capi- 
tal include  any  surplus  or  undivided  profits  earned  during 
the  taxable  year. 

ILLUSTRATION  OF  AVERAGE  ADJUSTMENTS. 

11914— 

Thus,  if  the  invested  capital  was  $60,000  on  January  1, 
1918,  and  was  increased  on  July  15,  1918,  by  the  addition 
of  admissable  assets  to  $100,000,  the  average  capital  would 
be  computed  as  follows : 

Six  months,  at  $60,000 $360,000.00 

July— 14  days,  at  $60,000 $840,000 

17  days,  at  $100,000 1,700,000 

Total    $2,540,000 

Average  for  month  of  July — total  divided  by  31 81,935.48 

Five  months,  at  $100,000 500,000.00 

Total  for  year $941,935.48 

Average  for  year — total  divided  by  12 $78,494.62 

MISCELLANEOUS  PROVISIONS. 
TI  91  S^Fiscal  Year  Computations. 

If  a  corporation  (other  than  a  personal  service  corpora- 
tion) makes  return  for  a  fiscal  year  beginning  in  1917  and 
ending  in  1918,  the  tax  for  the  first  taxable  year  under  this 
title  shall  be  the  sum  of: 

(1)  The  same  proportion  of  a  tax  for  the  entire  period 
computed  under  Title  II  of  the  Revenue  Act  of  1917  which 
the  portion  of  such  period  falHng  within  the  calendar  year 

1917  is  of  the  entire  period,  and  (2)  the  same  proportion 
of  a  tax  for  the  entire  period  computed  under  this  title  at 
the  rates  specified  in  subdivision  (a)  of  Section  301  which 
the  portion  of  such  period  falling  within  the  calendar  year 

1 9 1 8  is  of  the  entire  period. 

482 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

H  91  e— Amount  Paid  Under  1917  Act  a  Credit. 

Any  amount  heretofore  or  hereafter  paid  on  account  of 
the  tax  imposed  for  such  fiscal  year  by  Title  II  of  the  Rev- 
enue Act  of  1917  shall  be  credited  toward  the  payment  of 
the  tax  imposed  for  such  fiscal  year  by  this  title,  and  if  the 
amount  so  paid  exceeds  the  amount  of  the  tax  imposed  by 
this  title,  the  excess  shall  be  credited  or  refunded  to  the 
corporation  in  accordance  with  the  provisions  of  Section 
252. 

If  91 7 — Proportionate  Amount  of  Tax  Payable. 

(b)  If  a  corporation  makes  return  for  a  fiscal  year  be- 
ginning in  1918  and  ending  in  1919,  the  tax  for  such  fiscal 
year  under  this  title  shall  be  the  sum  of:  (1)  the  same  pro- 
portion of  a  tax  for  the  entire  period  computed  under  sub- 
division (a)  of  Section  301  which  the  portion  of  such  period 
falling  within  the  calendar  year  1918  is  of  the  entire 
period,  and  (2)  the  same  proportion  of  a  tax  for  the  entire 
period  computed  under  subdivision  (b)  or  (c)  of  Section 
301  which  the  portion  of  such  period  falling  within  the 
calendar  year  1919  is  of  the  entire  period. 

(c)  If  a  partnership  or  a  personal  service  corporation 
makes  return  for  a  fiscal  year  beginning  in  1917  and  ending 
in  1918,  it  shall  pay  the  same  proportion  of  a  tax  for  the 
entire  period  computed  under  Title  II  of  the  Revenue  Act  of 
1917  which  the  portion  of  such  period  falHng  within  the 
calendar  year  1917  is  of  the  entire  period. 

Tf  91 9 — Partnership  and  Personal  Service  Refunds. 

Any  tax  paid  by  a  partnership  or  personal  service  cor- 
poration for  any  period  beginning  on  or  after  January  1, 
1918,  shall  be  immediately  refunded  to  the  partnership  or 
corporation  as  a  tax  erroneously  or  illegally  collected. 

11  920— 

Every  corporation,  not  exempt  under  Section  304,  shall 
make  a  return  for  the  purposes  of  this  title.  Such  returns 
shall  be  made,  and  the  taxes  imposed  by  this  title  shall  be 
paid,  at  the  same  times  and  places,  in  the  same  manner,  and 

483 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 

subject  to  the  same  conditions,  as  is  provided  in  the  case  of 
returns  and  payment  of  income  tax  by  corporations  for  the 
purposes  of  Title  II,  and  all  the  provisions  of  that  title  not 
inapplicable,  including  penalties,  are  hereby  made  applicable 
to  the  taxes  imposed  by  this  title. 

If  921 — Limit  of  Tax  on  Profits  from  Sale  of  Mines. 

In  the  case  of  a  bona  fide  sale  of  mines,  oil  or  gas  wells, 
or  any  interest  therein,  where  the  principal  value  of  the 
property  has  been  demonstrated  by  prospecting  or  explora- 
tion and  discovery  work  done  by  the  taxpayer,  the  portion  of 
the  tax  imposed  by  this  title  attributable  to  such  sale  shall 
not  exceed  20  per  centum  of  the  selling  price  of  such  prop- 
erty or  interest. 

If  922— Rates  of  Tax  for  the  Year  1919. 

For  the  year  1919  and  subsequent  years  the  excess-profits 

tax  rates  are  as  follows : 

First  bracket — 20  per  cent  of  the  net  income  in  excess  of 

the  excess  profits  credit  and  not  in  excess  of  20  per  cent 

of  the  invested  capital. 

Second  bracket — 40  per  cent  of  the  net  income  in  excess 

of  20  per  cent  of  the  invested  capital. 

The  total  tax  shall  not  exceed  the  sum  of  the  following : 
20  per  cent  of  the  net  income  in  excess  of  $3,000 ;  and 
40  per  cent  of  the  net  income  in  excess  of  $20,000. 

Tf  923 — Limitation  on  Value  of  Tangible  Property  Paid  in 
for  Stock  or  Shares. 

In  the  case  of  tangible  property  paid  in  for  stock  or  shares 
the  amount  to  be  included  in  invested  capital  for  the  purpose 
of  the  tax  is  the  actual  cash  value  of  the  tangible  property  at 
the  time  of  payment;  but  in  no  case  can  this  value  exceed 
the  par  value  of  the  stock  or  shares  specifically  issued  there- 
for. 


484 


WAR-PROFITS  AND  EXCESS-PROFITS  TAX. 


Treasury  Decision  2791. 

For  the  Purpose  of  Determining  Invested  Capital  Under  the 
Act  of  October  3, 1917,  Income  and  Excess  Profits  Taxes 
Deemed  to  Have  Been  Paid  Out  of  Earnings  of  the  Year 
For  Which  Levied. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned : 

For  the  purpose  of  determining  invested  capital  under 
Title  II  of  the  Act  of  October  3,  1917,  income  and  excess 
profits  taxes  shall  be  deemed  to  have  been  paid  out  of  the  net 
income  for  the  taxable  year  for  which  such  taxes  are  levied. 
Amounts  payable  on  account  of  income  and  excess  profits 
taxes  for  any  year  may  be  included  in  computing  surplus  and 
undivided  profits  for  the  succeeding  years  only  for  the  pro- 
portionate part  of  the  year  represented  by  the  period  of 
time  between  the  close  of  the  taxable  year  and  the  date  or 
dates  upon  which  such  taxes  become  due  and  payable. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  February  17,  1919. 
CARTER  GLASS, 

Secretary  of  the  Treasury. 


485 


Pages  486  to  1000 

In  order  to  hasten  delivery  of  the  Manual,  this 
book  was  printed  in  two  sections,  the  second  section, 
containing  data  that  was  then  complete  and  avail- 
able, being  printed  in  advance. 

As  it  was  impossible  to  calculate  at  that  time  how 
many  pages  the  War  Revenue  Bill  and  Digest  would 
occupy,  the  page  numbers  of  the  section  containing 
the  Security  Prices  were  started  at  1001.  Thus  folios 
486  to  1000  are  void. 


Section  IL 


CONTENTS. 


High  and  Low  Prices  of  Stocks  and  Bonds 

as  of  March  1,  1913. 
Treasury  Decisions,  Court  Decisions,  etc. 
Complete  List  of  Collection  Districts. 
Stock  Dividends  Paid  in  1918. 


1001 


High  and  Low  Prices  of  Stocks 
and  Bonds  as  of  March  1,  1913 


The  Revenue  Act  of  1918  provides,  in  part,  as  fol- 
lows: 

"That  for  the  purpose  of  ascertaining  the  gain 
derived  or  loss  sustained  from  the  sale  or  other 
disposition  of  property,  real,  personal  or  mixed, 
the  basis  shall  be : 

"In  the  case  of  property  acquired  before 
March  1st,  1913,  the  fair  market  price  or  value 
of  such  property  as  of  that  date." 

Although  the  regulations  provide  that  the  depart- 
ment cannot  formulate  a  method  that  will  determine 
this  value  in  all  cases,  and  that  the  value  is  a  ques- 
tion of  fact  to  be  established  by  any  evidence  which 
will  reasonably  and  adequately  make  it  appear,  the 
fair  market  price  or  value  of  securities  as  of  March 
1,  1913,  is  held,  in  the  case  of  variation  between 
"opening  and  closing  price"  for  the  day,  to  mean  the 
average  price  for  the  day. 


1003 


Quoted  Values  of  Securities 
as  of  March  I,  1913 

STOCKS 


High 

Abbeville  Cotton  Mills  (South  Carolina) 

Acacia   (Colorado  Springs) 

Acme   Consolidated   

Acme   Steamship   *70 

Acme  White  Lead  &  Color  Works,  pfd 

common  

Acushnet  Mill  (New  Brunswick)  

Adams   Express   

Adams  Gold  Fid.  Mining  (Nev.) 

Adams  Mining   

Adiron.  Electric  Power,  com 

preferred    

Adrian  Fence  Co 

Adventure  Consolidated  Mining 

Aeolian -Weber,  com. 

preferred    

Aetna  Accident  Insurance   (Hartford) 

Aetna  Casualty  &  Surety 

Aetna  Fire  Insurance    (Hartford) 

Aetna  Life  Insurance  (Hartford) 

Aetna  National    

Aetna  National  Bank  (Hartford) 

Aetna  National  Bank  (New  York) 

Ahmeek  Mining 

Aiken  Manufacturing  (South  Carolina) 

Alabama  Great   Southern,  com.   

preferred    

Ala.  N.  0.  Tex.  &  Pac.  Jc,  pfd.  A  (par   £10) 

B    (par     £10) 

Alabama  Traction,  Light  &  Power,  com 

Alamo   (Colorado  Springs)    

Alamo  National  Bank  (San  Antonio) 

Alaska  Copper  5% 

Alaska  Gold  Mines 13% 

Alaska  Packers'  Association  

Alaska   Steamship   

Albany  Insurance   

Albany  S.  D.  &  Stor. 

Albany  Southern  R.  R.,  com 

preferred   

Albany  &  Susquehana,  gtd. 

Albany  Trust  (Boston)   

Albany  (New  York)  Trust  Co. 

Albaugh-Dover  Co.   

Alberta  Pacific  Grain,  pfd. 

*Quotatlon  nearest  March  1,  1913.    No  quotation  on  that  date. 

1005 


jOW 

Bid 

Asked 

__ 

__ 

75 

__ 

3c 

3%e 

— 

Ic 

2c 

II 

•24% 

II 



*27i/4 

_^ 

__ 

145 

_„ 

__ 

135 

145 

__ 



Ic 

__ 

30c 

__ 

__ 

30c 

„„ 

__ 

57% 

60 



*19 



31/, 

4 



25 

35 



85 

95 



$275 

$285 



275 

285 



349 

353 



605 

515 

__ 

$27 

$29 



320 





195 

200 



290 

300 

__ 

38 

42 



$441/2 

$461/, 



$56% 

$581/, 



$8 

$81/, 



$% 

$% 



$40 

$45 



.005c 

__ 



190 



5% 



__ 

13% 





__ 

90 

__ 



__ 

*58 



$100 

$101 



125 





7 

10 



23 

28 



*275 

285 



$90 

$96 



190 

195 





*7i/. 

__ 



*100 

High  Low  Bid  Asked 

Alden  Mills,  com. __  __  26 

^preferred    „  93 

Aldine  Fruit  Co __  __  __  *110 

Aldine  Trust   (Philadelphia)    *125     *125 

Algomah  Mining ll^  V/^ 

Alice  Gold  &  Silver  Mining *$3.10  *$3.10 

Allegheny  &  Western,  gtd. __  __  *130  •138 

Allegheny  Traction __  __  __  $50 

Allegheny  (Pa.)  Trust *$140  *$140 

Allemannia  Insurance   (Pittsburgh) $110 

Allentown  National  Bank  (Allentown) __  __  158  1591/2 

Allentown  Portland  Cement,  com. *3V^ 

Allentown  (Pa.)  Trust  Co. __  __  $53  $55 

Alliance  Bank   (Rochester)    __  245  255 

Alliance  Insurance   (Philadelphia)   __  __  $15%  $16 

Alliance  Realty  __  __  $115  $117 

AUis-Clialmers,    com 14 

Cent.  Tr.  Ctfa.,  Com.,  of  dep.  3rd  Paid—  „  __  3  4l^ 

Pfd.  Cent.  Tr.  Ctfs.  of  dep.  3rd  Paid __  __  __  9 

All  Night  &  Day  Bank  (L.  A.)  __  __  245  260 

Allouez  Mining __  __  36  38 

Alpha  Mining   (Nevada)    le 

Alta  Silver  Mining  (Nevada) 3c 

Altoona  (Pa.)  Trust  Co. __  __  200  210 

Amalgamated  Copper 69%  68l^ 

Amalgamated  Nevada  Mines Ic  2c 

Amalgamated  Oil __  __  86%  86% 

America,  Bank  of  (New  York) __  __  *605  615 

American  Academy  of  Music *210y2  *210y2 

American  Agricultural  Chemical,  com. 51^/2  SlVg 

preferred   __  90  99 

American  Arch  Co. . *95 

American  Assurance,  com. __  *13 

American  Axe  &  Tool __  __  *24  *30 

American  Bakery,  pfd. __  __  971/2 

common    52 

American  Bank  (Philadelphia)   *$60    *$60 

American  Bank  Note,  com.  __  __  $50  $51 

preferred    __  __  $53  $54 

American  Bank  &  Trust  (San  Antonio) 110 

American  Beet  Sugar  Co.,  com. 34%  35% 

preferred __  __  84  86 

American  Book _..  __  170  175 

American  Brake  Shoe  &  Foundry,  com. 90%  95 

preferred __  __  131%  1361/3 

American  Brass   138  142 

American  Can,  pfd. 124%  I241/2 

common    35%  35% 

American  Car  &  Foundry,  pfd. 116  116 

common    49%  49% 

American  Caramel,  com. __  __  4  10 

preferred    __  30  50 

American  Cement   $2  $2% 

American  Central  Insurance   (St.  Louis) —  __  __  148 

American  Chain,  pfd __  —  *100 

American  Chicle,  com. 205  210 

preferred »_  __  100  103 

American  Cigar,  com. —  140  147 

preferred    85  95 

^Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1006 


High    Low 

American  Cities,  com. 

preferred    

American  Coal  Co.  of  Allegheny  Co. 

American  Coal  Products,  com.  

preferred    1 

American  Color,  pfd.  

American  Colortype,  1st  pfd.  

■ second   preferred   

common    

American  Cotton  Oil,  com 

preferred    

American   Credit   Indem 

American  Crude  Oil  

American  District  Telegraph  (New  Jersey) 

American  District  Telegraph    (New  York)_> 

American  Dredging  Co. 

American  Druggists  Syndicate 

American  Exchange  National  Bank  (Dallas) 
American  Exchange  National  Bank  (Duluth) 
American  Exchange  National  Bank    (N.  Y.) 

American  Express  

American  Felt  Co.,  pfd. '101    'lOl 

American  Fire  Insurance   (Philadelphia) $60 

American  Five  &  Ten-Cent  Store,  pfd. __        __  *85 

American  Fork  &  Hoe,  com. 111 

preferred  

American  Fruit  Prod.,  com.   

preferred    

American  Gas  Co.  of  New  Jersey *103 

American  Gas  &  Electric,  com. 

preferred    I - 

American  Glue,  com. 

preferred 

American  Gold  Mining 

American  Graphophone,  com 

■ preferred    

American  Hardware  

American  Hide  &  Leather,  com. : 414      414 

preferred    

American  Hominy,  pfd. 

common    

American  Hosiery  

American  Ice  Securities 241/4    2414 

American  Insurance  (Newark)   

American-La  France  Fire  Eng.,  com. 

preferred    

American  Laundry  Machine,  com 

American  Light  &  Traction,  com 

preferred    

American  Linen  Mills  (Fall  River) 

American  Linseed,  com. 

preferred    

American  Lithographic,  pfd 

common    

American  Locomotive,  com 35%     35% 

preferred    

American  Lumber  

American  Machine  &  Foundry 

*Quotation  nearest  March  1,  1913.    No  quotatioD  on  that  date. 

1007 


Bid 

Asked 

471/2 
753/4 
$171/2 
87 

49 

77 

$25 

92 

100 

1091/2 
*90 

~ 

$1021/2 
*90 



*31 

47 

49 

96 

100 

120 



30c 

*50 

*53 

16 

18 

350 

*1953/4 
*13% 

325 



234 

260 

1571/2 

162 



♦128 



4 

~ 

25 

$84 

$86 

$44 

$451/2 

102 

IO6I/2 

139 

144 

8c 

15c 



53 



80 

136 

138 

251/2 

27 

84 

85 

55 

56 

$195  ; 

$215 

$26 

:: 

4 

7 

40 

45 



♦31 

400 

410 

108 

110 



80 

9% 

11 

27 

30 

*95 

__ 

*58 

♦64 

1041/2 

1051/2 

♦621/2 

♦451/4 

♦471/4 

High    Low 

American  Mail  Steamship  

American  Malt  Corporation,  com. 

^preferred    

American  Manufacturing   

American  Marconi    (new). 

American  Meter 

American  Multigraph,  com.  

preferred    101 

American  National  Bank  (Atlanta)   

American  National  Bank  (Beaumont) 

American  National  Bank  (Forth  Worth) 

American  National  Bank   (Louisville)    

American  National   Bank    (Macon)    

American  National  Bank  (McAllister) 

American  National  Bank   (Nashville)    

American  National  Bank  (Newark) 
American  National  Bank  (Oklahoma  City)  — 

American  National   Bank    (Richmond) 

American  National  Bank  (St.  Paul)  

American  National  Bank  (San  Francisco) 

American  National  Bank  (Shreveport) 

American  National  Bank    (Washington) 

American  National  Bank  (Wilmington,  N.  C.) 

American  News  Co. 

American  Oil  Fields  

American  Oriental  Co.,  pfd. 

common  

American  Petroleum,  com.  

preferred    

American  Piano,  pfd. 

American  Pipe  &  Construction 90 

American  Pneumatic  Service,  com. 

-1st  preferred 

2nd  preferred  

American  Power  &  Light,  com. 

preferred    

American  Press  Association 

American  Public  Utilities,  pfd. 

common    

American  Radiator,  com.   

preferred    

American  Railways,  com.  

American  Rolling  Mill,  com. 

preferre^d    

American  Savings  Bank  (Los  Angeles) 

American  Screw __      ■  __ 

American  Seating  Co.,  pfd.  

American  Security  &  Trust   ( Washington )__ 

American  Seeding  Machine,  com.  

preferred 

American  Sewer  Pipe *10% 

American  Shipbuilding,  com.  

preferred    

American  Smelting  &  Refining,  com 69%     69 

preferred    103%  103% 

American  Smelters  Securities,  pfd.,  Ser.  B 

American   Snuff,  com.   

preferred    

American  Speaking  Telephone  Co. 

'Quotation  nearest  March  1,  1913.    No  quotation  on  tliat  date. 

1008 


Bid 

Asked 



*10 

11 

12 

531/3 

56 

*130 

*132 

51/2 

5% 



*110 

17 

191/2 

215 

222 

300 





225 



1281/2 

198 

200 



150 

183 

187 

130 



130 



220 



125 



133 



200 

210 

170 

175 

122 

123 

*29 

__ 



*16 



*60 



*5 

51 

65 

71 

76 

*70 

*75 

Svh 

$41/4 

$493/4 

$51 

$21 

$22 

731/2 

75 

83 

86 

48 

52 

751/2 



621/2 

641/2 

500 



133 

136 

$40 

$401/2 

173 

200 

1151/2 

125 

175 





154 

*20 

*30 

310 

__ 



84 

97 

100 

52 

54 

100 

101 

85 

86 

175 

190 

103 

105 

-_  *250 

High  Low  Bid    Asked 

American  Spinning  Co.  —        155 

American  State  Bank  (Chicago)   —  __  210      215 

American  Steam  Gauge  &  Valve  Mfg.,  pfd. —  —  —  —    *105 

American  Steel  Foundries,  new  stock __  __  331/3    35 

American  Sugar  Refining,  com , —  113       115 

preferred    __  __  113       116 

American  Sumatra  Tobacco,  pfd. —            *73 

common'   *16% 

American  Surety  __  —  $100    $102l^ 

American  Telegraph  &  Cable  Co —  —  *58%  *66 

American  Telegraph  Typewriter *40      *47 

American  Telephone  &  Telegraph 132%  132% 

American  Textile   (Pawtucket)   125 

American  Thread __        $3y2     $5 

American  Tobacco,  common 240      260 

preferred   —  _-  103^2  104 

American  Trust  Co.   (Boston)   350 

American  Trust    (Charlotte)    __        170 

American  Trust    (Morristown) 120 

American  Trust  &  Sav.  Bank   (Birmingham)  __  __  195       200 

American  Type  Founders,  com.   46        49 

preferred    __        100      103 

American  Utilities — 10  shares  preferred  and  5   shares  common  sold  for 
$1,000,  March  1,  1913. 

American  Vanadium  Co. *500 

American  Water  Works  &  Electric,  com *55      *60 

preferred    97        97^2 

American  W.  Wks.  &  Guar.  (Pittsburgh),  pfd.  __  __  __      *97y3 

common  *57V^  *60 

American  Window  Glass,  pfd.  42 

American  Wire  Fabrics,  pfd. *90 

American  Woolen,  pfd.  77%  771/2 

common    17        17i/a 

American  Wririger,  com. 106 

preferred    116 

American  Writing  Paper,  pfd.   28*4  28 

common 2          2^4 

American  Zinc,  Lead  &  Smelting __        29%     29% 

Ames-Holden-McCready,    pfd.    __  __  781/2  *79 

Amherst  Gas 145  145 

Amoskeag  Manufacturing,  com. __  __  __        71 

preferred    __  __  9814     99 

Anaconda   Copper    $361/4  $35% 

Anacostia  &  Potomac  River  5s,  1948 *98i/3  __ 

guarantee  5s,  1948 *101 

Anderson  Cotton  Mills  (South  Carolina) 35        45 

Andes  Silver  Mining  (Nevada) 4c 

Andreae  Silk  (Virginia)   __  __            *100 

Andrew  Jergens,  pfd. 105 

Androscoggin  Mills    (Maine) *160 

Anglo-American   Oil    $18      $18l^ 

Anglo  &  L.  P.  National  Bank  (San  Francisco)  __  __  152      I531/2 

Anglo  California  Trust  Co.  (San  Francisco)  __  __  __  125i^  126l^ 

Ann  Arbor,  com.  15        30 

preferred    50        80 

Annapolis  (Maryland)  Gas  &  Elec.  Lt.,  com.  __  __  *50 

Anthracite  Trust   (Scranton) *73       *76 

Appalachian  Power,  com.  __        22        23 

preferred    __  71%     73 

*Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1009 


High  Low  Bid  Asked 

Appleton  Co.  (Massachusetts)  'ITS 

Apsley  Rubber,  pfd.  __  __  __  *iii 

Ardmore  National  Bank __            *120 

Aristos  Co.,  pfd. __            •12 

Arizona  Commercial  Mining __  3%      3% 

Arizona  Power,  com.   __  II1/2     13 

preferred    j. __  45  50 

Arkansas,  Oklahoma  &  Western  Ry.,  com $8 

Arkansas  Vy.  Ry.  Light  &  Power,  pfd _.  __  __  971/3 

Arkwright  Mills  (Fall  River) __  __  __  70 

Arkwright  Mills   (South  Carolina) __  __  95  100 

Arlington  Fire  Insurance  __  __  16  21 

Arlington  Insurance   (Washington) __  $16  $21 

Arlington  Mills  (Massachusetts)   108  112 

Arlington  Trust   (Lawrence) __  __  125 

Armet  Moving  Pictures *20 

Arms  Palace  Horse  Car  Co. __  __            *5 

Armsby  Co.  of  New  York,  pfd. __  __  __  100 

Arnold  Mining  __  i 

Arsenal  Bank  (Pittsburgh)   138 

Art  Metal  Cons.,  com. __  __  __  *170 

Arundel  Sand  &  Gravel,  pfd __  __  __  *85 

Aseptic  Products,  pfd. __  __  __  *lll^ 

common __  *15 

Assets  Realization  Co _^  105  115 

Associated  Gas  &  Electric,  pfd __  *100 

Associated  Merchants,  1st  pfd. *100  *101 

preferred   __  ,_  *100  •lOQi/g 

Associated   Oil   __  41  441/2 

Astor  Trust  (New  York)   __  __  350  375 

Atchison,  Topeka  &  Santa  Fe,  com. 102  101% 

preferred    100%  100% 

Athenaeum  of  Philadelphia __            *13 

Atlanta  &  Charlotte  Air  Line __  165  170 

Atlanta  &  Gulf  Cotton  Mills  (Georgia) __  __  __  110 

Atlanta  &  West  Point __  __  150  155 

Atlanta   Mining   17%c  17c 

Atlanta  National  Bank __  __  290  305 

Atlanta    (Georgia)    Trust  __  __  105  109 

Atlantic  City  Co.,  pfd.  __  __  *80  *85 

common  *10  *15 

Atlantic  City  Gas,  pfd. __  __  __  *84% 

Atlantic  City  Electric _«  __  __  *100 

Atlantic  Coast  Line  125  125 

Atlantic  Coast  Line  Co.  of  Connecticut __  __  247%  255 

Atlantic  Cotton  Mills  ♦40%  __ 

Atlantic  Dock  Co.  __  __  __  *98 

Atlantic  Fruit  &  Steamship  __  __  *1%    *2% 

Atlantic,  Gulf  &  West  In.,  com __  5%       6% 

preferred    __  __  10%     12 

Atlantic  National  Bank  (Providence) $60 

Atlantic  Power  &  Light — 10  shares  preferred  and  4  shares  common  sold 
for  $1,000,  March  1,  1913. 

Atlantic   Refining   ♦635     ^635 

Atlantic  Trust  &  Banking  (Wilmington) __  __  340  345 

Atlas  National  Bank  (Cincinnati) 320  325 

Atlas  Portland  Cement,  com. $60 

Atlas  Powder  __  ..  ♦gi  ^92% 

'Quotation  nearest  March  1.  1913.    No  quotation  on  that  date. 

1010 


High  Low  Bid  Asked 

Atlas  Wonder  Mining  (Nevada)   —  —  12c  13c 

Attleborough  Steam  &  Elec —  „  —  t280 

Augusta-Aiken  Ry.  &  Elec,  com. __  __  23  35 

preferred    —     •    —  75  85 

Augusta  &  Savannah —  —  103  107 

Augusta  Factory  (Georgia)   —  —  30  35 

Augusta  Knitting  Co.,  pfd. —  —  —  *100 

Augusta   (Georgia)   Savings  Bank __  —  150 

Augusta  Southern  Railroad —  —  —  *5 

Aurora,  Elgin  &  Chicago,  com —  —  41  45 

preferred    —  __  86  891/2 

Austin   (Texas)    National  Bank —  —  250 

Austin  State  Bank    (Chicago) —  __  —  215 

Auto  Safety  Razor,  pfd. —  __  __  *100 

Auto  Transportation  —  —  *22 

Automatic  Electric  —  —  —  *65 

Automatic  Lighting —  —  5%     — 

Autosales  Gum  &  Candy —  —  27  32 

Avery  Co.,  pfd —  —  *96  ♦971/3 

common    —  —  —  *103i/3 

Babcock  &  Wilcox  __  —  103  105 

Back  Bay  Realty  Association —  __  *105 

Badger  State  Bank   (Milwaukee)    —  —  103  105 

Bagdad  Copper —  —  —  *3i/2 

Balch  PubUshing,  pfd. —  —  —  *3i/2 

Baldwin  Locomotive,  com. 49%    49l^ 

preferred    —  —  104  106 

Baltimore  &  Ohio,  com. lOlVs  100% 

preferred —  —  83  84 

Baltimore  Brick,  com. —  —  2  2l^ 

preferred —  —  23  25 

Baltimore  Electric,  pfd 45  45 

Baltimore  Trust  Co. —  —  "158%     __ 

Bangor  Railway  &  Electric,  com. >  —  __  88  40 

preferred —  —  115  120 

Bank  for  Savings  (Seattle)   —  —  —  100 

Bank  of  America  (New  York)  „  —  605  615 

Bank  of  British  North  America  (Montreal)—  __  __  155 

Bank  of  Buffalo —  —  310  325 

Bank  of  California  (San  Francisco) —  200 

Bank  of  Charleston  (South  Carolina) __  —  235  240 

Bank  of  Commerce  (Cleveland) *217 

Bank  of  Commerce  (Little  Rock) —  __  $87l^     _- 

Bank  of  Commerce  (Philadelphia) *140i/2*140i/2 

Bank  of  Commerce  &  Trust  (Memphis) __  __  290  300 

Bank  of  Commerce  &  Trust   (Richmond) „  __  197  200 

Bank  of  Coney  Island  (Brooklyn) __  __  135  155 

Bank  of  Flatbush  (Brooklyn) __  ._  150  165 

Bank  of  Hamilton  (Ontario)   1 —  —  —  208 

Bank  of  Manhattan  County  (New  York) __  __  $175  $180 

Bank  of  the  Metropolis  (New  York) *340    *340 

Bank  of  Montreal —  —  —  242 

Bank  of  New  Brunswick  (St.  John) —  __  275 

Bank  of  Norfolk  —  —  130  140 

Bank  of  North  America  (Philadelphia) *295    *295 

Bank  of  Nova  Scotia  (Halifax) „  __  26O14  261 

Bank  of  Ohio  Valley  (Wheeling)  __  __  $82  $85 

Bank  of  Orleans  (New  Orleans) __  —  225 

•Quotation  nearest  March  1,  1913.    No  quotation  on  thai  date.    f'Value"  as  of  March  1,  1913. 

1011 


High    Low 

Bank  of  Ottawa  (Ontario)  

Bank  of  Pittsburgh 

Bank  of  Saginaw 

Bank  of  Topeka  (Kansas)  

Bank  of  Toronto  (Ontario)   

Bank  of  Washington  Heights  (New  York) 

Bankers'  Trust   (Houston)    

Bankers  Trust  (New  York)  

Bankers'  Trust   (St.  Louis)   

Bankers'  Trust  (Tacoma)  

Banking  Trust  (Kansas  City,  Kan.) 

Banner  (Colorado  Springs)  

Banque  d'Hochelaga  (Montreal) 

Banque  Nationale  (Quebec)   

Barnard  Manufacturing  (Fall  River) 

Barnett  National  Bank  of  Jackson 

Barney  &  Smith  Car,  com 

preferred 

Barre  (Vermont)  Bank  &  Trust 

Barrett  Company,  com. 

preferred 

(Formerly  American  Coal  Products  Co.) 

Barristers  Hall  Trust  (Boston)  

Batavia  Rubber,  pfd. 

Bates  Manufacturing  Co.  (Maine)  *272y3     — 

Batopilas  Mining 

Battery  Park  National  Bank  (New  York)  — 

Baxter  National  Bank   (Rutland) 

Bay  City  (Michigan)  Bank 

Bay  State  Gas  

Bay  State  National  Bank  (Lawrence) 

Bay  State  Street  Ry.,  1st  pfd. 

Beacon  Mfg.  (New  Brunswick),  com 

< preferred 

Beacon  Trust  (Boston)   

Bear  Creek  Oil  &  Mining 

Beatrice  Creamery,  com. 

preferred  

Beaver  Consolidated  

Bedford  Safety  Razor 

Bedford  Trust  (Boston) 

Beech  Creek  Railroad,  gtd.  4% 

Beekman  Estate,  Inc.,  com. 

Begole  Syndicate  

Belcher  Mining  Co.  (Nevada)   20c      20c 

Bellows  Falls  Power,  pfd. 

Bell  Telephone  of  Canada 

Bell  Telephone  of  Pennsylvania •1221/8     __ 

Belmont  Milling  (Nevada)   

Belmont  Trust  (Philadelphia) *$30     *$30 

Belton  Mills  (South  Carolina)  

Bergen  &  Lafayette  Trust  (Jersey  City) 

Bergner  &  Engel  Brewing,  pfd. *95      *95 

Berkeley  Hotel  Trust  (Boston)   

Berks  County  Trust   (Reading)   

Berkshire  Cotton  Mfg.   (Massachusetts) 

Berlin   (Paper)   Mills    (Maine)    *102 

Bessie  Gold  Dredging,  com.  lOVg     lOVg 

preferred   —        —  11        llH 

*Quotatlon  nearest  Marcb  1,  1913.    No  quotation  on  that  date. 

1012 


Bid 

Asked 



210% 



$125 

300 

320 



250 

__ 

208 

275 



140 

141 

485 

495 



285 



125 

115 

120 

2y8c 

28/8C 

159 

160 

140 

142 



75 

325 





12 

70 

82 

120 



87 

92 

100 

1091/8 

$90 

— 

*100 

iiVa 

ill/a 

130 

140 

110 

__ 



200 

20c 

21c 

175 





•120 

102% 



1121/2 



225 



72i/2( 

;  80c 

145 

151 

931/^ 

,  95 

40c 

42c 



•100 

$55 

$70 

*$45Vo 

$48 



$100 

iVa 

;   1% 

♦96 

149% 

,  150 

$7 

$7 

100 

105 

290 

— 

$75 

$85 

$19* 

$20 

235 

250 

High  Low  Bid  Asked 

Best  &  Belcher  Mining  (Nevada) __  _-  3c  4c 

Bethlehem  Steel,  com.  SeVs  SSy^ 

preferred 66  65% 

Beverly  Gas  &  Elee __  _-  __  t300 

Beverly  National  Bank   (Boston)    :. __  __  152 

Bibb   Manufacturing    (Georgia)    __  __  90  95 

Big  Vein  Coal  Co.  of  West  Virginia __  __  *25c 

Bigelow   Carpet    *170l^  __ 

Bigelow -Hartford   Carpet,   com.    122  124 

preferred  —  __  118  122 

Bigelow  Kennard  &  Co.,  1st  pfd. *105    *105 

Billings  &  Spencer $48 

Bingham  Mines   4  4^ 

Biograph  Co.  __  __  *95 

Birmingham,  Ensley  &  Bessemer  R.  R.,  pfd.__  __  __            *48% 

common I _«  __  *16  "20 

Birmingham  Insurance   (Pittsburgh) $100 

Birmingham  Railway,  Light  &  Power,  com. 100  125 

' preferred __  __  98  102 

Birmingham  Trust  &  Savings  Bank 240  250 

Bishop,  Babcock  &  Becker,  com *5 

preferred    *70 

Black  Jack   (Colorado  Springs)    __  2c  2y8e 

Black  Mountain  Corporation  5c 

Blackstone  Can.  National  Bank  (Providence)  __  $35 

Blackstone  Val.  Gas  &  Electric,  pfd. __  __  *110 

Blanke  (C.  F.)  Tea  &  Coffee _-  __  „  "SI 

Blaugas  Co.  of  America $20 

Bleecker  Street  &  Fulton  Ferry __  __  18  23 

Bliss  (E.  W.),  com. __  __  $40  $45 

preferred __  __  $61  $65 

Blue  Bell   (Colorado  Springs)    __  .0095c 

Blue  Bell  Mining  (Nevada)   2c 

Blue  Bull  Mine    (Nevada)    __  4c  5c 

Blue  Creek  Coal  &  Sand >.  _«  __  *75 

Bluff  City  Insurance    (Memphis) 93  100 

Board  of  Trade  Building  Tr.  (Boston) ._  »_  $101  $106 

Boatmen's  Bank  (St.  Louis)   »_  __  224y, 

Bob  Lee  (Colorado  Springs) .007c 

Bohemia   Mining    2  2*A 

Bon  Air  Coal  &  Iron,  pfd __  __  y^      ly. 

Bonanza  Development  Co. 40c  45c 

Bond  &  Mortgage  Guarantee 288  293 

Bond   Lumber    (Mississippi) 60 

Bonnie  Claire  Mining  (Nevada)   2c 

Booth   Fisheries,   com.   —  —  64  65 

. 1st    pfd.    85  85 

Booth  Mills   (Massachusetts) *98y8  — 

Booth  Mining   (Nevada)    5c 

Borden   (Richard)    Manufacturing „.  139 

Borden's  Condensed  Milk  Company __  __  116  119 

preferred  __  _-  108  110 

Border  Cotton  Mills  (Fall  River) __  >_  ._  110 

Borne-Scrymser    *310 

Boston    &    Albany __  __  __  211 

Boston  Athenaeum  Co *330     *330 

Boston   Belting  154 

Boston  &  Chelsea  Street  R.  R _ *75 

Boston  Cold  Storage  preferred __  __            *95 

*QuotatIon  nearest  March  1,  1913.    No  quotation  on  that  date.    f'Value"  as  of  March  1,  1913. 

1013 


High 

Boston  &  Corbin  Copper  &  Silver  Mines 

Boston  &  Lowell 

Boston  &  Maine,  common 

preferred   

Boston   &   Providence 

Boston  &  Worcester  Electric,  -common 

preferred   

Boston  &  Worcester  Street  Railway,  preferred 

Boston  Condensed  Milk,  first  preferred 

Boston  Duck   (Massachusetts) 

Boston  Elevated,  common 

Boston   Ely   Mining 

Boston  Gr.  Rent  Tr 

Boston  Insurance 

Boston  Land   

Boston  Library  Society 

Boston   Manufacturing    (Massachusetts) 

Boston  Real  Estate  Trust 

Boston,  Revere  Beach  &  Lynn 

Boston  Safe  Deposit  &  Trust 

Boston    Securities,    preferred *31 

common 

Boston  Storage  Warehouse . 

Boston  Suburban  Electric,  common 

preferred   

Boston   Tonopah   Mining    (Nevada) 

Bourne  Mills    (Fall  River) 110 

Bowery  Bank  (New  York) 

Boylston  National  Bank   (Boston) 

Braden  Copper 8% 

Brandon  Mills   (South  Carolina) 

Brazilian  Traction,  Light  &  Power 

Bremen  Bank   (St.  Louis) 

Bridgeport   Trust   Co 

Brier  Hill  Steel,  preferred 108 

Brighton  Germ.  Banking    (Cincinnati) 

Brill   (J.  G.)   Co.  preferred 

Brine  (R.  S.)  Transportation 

Bristol  Brass 

Bristol  County  National  Bank  (Taunton) 

Bristol  Water  

British  American  Tobacco $23% 

British  Columbia  Copper 3% 

British  Columbia  Packers,  common 

^preferred  "A" 

British  North  America  (Bank  of) 

Broad  &  Market  National  Bank  (Newark) 

Broad  Brook  Co 

Broad  Street  Bank  (Richmond) 

Broad  Street  National  Bank  (Trenton) 195 

Broadway  &  Seventh  Avenue 

Broadway  Bank  (St.  Louis) 

Broadway  National  Bank  (Nashville) 

Broadway  Savings  &  Trust  (Cleveland) 

Broadway  Savings  Trust  (St.  Louis) 

Broadway  Trust  (Camden) 

Broadway  Trust  (New  York) 

^Quotation  nearest  March  1,  1913.    No  quotation  on  that  data. 

1014 


Low 

Bid 

Asked 

__ 

6 

7 

__ 



203 

__ 

89 

91 



131 



__ 

__ 

290 

__ 

$6 

$7 

__ 

$43 

$45 





•120 

__ 



•98 



1300 





108 

108% 

__ 

65c 

70c 

__ 

$100 

$103 



480 

500 

»_ 

$5Vfl 

I   $61/2 

__ 

__ 

•15 



110 





__  $1160 

__ 



150 



370 



•31 





__ 

*4 

•10 

__ 

$112 

__ 



$71/2 

1 

__ 

$65 

$68 

— 

Ic 

2c 

~~ 

425 

"■" 



120 

125 

8% 

__ 

__ 



85 

__ 

96ys 

1  96% 



650 

~ 

157 

— 

'_'_ 

320 

325 



*100 

•102 



*60 

•75 



$391/4 

$40% 



103 







•135 

$233/8 





3^8 





148 

154 

__ 



154 

__ 

155 





155 

__ 



$18 

__ 



$60 



195 



__ 



170 

182 



135 

— 

__ 

150 

155 

__ 

•235 

__ 

__ 

155 





194 

__ 

__ 

165 

175 

High  Low  Bid  Asked 

Brockton  Gas  Light ^___^__^ __  __  __  fi70 

Bromfield  Building  Trust   (Boston) __  __  __  $95 

Bronx  National  Bank  (New  York) __        __  *200 

Bronze  Metal,  preferred __  __  __  *85 

common  ^ *60  *65 

Brooklyn  Academy  of  Music __  *22i4 

Brooklyn  City  R.  R >_  __  $16  $16l^ 

Brooklyn  Factory  &  Power,  preferred *100 

Brooklyn  Rapid  Transit 89l^  89 

Brooklyn  (New  York)  Trust  Co __  __  495  605 

Brooklyn  Union  Gas __  __  130  ISS^i 

Brooklyn  Warehouse  &  Storage *67V^ 

Brown  Hoisting  Machinery,  preferred "93 

Brown  Shoe,  common __  50  54 

preferred   __        92  94 

Brunswick-Balke-ColL,  preferred   __  IO914  110l^ 

Brunswick  Cons.  Gold  Min.  (California) __  __  80c  90c 

Brunswick  Terminal  &  Railway  Sec 8%  8% 

Bryant  Park  Bank  (New  York) __  __  150 

Bronx  Borough  Bank  (New  York) __  «_  300 

Bronx  National  Bank  (New  York) _-  —  180  195 

Bryant  Paper,  common __  *16% 

Buckeye  Pipe  Line __  __  $82  $83 

Buck's  Stove  &  Range,  preferred __  101 

Bucyrus  Co,  preferred __  __  *76  *83% 

Buffalo  &  Susquehanna  R.  R.,  preferred __  _>            *1 

Buffalo  Citj^  Gas,  preferred 15 

common . —  —  5  6 

Buffalo  General  Electric __  __  __  1031^ 

Buffalo  Loan,  Tr.  &  Safe  Dep.  Co _-  __  125  128 

Buffalo  Mines  _.  —  2l^      21/3 

Buffalo,  Rochester  &  Pittsburgh,  common 105  115 

preferred   —  __  123  150 

Bullion  Mining    (Nevada) —  —  —  2c 

Bunker  Hill  Mining   (California) __  —  $1.80 

Burke  Electric  Co *20 

Burl.,  Cedar  Rapids  &  Nor _.  __  __  *127ya 

Burlington  (Iowa)   Savings  Bank —  —  125 

Burroughs  Adding  Machine 347  357^ 

Burt  (F.  N.)  Co.,  common. __  »»  __  100 

preferred —  104 

Burton  Dry  Goods,  preferred *100     *100 

Bush  Terminal,  com __  —  *54  *60 

Business  Real  Estate  Trust  (Boston) __  __  __  $97 

Butch.  &  Drov.  National  Bank  (New  York)—  __  __  *$32ya*$35 

Butler   (James),  pfd —  —  *65 

Butler  (Jim)  Tonopah  Mining  (Nevada) >_  __  73c  75c 

Butler  Mill  (New  Bedford) —  —  —  130 

Butte  &  London  Copper  Dev —  —  25c  30c 

Butte  &  New  York I14  1^4 

Butte  &  Superior  Copper —  —  31^4     31% 

Butte-Ballaklava   Copper —  —  2%      2% 

Butte  Central  Copper —  —  8:^      Si/g 

Butte  Coalition  Mines  (old  stock) —  —  *15 

Butterick  Co. —  —  28  31 

By-Products  Coke  Corporation —  —  —  *130 

*Quotatlon  nearest  March  1,  1913.    No  quotation  on  that  date.    f'Value"  as  of  March  1,  1913. 

1015 


High  Low  Bid    Asked 

Cabarrus  Cotton  Mills  (North  Carolina) —  —  130      140 

Cabot  Manufacturing  (Maine) *120 

Cactus  Copper —  —  6c        7c 

Calaveras  Copper —  —  2H      SVa 

Caledonia  Mining  (Nevada) 85c  85c 

California  Electric  Generating,  pfd __  —  75        80 

California  Fruit  Canners  Association —  —  HSVa     — 

California-Idaho  Co.,  Series  A —  —  —      *50 

California  Insurance  (San  Francisco) __  —  $73 

California  Midway  Oil —  —  10%c     Ic 

California  Petroleum,  com 50%     491/3 

preferred —  —  80        82 

California  Portland  Cement —  —  110 

California  Railway  &  Power,  prior  pfd __  __  871/2     QSVa 

California  Sav.  &  Com.  Bank  (Los  Angeles)—  __  __  190 

California  Street  Railway __  —  I241/2     __ 

California  Wine  Association,  com —  __  46l^     __ 

preferred —  —  83%     8514 

Calumet  &  Arizona  Mining —  —  62        6214 

Calumet  &  Chicago  Canal  &  Dock __  —  53        57 

Calumet  &  Hecla  Mining _..  —  455      460 

Calumet-Corbin  —  —  5c      10c 

Calumet  National  Bank —  —  140      150 

Calvert  Bank   (Baltimore) —  —  $70 

Camaguey  Co.,  Ltd ,     __  __  —      *65 

Cambria  Iron —  $44      $45 

Cambria  Steel —  —  $51      $511/2 

Cambridge  Electric  Light __  __  __     1305 

Cambridge  Electric  Securities t305 

Cambridge  Gas  Light ., 285  285 

Camden  &  Burlin^on  County  Railroad __  __  $321/2  $36i4 

Camden  &  Suburban __  __  $19      $20 

Camden  (New  Jersey)  National  Bank 191 

Camden  (New  Jersey)  Safe  Deposit  &  Trust-  *100  *100 

Canada  Bread,  com __  __  29        31 

Canada  Brick  &  Fire  Proofing,  pfd "100  *100 

Canada  Cement,  com __  _-  27%     28 

preferred __  __  91        91% 

Canada  Foundries  &  Forgings,  pfd *100 

Canada  Interlake  Line,  com 69 

preferred >_  87%     — 

Canada  Landed  &  National  Investment *170 

Canada  Life  Assurance *170 

Canada  Machinery __  __  591/2     61 

Canada  North-West  Land *99 

Canada  Permanent I961/2 

Canada  Southern 60        63 

Canadian  Bank  of  Commerce  (Toronto) __  __  $110 

Canadian  Car  &  Foundry,  com __  __  77        80 

preferred 116  115 

Canadian  Cereal  &  Flour  Mills *45  *45 

Canadian  Consolidated  Rubber,  com __  __  85        90 

preferred _^  98%    99 

Canadian  Converters 46        47 

Canadian  Cottons,  com __  __  42%     43 

preferred __  __  78        78% 

Canadian  General  Electric,  com __  __  110 

Canadian  Locomotive,  com 67 

preferred __  __  __        95 

•Quotation  nearest  March  1,  1913.    No  quotation  on  tiiat  date.    f'Value"  as  of  March  1,  1913. 

1016 


High  Low  Bid    Asked 

Canadian  Marconi —  ~  SVg      41/2 

Canadian  Pacific,  com —  2311/2  231l^ 

. preferred —  —  97        99 

Canadian  Salt  __— *120 

Canadian  Venezuelan  Ore,  Ltd _ *36  *36 

Canal-Louisiana  Bank  &  Trust  (New  Orleans)  __  __  105 

Canal  National  Bank  (Portland,  Me.) —  __  108      110 

Caney  River  Gas *$32  *$32 

Canton  Co. —  —  136 

Canton  National  Bank  (Baltimore) __  —  105      110 

Capital  National  Bank  (St.  Paul) __  „  137 

Capital  National  Bank  (Washington) 224 

Capital  Traction —  __  122%  1231/, 

Capital  Trust  (St.  Paul) __  —  145 

Carbolite  Co.  __  __  *3i/a     __ 

Cardenas  American  Sugar,  pfd —  lOOVa  101% 

Caribou  Oil __  —  __        $1 

Carolina  Power  &  Light,  pfd __  __  *93     *100 

■ common __  26        28 

Carolina  Savings  Bank  (Charleston) __  __  225      250 

Carriage  Factories,  Ltd.,  pfd __  __    $100 

Casco  National  Bank  (Portland,  Me.) __  __  105      106 

Case,  Lockwood  &  Brainard 155 

Case  (J.  L)  Thresh.  Mach.  pfd.  stk.  tr.  ctfs __  _-  100%  102l^ 

Casein  Co.  of  America,  com 8 

preferred  40 

Cash  Boy  Consolidated  Mining  (Nevada) __  __  8c      10c 

Cass  Avenue  Bank  (St.  Louis) 200 

Casualty  Co.  of  America __  110      120 

Catawissa  Railroad  1st  pfd __  __  $55      $55i/, 

2d  preferred __  __  $531/2  $54i/, 

Cayuga  &  Susquehanna  ($30  par) __  200      215 

Celluloid  Co. __  __  135       138 

Centennial  Copper  Mining __  __  14%     16 

Centennial  National  Bank  (Philadelphia) *275  *275 

Center  Creek  Mining __  __  $1.50 

Central  Aguirre  Sugar,  com *62 

Central  Arkansas  Railway  &  Light,  pfd *100  *100 

Central  Bank  (Rochester) __  __  240      250 

Central  Bank  &  Trust  (Atlanta) >_  __  140      143 

Central  Building  Trust  (Boston) __  __  __      $90 

Central  Canada  Loan  &  Savings *190 

Central  Coal  &  Coke,  com __  __  92        93 

preferred __  __  sii/a     8314 

Central  Crosstown  Street  Railway __  __  __        10 

Central-Eureka  Mining    (California) 15c  14c 

Central  Fire  Works,  com __  __  2          3 

preferred __  __  25        30 

Central  Georgia  Power __  __  *34 

Central  Leather,  com 28%     2814 

preferred 96l^     9&y^  "        _I 

Central  Maine  Power,  pfd __  __  *94 

common __  __  *25 

Central  Manufacturing  Dis.  Bank,  (Chicago).  __  __  140      150 

Central  Massachusetts  Light  &  Power,  pfd *105  *105 

Central  Mass.  Power,  pfd __  __  __     fiio 

Central  Mexico  Light  &  Power,  pfd _I  II  64        68 

Central  National  Bank  (Buffalo) __  __  200 

Central  National  Bank  (Cleveland) __  __  163        II 

^Quotation  nearest  March  1,  1913.    No  quotation  on  that  date.    f'Value"  as  of  March  1,  1913. 

1017 


High  Low  Bid  Asked 

Central  National  Bank  (Columbus,  0.) __  —  —  103 

Central  National  Bank  (Frederick) -_  __  $35 

Central  National  Bank  (Los  Angeles) -_  —  219  226 

Central  National  Bank  (Oakland) __  __  160 

Central  National  Bank  (Philadelphia) *440  ^440 

Central  National  Bk.  of  Richmond  (Virginia)  _-  —  144  147 

Central  National  Bank  (St.  Louis) __  —  118  120 

Central  National  Bank  (Topeka) >_  __  —  151 

Central  National  Bank  (Wilmington,  Del.) —  __  __  115  125 

Central  National  Bank  (York) —  __  99  102 

Central  Oil 1.10 

Central  of  New  Jersey —  —  345  350 

Central  Park,  North  &  East  River __  .._  13 

Central  Savings  Bank,  Detroit __  __  213  220 

Central  &  South  American  Telegraph __  __  105  112 

Central  State  Bank  &  Trust  (Memphis) __  __  215  220 

Central  States  Electric,  pfd —  __  *89 

Central  Syndicate  Building  Co -_  __  —  *100 

Central  Trust  (Altoona) __  —  200  210 

Central  Trust  (Camden) _-  __  __  lOSi/g 

Central  Trust   (Harrisburg) __  >_  $65  $70 

Central  Trust  (Indianapolis) __  __  110  120 

Central  Trust  (Macon) . __  __  90  95 

Central  Trust  (New  York) __  —  1015  1030 

Central  Trust  (San  Antonio) __        125 

Central  Trust  Co.  of  Illinois  (Chicago) __  __  234  237 

Central  Trust  &  Safe  Deposit  (Cincinnati)™  __  __  290  310 

Central  Trust  &  Savings  (Philadelphia) *$65  *$65 

Centre  Wheeling  Savings  Bank  (Wheeling) __        215 

Century  Bank  (New  York) __  __  220  230 

Chace  Mills  (Fall  River) __  __  __  115 

Challenge  Mining  (Nevada) __  __  3c  5c 

Chalmers  Motor  Co.,  pfd *102y2  $1021/3 

common __  _«  *132 

Champion  Coated  Paper,  com. 180 

preferred __  __  110  II21/2 

Chapin  National  Bank  (Springfield,  Mass.) __        115  120 

Chapin-Sacks __  __  160  220 

Chapman  National  Bank  (Portland,  Me.) __  __  108  110 

Charleston  (South  Carolina)  Savings  Inst'n__        __  425  450 

Charlestown  Gas  &  Elec __  __  __  tl30 

Charlotte  (North  Carolina)  National  Bank __  155 

Charter  Oak  National  Bank  (Hartford) 155 

Chase  National  Bank  (New  York) __  __  *690  715 

Chatham  Bank   (Savannah) __  __  138 

Chatham  &  Phoenix  National  Bk.  (New  York)  __  __  $44  $451^ 

Chelsea  Exchange  Bank  (New  York) __  __  150  153 

Chelten  Trust  (Philadelphia) *$75  *$75 

Chemical  National  Bank  (New  York) __        *440  448 

Chemung  Canal  Trust  (Elmira) __  __  180  190 

Cherokee  Copper 1 

Chesapeake  &  Ohio 73%     73% 

Chesebrough  Manufacturing __  __    $332^4  $337Vi 

Chicago  &  Alton,  com __  10  20 

preferred __  __  251/2    40 

Chicago  Auditoriimi __  __  15  16 

Chicago  Brewing  &  Malting,  com __  __  1  1% 

preferred __  __  6  Sy^ 

Chicago,  Burlington  &  Quincy _>  __  ♦209  217 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date.    f'Value"  as  of  March  1,  1913. 

1018 


Bid 

A8k( 

275 



150 

170 

45 

49 

100 

103 

30 

35 

93 

94 

♦62 

*68 

167 

168 

1041/3 



•58 

*59 

High    Low 

Chicago  City  Bank  &  Trust  (Chicago) 

Chicago  City  Railway 

Chicago  &  Eastern  Illinois,  com 

preferred 

Chicago  Elevated  Railways,  com < 

preferred 

Chicago  Great  Western,  com 15        15 

Chicago,  Indianapolis  &  Louisville,  pfd 

Chicago  Jctn.  Ry.&  Un.  Stk.  Yds.  (stp'd  stk.) 

preferred 

Chicago  Lumber  &  Coal 

Central  Mexico  &  Southern  Pacific,  com 109      lOSVg 

^pref erred :. ISSi/g  ISSVa 

Chicago-New  York  Air  Line —        —  —        *3V3 

Chicago  &  North  Western,  com 136%  136^4 

■ preferred  

Chicago  Pneumatic  Tool 

Chicago  Railways  Certificates  "1" 931/3     921/3 

■ "3"    233/4    233^ 

"3"    

«4» 

Chicago  Railways  Equipment 

Chicago  R.  E.  Trustees 

Chicago,  Rock  Island  &  Paciffic  Ry. 

Chicago,  St.  Paul,  Minneapolis  &  Omaha,  com. 

preferred 

Chicago  Savings  Bank  &  Trust  (Chicago) 

Chicago  Securities  Co.,  pfd. *100    *100 

Chicago  Suburban  Gas  &  Electric,  pfd 

Chicago,  Terre  Haute  &  S.  E 

Chicago  Title  &  Trust  

Chicago  Union  Traction,  stpd. 

Chicago   Utilities,   com    

preferred    

Chicago,  Wilra.   &  Vermilion  Cont 

Chicopee  Manufacturing   (Massachusetts) *110 

Chicopee  National  Bank   (Springfield,  Mass.) 

Chief  Consolidated  Mining  

Chihuahua  &  Sinaloa  Development 

Childs  Co.,  pfd.   

common    

Chino   Copper   $38%      $37i/2 

Chippewa  Bank   (St.  Louis)    

Chollar  Mining  (Nevada)    

Christopher  &  10th  Streets  Railroad 

Cigar  Machine  Corporation  of  America 

Cincinnati  &  Hamilton  Traction,  com. 

■ preferred 

Cin.  &  Sub.  Bell  Telephone 

Cincinnati,  Dayton  &  Toledo  Tr.,  com 

Cincinnati  Gas  &  Electric  

Cincinnati  Gas  Trans.  

Cinn.  N.  O.  &  Tex.  Pac,  com 

preferred 

Cinn.,  Newp.  &  Cov.  Lt.  &  Tr.,  com. 

preferred 

Cincinnati  Northern 

Cincinnati,  Sandusky  &  Cleveland,  pfd. 

Cincinnati  Street  Railway 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1019 


180 

190 

491/3 

50 

'6% 

"71/* 

3% 

4 

851/3 

< 

5975 

*100 

110 

125 

130 

140 

155 

147 

151 

"— 

*97i/. 

15 

25 

204 

205 



*6i/3 

21/0 

3% 

*6 

*12 

*30 

*42i/3 

185 

190 

1% 

1% 

*1 

*110i/3 

*113 

*150  ' 

*162 

215 

" 



Ic 

125 

135 

*iy4 

*ll/3 

751/4 

105 

$1071/3 

$110 

23 

25 



85 



115 



255 



1071/3 

88I/4 

93 

763/4 

821/3 

35 

50 

*$67i/3 

$721/3 

H 

*$56i/3 

High  Low  Bid  Asked 

Cincinnati  Tobacco  Warehouse __  __  __  60 

Cincinnati  Union  Stock  Yards __  __  __  lOO 

Cities  Service,  pfd.  __  __  88  90 

common __  __  140  145 

Citizens'  Bank  (Buffalo)   __  __  225 

Citizens*  Bank   (Norfolk)    __  __  275 

Citizens'  Bank  &  Trust  (Memphis) _»  __  140  150 

Citizens'  Bk.  &  Tr.  Co.  of  La.  (New  Orleans)  __  _»  120  123 

Citizens'  Central  National  Bank  (New  York)  __  __  *197  203 

Citizens'  Deposit  &  Trust  (Allentown) __  __  $50  $51 

Citizens'  Firt  Insurance  of  Baltimore __  __  __  *85 

Citizens'  National  Bank  (Baltimore) __  __  42  42ya 

Citizens'  National  Bank  (Cincinnati) __  203  210 

Citizens'  National  Bank  (Covington) __  __  160 

Citizens'  National  Bank   ( Fredericksburg)  ___  __  __  450 

Citizens'  National  Bank  (Los  Angeles) __  __  260  265 

Citizens'  National  Bank   (Louisville)    __  250  255 

Citizens'   National   Bank    (Macon) __  __  120  123 

Citizens'  National  Bank    (Raleigh) __  __  160 

Citizens'   National  Bank    (Waterbury) __  __  140  150 

Citizens'  Passenger  Railway  (Philadelphia)—  __  __  $138'  $143 

Citizens'  Savings  Bank  (Washington) __  __  $19^^     — 

Citizens'  Savings  &  Trust  (Cleveland) *265 

Citizens'  Telephone,  pfd. 30^4 

Citizens'  Traction    (Pittsburgh) __  __  $50  $55 

Citizens'  Trust   (Brooklyn)    __  __  150  155 

Citizens'  Trust   (Paterson) __  __  220 

Citizens'  Trust  Co.   (Savannah) __        140 

Citizens'  Trust  (Utica)   __  __  225  230 

Citizens'  Trust  &  Savings   (Columbus,  Ohio)  __  __  100  110 

City  &  Suburban  Homes *99 

City  Assoc.   (Boston)    __  __  $540  $580 

City  Bank  of  Hartford __  __  125 

City  Bank  of  New  Haven __  __  135 

City  Bank   (York)    __  __  $95  $100 

City  Bany  &  Trust  (Hartford) __  __  125 

City  Bank  &  Trust  (New  Orleans) __  __  114 

City  Dairy,  com.  __  __  50  — 

preferred 100 

City  Hall  Bank  (Cincinnati) __  __  300 

City  Ice  Delivery __  __  *75  *102 

City  Investing,   com.    43  48 

preferred —  —  100  101 

City  Insurance   (Pittsburgh)   *$75  *$75 

City  Manufacturing   (New  Bedford) __        115  120 

City  National  Bank  (Bridpeport) __  __  215 

City  National  Bank   (Columbus,  Ohio) __  __  130  135 

City  National  Bank  (Dallas)    __  __  350  360 

City  National  Bank   (Dayton)    __  __  3OO  310 

City  National  Bank  (Duluth)  __  __  130 

City  National  Bank   (Galveston) __  __  200  210 

City  National  Bank  (Holyoke)  __  __  113  114 

City  National  Bank  (McAlester)   __  __  __  160 

City  National  Bank   (Omaha)   __  __  105  112 

City  National  Bank   (San  Antonio) >_  __  225 

City  of  New  York  Insurance __  __  165  185 

City  Passenger  Railway    (Reading) __  __  $138  $143 

City  Railway  (Dayton,  0.),  com. __  __  __  17O 

preferred __  _>  145  150 

♦Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1030 


Bid 

Asked 



$850 

125 

__ 

185 

3%c 

lie 

*80 

*85 

*85 

*88 

*88 

*91 

165 



107 



*$8iy2 
*$47y2 

*83 
$49y2 

8 
*30 

— 

*5y3 

*30 

53 

57 

90 

95 



400 

Higli    Low 
City  R.  E.  Tr.   (Chicago) 

City  Safe  Deposit   (Albany)   

City  Trust    (Newark)    

C.  K.  &  N.  (Colorado  Springs) 

Claflin  (H.  B.)   Co.,  com 

1st  preferred 

2nd  preferred   

Claremont  Bank  (Jersey  City)   

Clark  Avenue  Savings  Bank   (Cleveland) 

Claverly  Trust    (Cam.)    —        __  __    $410 

Clement  National  Bank   (Rutland) __        __  250 

Clements  Hotel  Co.,  com. __        —  __    $100 

Cleveland -Akron  Bag  *148 

Cleveland  &  Buffalo  Transit *140 

Cleveland  &  Pittsburgh,  gtd. 

special  guaranteed  betterment 

Cleveland  &  Sandusky  Brew.,  com. 

preferred    

Cleveland  &  South  Western  Traction,  com. 

preferred  

Cleveland,  Cincinnati,  Chicago  &  St.  L.,  com. 

■ preferred 

Cleveland  Cliffs  Iron  

Cleveland  Electric  Illuminating  __        __        *134% 

Cleveland  National  Bank  *106y8     __ 

Cleveland,  Painesville  &  Eastern 5        20 

Cleveland  Railway   103%     __ 

Cleveland,  Southwest  &  Columbus  Ry.,  com 

preferred 

Cleveland  Stone  *110 

Cleveland  Trust  Co.  

Cleveland  Union  Stock  Yards 

Cleveland  Worsted  Mills 

Cliff  Mining    

Clifton  Manufacturing  (South  Carolina) 

Clinchfield  Coal  Corporation 

Clinton  Cotton  Mills   (South  Carolina) 

Clinton   Trust    (Newark)    

Cluett  Peabody,  com. 

• preferred 

Coal  &  Iron  National  Bank  (New  York) 

Coal  Land  Securities  

Coal  Valley  Land  Co. 

Coalinga  Central  Oil 

Coalinga  National  Oil  

Cobalt  Silver  Queen 

C.  0.  D.  Consolidated 7c        7c 

Collins  Co.    (Connecticut) 

Colonial  Bank    (New   York) 

Colonial  Beach  Co.  *25 

Colonial  Oil  

Colonial  Trust   (Baltimore)   

Colonial  Trust  (Philadelphia)   *$100  *$100 

Colonial  Trust  (Pittsburgh)  *$179  *$179 

Colonial   Trust    (Reading)    

Colonial  Trust   (Waterbury)    

Colonial  Trust  &  Savings  Bank  (Chicago)  — 

Colonial  Savings  &  Loan  (Can.),  pfd *80ya     „ 

Colwell  Lead,   pfd.   __        —  *70      *87 

•Quotation  nearest  March  1,  1913.    No  quotation  on  tiiat  date. 

1031 




sy^ 

~ 

30 

232y2 

235 

135 



125 



1% 

4 

95 





*77 

115 

125 

150 



60 

63 

98 

101 

160 

165 

*47 



*40 

*46 

20c 



16c 

25c 

4c 

6c 

205 

215 

425 

— 

130 

135 

$28% 

$29y3 

$16 

$17 

160 



223 

228 

High  Low  Bid    Asked 

Colorado  Yule  Marble,  2d  pfd. __  __  ♦121/2     _. 

Colt's  Patent  Fire  Arms  Mfg.  (par  $100) __  __  178      182 

Colorado  &  Southern,  com.   26  26 

1st  preferred __  __  67        69 

2nd  preferred   __  __  60        b7 

Colorado  Fuel  &  Iron,  com. 33%    33% 

preferred    170      177 

Colorado  Gold  Camp  (Colorado  Springs) —  —            .005 

Colorado  Metals  Extraction  Co. '3U 

Colorado  Power,  com.   20 

preferred 75 

Columbia  Avenue  Trust  (Philadelphia) *170    *170 

Columbia  Bank  (New  York) __  __  •330      340 

Columbia  Bank  &  Savings  (Cincinnati) 450      500 

Columbia  Gas  &  Electric __  __  13^4     15 

Columbia-Knickerbocker   Trust    (New   York)         540      650 

Columbia  Mountain  Mining   (Nevada) Ic        2e 

Columbia  National  Bank    (Buffalo) __  __  300      350 

Columbia  National  Bank   (Washington) __  __  250      268 

Columbia  National  Life  Insurance  (Boston)—  __  __  120      125 

Columbia   Oil    __  __  79c 

Columbia  (S.  C.)  By.,  Gas.  &  Electric,  com__  __  __  50 

^preferred    __  __  85        95 

Columbia  Sugar  __  __  8        10 

Columbia  Title  (Washington) __  __  SeVg     __ 

Columbia  Trust  (Boston)   __  __  120 

Columbus  Dental  Mfg.,  pfd.   __  __  114l^     __ 

Columbus  Edison,  pfd. __  __      103 

common 851/2 

Columbus  Forge  &  Iron,  pfd. __  __  __      100 

Columbus  Gas  &  Fuel,  com. __  __            37 

• preferred 70 

Columbus  Light,  Heat  &  Power,  pfd. __  __  __        9514 

common    __  __  54%     __ 

Columbus,  Newark  &  Zanesville 100% 

Columbus  Railway,  pfd.  __  __  __        90*4 

■ common.    __  69%     70% 

Columbus  Railway  &  Light   ($20  paid) __  __  18        191/2 

Columbus  &  Xenia  Railway $101 

Combination  Fracticn    (Nevada)    8c  8c 

Commerce  &  Savings  Bank  (Washington) I21/2     17 

Commerce  &  Trusts   (Richmond) 197 

Commerce   (Bank  of),  Can.  __  __  __      219% 

Commerce  (National  Bank  of  New  York) __  _«  191      193V3 

Commerce  Insurance   (Albany)    $42^2 

Commerce  Trust  Co.   (Kansas  City,  Mo.) __  __  227      2281/2 

Commercial  Bank  (Bay  City)   __  __  225       250 

Commercial  Bank    (Harrisburg)    $80 

Commercial  Bank  (Jacksonville)  100 

Commercial  Bank  (Savannah)  __  __  116 

Commercial  Bank  of  Wheeling __  __    '  __      225 

Com'l-Germania  Tr.  &  Sav.  Bk.  (New  Orl.)__  __  __  235 

Commercial  National  Bank   (Boston) 165       170 

Commercial  National  Bank   (Charlotte)    159      160 

Commercial  National  Bank  (Columbus,  Ohio)         240      260 

Commercial  Nat'l  Bank  (Kansas  City,  Kan.)  __  __  275 

Commercial  Nat'l  Bank   (Kansas  City,  Mo..)  __  240 

Commercial  National  Bank    (Los  Angeles) 175       205 

Commercial  National  Bank   (Macon) __  120      123 

•Quotation  nearest  Marcfa  1,  1913.    No  quotation  on  that  date. 

1033 


High    Low  Bid    Asked 

Commercial  National  Bank   (Minneapolis) __  —  110      126 

Commercial  National  Bank    (Musk.) __  __  150 

Commercial  National  Bank   (New  Orleans) 285 

Commercial  National  Bank   (Raleigh) 130 

Commercial  National  Bank  (Saginaw) __. __        225      230 

Commercial  National  Bank   (Shreveport) 290      300 

Commercial   National   Bank    (Washington)—  _-_  __  200      205 

Commercial  Savings  Bank    (Charleston) __  125       130 

Commercial  Savings  Bank  (Grand  Rapids)—  —  —  200      201 

Commercial  Savings  Bank  &  Trust   (Toledo)         __  —      100 

Commercial  Trust  Co.  of  N.  J.  (Jersey  City)  __  __  370      380 

Commercial  Trust  (New  York) —  —  93        97 

Commercial  Trust    (Philadelphia)    *435  *435 

Commercial  Trust  (Reading)   __  __  100      110 

Commercial  Trust  &  Sav.  Bank  (Memphis) 375 

Commercial   Union    —  __  $241/2  $271/3 

Commonwealth  Bank  (Baltimore)   __        $90 

Commonwealth  Bank    (Richmond)    115      120 

Commonwealth   Edison    —  __  140      141 

Commonwealth  Gas  &  Elec,  pfd __  __  __     tl04 

Commonwealth  Insurance   (New  York) 325 

Commonwealth  National  Bank   (Dallas) __  —  185      190 

Commonwealth  National  Bank  (Kansas  City)         *245 

Commonwealth  Power,  Ry.  &  Light,  com __  „  68        70 

■ prefen-ed __  __  891/3     90i/a 

Commonwealth  Title  Ins.  &  Tr.   (Phila.) *238  *238 

Commonwealth  Trust   (Boston)    __  __  205      210 

Commonwealth  Trust  Co.   (Buffalo) __  __  200      205 

Commonwealth  Trust    (Harrisburg)    __  __  350      400 

Commonwealth  Trust    (Pittsburgh)    __  —  172      176 

Commonwealth  Trust  (St.  Louis)   —  —  92  •     93 

Comp.-Tab.-Rec.   __  __  431/3    451/3 

Comstock  Stock *10  *9 

Comstock    Tunnel *8c 

Concord  &  Montreal,  class  1 *135 

class  2 *135 

class  3  —  —            135 

class  4 *131  *130 

Concord  &  Portsmouth  175 

Conestoga  National  Bank  (Lane.) __  __  380 

Coney  Island  &  Brooklyn  Railroad —  __  98      101 

Confederation  Life  Assurance *300 

Confidence  Mining   (Nevada)    __  __  31c 

Congress  Hotel,  com.  __  97      101 

preferred __  __  62        67 

Congress  St.  Assoc.    (Boston)    __  __  $100    $102 

Congress  St.  Bldg  Tr.   (Boston) __  __  __      $65 

Coniagas  Mines   8.00 

Conley  Foil  —  __  290      300 

Conn.  &  Pass.  Rivers,  pfd. __  __  __       126 

Connecticut  Fire  Insurance   (Hartford) __  __  350      360 

Connecticut  Footwear,  pfd. *10 

common    __        *6 

Connecticut  General  Life  Insur.   (Hartford)—  __  __  500 

Connecticut  Insurance   (Hartford)    __  __  350      360 

Connecticut  National  Bank  (Bridgeport) 205 

Connecticut  Power,  pfd.   __  __  __      *92i/3 

Connecticut  Railway  &  Lighting,  com. —  __  *72      *75 

preferred —  —  *75       *80 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date.    t"Value"  as  of  March  1,  1913. 

1023 


High  Low  Bid  Asked 

Connecticut  Rirer  Banking  (Hartford)   —  —  $85 

Connecticut  River  Power,  com —  —  —  *^^Vz 

Connecticut  River  Railroad  —  —  —  260 

Connnecticut  Trust  &  Safe  Dep.    (Hartford)  __  __  312  318 

Conqueror  Consolidated  Mining  (Nevada) __  —  —  2c 

Consolidated  Arizona  Smelting —  —  30c  40c 

Consolidated  Car  Heating —  —  70  80 

Consolidated  Coal  of  Maryland —  —  100 

Consolidated  Coal  Co.  of  St.  Louis —  —  —  20 

Consolidated  Fire  Works,  com. —  —  2 

preferred    —  —  25  30 

Consolidated   Gas    (New   York) 1321/8  1311/2 

Consolidated  Gas  of  Pittsburgh,  pfd *$24    *$22y3 

Consolidated  Gas  Elec.  &  Power  of  Bait.,  com.  __  __  1121/2  115% 

preferred —  —  115  119 

Consolidated  Ice  (Pittsburgh),  com. „  —  $81/3    $91/, 

preferred    —  —  —  $48 

Consolidated  Imperial  Mining   (Nevada) —  —  Ic  2c 

Consolidated  Lumber,  pfd.  —  —  —  *100 

Consolidated  Mercury  Gold  Mining —  —  2c  4c 

Consolidated  Realty —  —  —  .IO81/3 

Consolidated  Rubber  Tire,  com. —  —  19  21 

preferred —  —  75  80 

Consolidated  Telephone  of  Buffalo  —  —  9  10 

Consolidated  Traction  Co.  of  New  Jersey __  __  * 73 1/2     — 

Consolidated  Virginia  Mining   (Nevada) 18c  18c 

Constitution  Wharf  Tr.  (Boston) —  —  —  $104 

Consumers  Gas   (Toronto)    —  —  —  $92% 

Consumers  Power   (Michigan),  pfd —  —  921/2     95 

common    —  —  6.31%  basis 

Contact  Copper —  —  20c  25c 

Continental  Bank  &  Trust  (Ft.  Worth) __  —  125  145 

Continental  Bank  &  Trust   (Shreveport) __  __  —  $126 

Continental  Can,  com.  —  —  50  54 

preferred    —  —  91  941/9 

Cont.  &  Com'l  National  Bank  (Chicago) __  —  312  314 

Continental  Equit.  Title  &  Tr.   (Phila.) *$100i/a  *$100%     „ 

Continental  Insurance   (New  York) —  —  940  960 

Continental  Mills   (Maine)    ^95 

Continental  National  Bank  (Indianapolis)—  __  __  120 

Continental  National  Bank  (Salt  Lake  City)-  __  „  145  146 

Continental  Oil —  —  *1800  *1900 

Continental  Passenger  Railway  •$1231/3     __ 

Continental  Trust    (Baltimore)    —  —  215  218 

Continental  Trust  (Macon)   __  —  105  IW 

Contoocook  Mills  (New  Haven)   —  —  —  *104 

Conveyancers'  Title  Insurance   (Boston) —  —  100 

Copley  Square  Trust  (Boston),  com __  —  --  $45 

preferred    ~  —  --  $100 

Copper  Range  Consolidated  Co.  —  —  451/3    46 

Corbin  Copper —        —  69c  70c 

Corby   (H.)   Distillery,  pfd.  *98  *98 

Corcoran  Insurance  (Washington)   —  --  $80 

Corn  Belt  Bank  (Kansas  City,  Mo.) —  —  150 

Corn  Exchange  Bank  (New  York) —        —  *320  *325 

Corn  Exchange  National  Bank  (Chicago) __  —  417  420 

Corn  Exchange  National  Bank   (Omaha) __        —  100  110 

Corn  Exchange  National  Bank  (Philadelphia)  ^300  *300 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1024 


High  Low  Bid    Asked 

Corn  Products  Ref.,  com.  12Vi  12 

preferred    70  CTVa 

Cornell  Anthracite  Mining —  —  *143ya*150 

Cornell  Mills   (Fall  River)   —  —  —      175 

Cortez  Associated  Mines —  —  30c      40c 

Coshocton  Light  &  Heat,  pfd. —  —  —      100 

common    —  —  32        40 

Cosmopolitan  Bank  &  Savings  (Cincinnati)—  —  —  $70 

County  Fire  Insurance   (Philadelphia) $125 

County  Savings  Bank  (Scranton)   __  —  4371/3  442ya 

Courtenay  Manufacturing  (South  Carolina)—  —  —  —        95 

Covington  (Kentucky)   Sav.  Bk.  &  Tr —  —  140      150 

Cox  Multi  Mailer  —  —  —        *2>y^ 

Cracker  Jack  Mining   (Nevada) —  —  —        Ic 

Cramp  (Wm.)  &  Sons  Ship  &  Eng.  Bldg.  Co.  —  —  17        25 

Creamery   Piackage   —  —  95        97 

Crescent  City  S.  Y.  &  S.  H —  —  $221/3     — 

Crescent  Pipe  Line  —  —  $61      $63 

Crex  Carpet —  —  75        85 

Cripple  Creek  Central,  com. —  —  *35      *43 

preferred *45       *50 

Cripple  Creek  Consol.  (Colorado  Springs) —  —  IV^c    2c 

Crocker-Wheeler,   pfd.    —  —  —    *105ya 

common    —  —  —       *80 

Crowell  Publishing,  com.   —  —  —    *200 

preferred    —  —  *99y3     „ 

Crown  Point  Gold  &  Silver  Mining  (Nevada)  —  —  20c 

Crown  Reserve  Mining  —  —  3%      4% 

Crows  Nest  Pass  Coal  *70 

Crucible  Steel,  com.  —  —  *153/4  *15% 

preferred —  —  *92       *93 

Cuba  Railroad  Co.,  pfd. —  —  94 

Cuban-American  Sugar,  com.   —  —  —        40 

preferred —  —  —        92 

Cumberland  Co.  (Me.)  Pow.  &  Lt.,  com —  —  60        60 

preferred —  —  96        96% 

Cumberland  Corporation,  pfd —  —  —       *50 

common    —  —  —       *13 

Cumberland  Pipe  Line —  —  —      *82y, 

Cumberland  Tel.  &  Tel. *127 

Cumberland  Val.  Nat.  Bank    (Nashville)—  —  —  100      103 

Curtice  Bros.,  pfd. —  —  115 

common    —  —  161 

Cuyahoga  Telephone,  com —  —  —       $14^/^ 

preferred $38%  — 

Dacust   Realty    —  —  '65 

Dallas  Electric,  com.   „  —  60        61 

1st  preferred —  —  94        96 

2nd  preferred   —  —  74        76 

Dallas  Manufacturing   (Alabama)    —  —  100      110 

Dallas  Trust  &  Savings  Bank —  —  175       180 

Daly -West   Mining    —  —  Zy%      4 

Dan  Patch  Electric  Railway —  —  —       *65 

Dante   (Colorado  Springs)    —  —  2V4c    2%c 

Darlington   Manufacturing    (South    Carolina)  —  —  —        45 

Dartmouth  Mfg.  (New  Bedford),  com. —  —  —      240 

preferred    —  —  103y3     — 

Dauphin  Deposit  &  Trust —  —  280 

*QuotatIon  nearest  March  1,  1913.    No  quotation  on  that  date. 

1025 


High 

Davenport  (Iowa)   Savings  Bank 

Davis-Daly  Copper  

Davis  Mills  (Fall  River)  

Davol  Mills  (Fall  River)  

Dayton  &  Michigan,  com. 

preferred    

Dayton  &  Western  Tr.,  com. 

preferred    

Dayton  Brewing,  com. *8l^ 

preferred    

Dayton   (Ohio)   National  Bank 

Dayton  Power  &  Light,  com, 

preferred 

Dayton  (Ohio)   Savings  &  Trust 

De  Long  Hook  &  Eye 91 

De  Luxe  Oil  

Dedham  &  Hyde  Pk.  Gas  &  Elec.  Light 

Deere  &  Co.,  pfd. 

Delaware  Railroad   

Delaware  &  Bound  Brook,  gtd. 

Delaware  &  Hudson ISOVg 

Delaware  Insurance    (Philadelphia)    *$7V3 

Delaware,  Lackawanna  &  Western- 

Delaware,  Lackawanna  &  Western  Coal 

Delaware  Trust  (Wilmington)    

Delevan  Condensed  Milk *10 

Delta  Building  Trust  (Boston) 

Demerara  Electric,  com 

Denholm  &  McKay,  pfd 

Denver  &  Northwestern  Railway 

Denver  &  Rio  Grande,  com 

preferred  

Denver  Gas  &  Electric 

Denver  Union  Water,  com 

preferred 

Deseret  National  Bank  (Salt  Lake  City) 

Deseret  Savings  Bank  (Salt  Lake  City) 

Des  Moines  &  Fort  Dodge,  preferred 

common 

Detroit  &  Cleveland  Navigation 

Detroit  &  Mackinac,  com. 

preferred 

Detroit  Creamery  Co 

Detroit  Edison 

Detroit  Fire  &  Marine  Insurance  Co 

Detroit,  Hillsdale  &  Southwestern,  gtd 

Detroit  Iron  &  Steel,  com 

^preferred 

Detroit  Savings  Bank 

Detroit,  Toledo  &  Ironton,  1st  pfd 

2d  preferred 

Detroit  Trust  Co 

Detroit  United 

Detroit  United  Bank,  Ltd 

Devonshire  Building  Trust  (Boston) 

Dexter  Horton  National  Bank  (Seattle) 

Dexter-Union  Mines  (Nevada) 4c 

Dexter  White  Caps  (Nevada) 8c 

Dial  Cash  Register 

*QuotatlOD  nearest  March  1,  1913.    No  quotation  on  that  date. 

1026 


Low 

Bid  Asked 



305   315 



UVs    $1A 



-  1021/3 



-    921/3 



$39   $42 



$933/4  __ 



—   100 

~ 

100   107 

II 

II    30 



160   165 



25    261/2 

— 

*82   *85 

~ 

210 

II 

60c    -I 



__  "$55 



98    98% 



$433/4  $461/4 

.60V, 

188   193 

$1971/2  $2071/2 



$155  $170 



160   210 

10 





—   $85 

_„ 

-_   *80 



-  •102 

__ 

108   113 



191/2  21 



34    361/3 



20    22 



31    34 



31    34 



325   327 



1114  1115 



*20   *25 



*4    *7 



1021/2  1031/2 



105 



100 



23    24 



1151/2  120 

__ 

$130 



*92   '95 



91/4 



10 

__ 

300 

— 

10 

4 
327   334 

" 



76    85 



2071/3  — 



-_   $55 



310   325 

4c 



8c 



High  Low  Bid    Asked 

Diamond  B.  B *3  *3 

Diamond  Match 104%  1045/3 

Diamondfield  Blk.  Butte  Reorg.  Min.  (Nevada)  __  __  2c        3c 

Diamondfield  Daisy  Gold  Mining  (Nevada) 4c  4c 

Dime  Deposits  Bank   ( Wilkes -Barre) __  __  $103     $105 

Dime  Deposits  &  Discount  Bank  (R'd'g) __  __  $450    $460 

Dime  Savings  Bank  (Detroit) __  __  234 

Dime  Savings  Bank   (Toledo) __  —  $141 

Diamond  (L.)  &  Sons,  pfd —  —  —     *100 

Distillers'  Securities  Corp —  —  18        18l^ 

District  National  Bank  (Washington) __  __  1471/2  150 

District  of  Columbia  Paper  Manufacturing —  __  134 

Dixon  (Joseph)   Crucible —  —  300      325 

Dr.  Jack  Pot —  —  51/40  6l^c 

Doe  Run  Lead ._  —  $65      $70 

Dollar  Savings  &  Trust  (Wheeling) __  __  251      257 

Dome  Mines,  Ltd __  __  *17y2     — 

Domestic  Bank  &  Tile,  pfd __  __  __     *100 

Dominion  Bank  (Canada) —  —     $112%     $1121/2 

Dominion  Canners,  com —  75%    80 

preferred __  __  __      102 

Dominion  Coal,  pfd —  —  110      112 

Dominion  Iron  &  Steel,  pfd 102 

Dominion  Life  Assurance __  —  *200 

Dominion  Mahogany  &  Veneer,  pfd *65  *65 

Dominion  Permanent  Loan —  —  —      *83 

Dominion  Savings  &  Investment *78 

Dominion  Steel,  com 531^     53% 

Dominion  Steel,  pfd. —      103 

Dominion  Telegraph __  —  $50 

Dominion  Textile,  Ltd.,  com 85        85l^ 

preferred  103 

Dominion  Trust  Co.,  Ltd *115     *115 

Donald  Steamship __  __  *62 

Dorchester  Electric *8%  *8% 

Dorchester  Trust  (Boston) __  110 

Doten-Dunton  Desk  Co.,  pfd __  __  —    *100 

Douglas  (W.  L.)  Shoe,  pfd __  __  *91 

Dow  Chemical __  __  6%      7 

Draper  Co.   (Me.),  com __  __  235      245 

Drexel  State  Bank  (Chicago) __  200      205 

Driver-Harris  Wire  *100 

Drovers'  &  Mechanics'  Nat'l  Bk.  (Baltimore).  __  __  210      225 

Drovers'  &  Mechanics'  National  Bank  (York)  __  __  190      195 

Drovers'  Deposits  National  Bank  (Chicago)—  __  __  242      247 

Drovers'  National  Bank  (Kansas  City,  Mo.)__  __  __  165 

Drovers'  Trust  &  Savings  Bank  (Chicago)™  __  __  250 

duPont  (E.  I.)  deNemours,  com 185 

preferred __  90        95 

duPont  International  Powder,  pfd __  __  __      *70 

duPont  Powder,  pfd _.  __  *93i/2  *94i/3 

common    __  __  *130     *133 

Duluth  Edison  Electric,  com __  __  72        76 

preferred __  __  __        25 

Duluth,  South  Shore  &  Atlantic,  com __  _«  5l^      8 

preferred  __  __  13        15 

Duluth  Superior  Traction,  com __  __  *70      *73 

preferred __  __  *63      *70 

Dunnellon  Phosphate  Co __  __  __      *50 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1027 


High    Low  Bid    Asked 

Dunton  Desk,  pfd —  -  —    *102 

Duquesne  National  Bank   (Pittsburgh) •$240  *$240 

Durfee  Safe  Deposit  &  Trust  (Fall  River) —  —  „  200 

Durkee  (Charles  D.) —  -  —  *10      *12i/8 

Dwelling  House  Association  (Boston) —  —  —    $750 

Dwight  Manufacturing  (Massachusetts) *1175 

Eagle  &  Blue  Bell  Mining __  __  1          1^^ 

Eagle  &  Phenix  Mills  (Georgia) —  >-  75        80 

Eagle  Lock —  —  $50      $55 

East  Boston  Land —  —  $121/2  $14 

East  Butte  Copper  Mining —  —  121/3     12% 

East  Canada  Fisheries,  pfd *15  *15 

East  Canada  P.  &  P *5 

East  End  Bank  (Cincinnati) —  —  115      120 

East  End  Bank  (Erie) —  _>  $100    $102 

East  Reading  Electric  Railways —  —  $75      $80 

East  River  National  Bank  (New  York) —  —  —     *$19 

East  St.  Louis  &  Suburban,  pfd —  —  —        72 

common —  —  36 

East  Side  State  Bank  (Minneapolis) —  —  130 

East  Side  R.  E.  Tr.  (Boston) —  —  $100 

East  Washington  Savings  Bank —  —  15l^     17 

Eastern  Light  &  Fuel *114 

Eastern  Pennsylvania  Railroad $66l^     — 

Eastern  Pennsylvania  Railways,  com —  —  5 

Eastern  Power  &  Light,  pfd *95  *95 

Eastern  Steel,  1st  pfd „  __  *65 

Eastern  Trust  &  Banking  (Bangor) —      325 

Eastern  Underwear  Manufacturers *10  *10 

Easthampton  Gas tl50 

Eastman  Kodak,  pfd __  —  123      124 

common —  __  695       705 

Easton  Consolidated  Electric  ($25  paid) __  __  $20      $22 

Edison  Electric  Hlum.,  Boston  (Ist  inst.  pd.)_        __  175 

• (fully  paid) —  __  275       281 

Edison  Elec.  HI.  of  Brockton __  __  „     t202 

Edwards  Manufacturing  (Maine) *65 

Eighth  Avenue  Railroad __  —  300 

Eighth  National  Bank  (Philadelphia) *401     *401 

Eisenstadt  Manufacturing,  com 127 

Eisner-Mendelson  Co.,  pfd __  __  '6        *7 

Electric  Boat  Co.,  com __  __  __      *10i/. 

Electric  Bond  Deposit,  pfd __  __  _.        8O14 

Electric  Bond  &  Share,  pfd ._  __  9914  101 

Electric  City  Bank  (Scranton) __  __  $74      $78 

Electric  Co.  of  America __  __  $1178 

Electric  Investment,  com 50 

■ preferred  __  _,  100 

Elec.  Lt.  &  Pow.  Co.  of  Abington  &  Rockland  __  __  „     tl95 

Electric  Storage  Battery,  com __  __  51l^     62 

Electrical  Development,  pfd.     *85 

Electrical   Security,   pfd __  __  82 

Electrical  Utility,  com __  __  34        38 

preferred __  80        82 

Electro  Lamp __  __      *85 

Elgin  National  Watch __  __  138      142 

Elizabeth  Gas  Light __  __  325 

Elizabeth  &  Trenton  Railway __  _>  ♦71/2     — 

♦Quotation  nearest  March  1,  1913.    No  quotation  on  that  date.    f'Value"  as  of  March  1,  1913. 

1028 


High  Low  Bid    Asked 

El  Paso  (Colorado  Springs) —  —  5.70     5.94 

El  Paso  Consolidated  Mining GVa      6 

El  Paso  Electric,  com —  —  114 

preferred  —  —  95        97 

El  Paso  Gold —  —  5.90c   5.99c 

Elkton  Consolidated  —  —  61c      GlVsC 

Elraira  &  Williamsport  Railroad,  com *$5iy8  ~ 

preferred  $70y2  __ 

Ely  Consolidated  (6th  assessment  paid) 16c  16c 

Ely  Walker  Dry  Goods,  com —  —  84        85 

1st  preferred —  —  —      103 

2d  preferred —  —  —        81 

Ely  Witch  Copper —  —  5c        7c 

Emerson-Brantingham,  com. 56%  56% 

- — preferred —  —  93        97 

Emerson  Steam  Pump *12 

Empire  &  Bay  State  Telephone —  —  60        72 

Empire  Cotton  Oil,  pfd —  -  —      *96 

Empire  Dist.  El.,  com —  —  50 

preferred —  —  80        84 

Empire  Gas  &  Electric,  com —  —  60 

■ preferred —  —  80        84 

Empire  Steel  &  Iron,  com —  —  10        13 

• preferred . —  —  43        45 

Empire  Title  &  Trust  (Philadelphia) *$20y3  *$20y2     __ 

Empire  Trust  (New  York)     —  —  300 

England  National  Bank  (Little  Rock) __  —  120 

Englewood  State  Bank  (Chicago) __  __  172      176 

English  Marconi —  __  17        22 

Enoree  Manufacturing  (South  Carolina),  com.  —  —  —        55 

preferred —  —  —      100 

Ensley  Land -_  __  $105    $120 

Enterprise  Bank  (Charleston) __  __  125       130 

Enterprise  Manufacturing  (Georgia) —  __  63        67 

Equitable  Guar.  &  Trust  (Wilmington,  Del.)_  __  __  235      245 

Equitable  Ilium.  Gas  Lt.  (Philadelphia),  pfd._  __  __  108      110 

Equitable  Real  Estate,  Ltd __  __  138 

Equitable  Trust  (New  York) __  __  495       505 

Erie,  com 27%  27 

Ist  preferred 43y2  43y3 

2d  preferred __  __  35y2     35% 

Erie  &  Kalamazoo __  __  $100    $115 

Erie  &  Pittsburg  Ry.  (gtd.  Pa.  R.  R.) __  __  *$65      $70 

Erie  (Pennsylvania)  Trust  Co __  __  160 

Esmond  Mills  (Rhode  Island),  pfd »_  __  100      103 

Essex  &  Hudson  Gas __  __  132      136 

Essex  County  National  Bank  (Newark) __  __  150      155 

Essex  Street  Trust  (Boston) __  __  $90      $95 

Euclid  Oil __  __  __      25c 

Eureka  Pipe  Line __  __  *355     *365 

European  &  North  American  Railway __  __  __    *125 

Everett  Mills  (Massachusetts) *150 

Excelsior  Trust  &  Savings  Fund *$60    *$60 

Exchange  Bank  (New  Orleans) __  __  145 

Exchange  Bank  (Savannah) >_  __  140 

Exchange  Banking  &  Trust  (Charleston) __  __  155      160 

Exchange  National  Bank  (Little  Bank) __  __  180 

Exchange  National  Bank  (Seattle) __  __  160      175 

Exchange  State  Bank  (Kansas  City,  Kan.)  ___  __  »_  165 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1039 


High    Low  Bid    Aiked 

Exchange  Trust  (Boston) —  —  150 

Exchequer  Mining  (Nevada) —  —  Ic        2c 

Exeter  Manufacturing,  pfd —  —  —      *47 

common —  —  *22 

Exposition  Cotton  Mills  (Georgia) __  —  —      150 

Factors  Insurance  (Memphis)   96      100 

Factory  Building  Trust   (Boston)   __  __  __      $92 

Fairbanks  (E.  &  T.)   268%     __ 

Fairmont   Creamery,   pfd ^_  __  __  *99 

Fairmount  Park  &  Haddington $60^4     ~ 

Fairmount  Park  Trans $10 

Fairmount  Sav.  Tr.  (Philadelphia) *110    *110 

Fairview  Gold  Boulder  Mining  (Nevada) 2c        4c 

Fairview  Savings  Bank  (Detroit)   —  —  157      165 

Fajardo  Sugar   —  __  —      *64 

Fall  River  Electric  Light 198  198 

Fall  River  Gas  Works —  __  300      310 

Fall  River  (Massachusetts)  National  Bank—  __  —  128      132 

Fanny  Rawlings  (Colorado  Springs)   '.  —  —  __        4c 

Farmers   &  Mech.   Nat'l  Bank    (Ft.  Worth)  __  __  —      228 

Farmers  &  Mech.  Nat'l  Bank  (Philadelphia)  ♦140    '140 

Farmers  &  Mech.  Nat'l  Bank  (Fred'k) __  —  $40 

Farm.  &  Mech.  Nat'l  Bank   (Washington)—  __  __  250 

Farmers  &  Mech.  Saving  Bank   (Davenport)  —  __  250      260 

Farmers  &  Merch.  National  Bank  (Baltimore)  —  —  $49 

Farm.  &  Merch.  Nat.  Bank  (Los  Angeles)—  —  —  400      405 

Farmers  &  Merch.  Nat.  Bank  (Washington)  „  —  __  250 

Farmers  &  Merchants'  Trust  (St.  Louis) —  —  160 

Farmers  &  Ship.  Tob.  W.,  com. „  —  —        30 

1st  preferred —  —  —      100 

2nd  preferred   —  —  —        80 

Farmers  Bank   (Wilmington,  Dela.) __  —  $120    $135 

Farmers  Dep.  Nat.  Bk.   (Pittsburgh) •$117  '$116 

Farmers  Loan  &  Trust  Co.   (New  York) —  —  *$640  *$648 

Farmers  National  Bank    (Reading) —  —  $91      $95 

Farmers  National  Bank  (York)  —  —  175      180 

Farmers  Trust  Co.   (Minneapolis) —  —  150 

Farmers  Trust  (Lancaster)   —  —  '260    *262 

Farmington  River  Power  —  —  $55 

Farr  Alpaca   (Massachusetts)    —  —  350      355 

Favary   Tire    —  —  —      *15 

Favorite   (Colorado  Springs)    —  —  —     .002c 

Fay  &  Egan,  pfd. —  —  75      100 

Fayette  Co.  Gas —  —  ^108      '110 

Fayette  National  Bank  (Lexington)  —  __  —      250 

Federal  Light  &  Traction,  com. —  —  30        31 

-preferred    __  —  80        81 

Federal  Mining  &  Smelting,  com. —  —  12y2    16 

^preferred    —  —  36%    41 

Federal  National  Bank   (Pittsburgh) *$178  *$178 

Federal  National  Bank    (Washington) >_  __  137      139 

Federal  Sign  System,  pfd —  „  $85 

Federal  Signal   (Troy),  pfd.  —  —  —      '25 

common —  —  *8      *14 

Federal  St.  &  Pleasant  Vy.  Pass.  Ry -.  —  $181/3  $20 

Federal  Sugar  Refining,  com „  —  *48      *51 

^preferred —  ~  '88      ♦92 

Federal  Trust  (Boston)  ~  —  138      140 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1030 


High    Low  Bid    Asked 

Federal  Trust    (Newark)    __  __  235 

Federal  Trust   (Philadelphia)    •125  •125 

Federal  Utilities,  com. __        __        40 

preferred __        70        77 

Federator  Mining  &  Milling . __  —  *36 

Fidelity  Bank  (New  York)   __  —  165      175 

Fidelity  &  Col.  Tr.    (Louisville) —  __  267      268 

Fidelity  &  Deposit  (Maryland) __  __  $1751/2     $1751/2 

Fidelity  Dep.  &  Dis.  Bk.  (Scranton) __  __  $160    $170 

Fidelity  National  Bank  (Seattle)   —  —  150      175 

Fidelity-Phenix  Insurance  (New  York) __  __  310      320 

Fidelity  Title  &  Trust  (Pittsburgh) __  „  __    *140 

Fidelity  Trust   (Baltimore)    „  __  250      260 

Fidelity  Trust    (Buffalo)    __  __  250      300 

Fidelity  Trust  (Hartford)    _.. __  __  200 

Fidelity  Trust  (Indianapolis)   __  __  110 

Fidelity  Trust  (Kansas  City,  Mo.) __  __  300        >_ 

Fidelity  Trust   (Newark)   __  —  __      775 

Fidelity  Trust  (New  York)   __  __  218 

Fidelity  Trust  (Philadelphia)   *1176  '1176 

Fidelity  Trust   (Portland,  Me.)    __  __  215      220 

Fidelity  Trust    (Rochester)    __  __  250      300 

Fidelity  Trust   (Tacoma)    ^ __  __  __      200 

Fifth  National  Bank   (New  York) „  __  300      325 

Fifth-Third  National  Bank  (Cincinnati) __  __  200      205 

Fifty  Assoc.  (Boston)    __  __  $4000 

Fifth  Avenue  Bank  (New  York) __  __  *4,500 

Finance  Co.  (Philadelphia),  1st  pfd. *119  *119 

2nd  preferred *108  *108 

Finance  &  Guaranty  Co.,  pfd. —  __            •lOO 

Findley  (Colorado  Springs) 4%c        5c 

Fire  Association   (Philadelphia)   $350 

Firemans  Fund  (San  Francisco) __  240      246 

Firemen's  Insurance    (Newark)    __        $245 

Firemen's  Insurance  (Washington)   __  __  $19      $22 

Firestone  Tire  &  Rubber,  com. 295l^ 

preferred    __        105l^     __ 

First  Bridgeport  National  Bank —  __  230 

First  Mortgage  Guarantee  (New  York) __  __  125      130 

First  Mtge.  Guar.  &  Tr.  (Philadelphia) *98  *98 

First  National  Bank  (Albany)   __  __  160      170 

First  National  Bank  (Altoona) __  __  330      350 

First  National  Bank   (Baltimore)   __  __  144      146 

First  National  Bank  (Bangor)   152 

First  National  Bank  (Beaumont)   __  __  300 

First  National  Bank  (Birmingham)   __  __  260      270 

First  National  Bank  (Boston)   __  __  475      480 

First  National  Bank  (Brooklyn) __  __  280      300 

First  National  Bank  (Burlington)  __  __  __      150 

First  National  Bank  (Camden)    *170  *170 

First  National  Bank   (Charleston)    __  __  350      375 

First  National  Bank  (Charlotte)   __  __  185 

First  National  Bank   (Chicago)   __  __  444      446 

First  National  Bank  (Cincinnati)   __  __  208      210 

First  National  Bank  (Cleveland)  221l^     __ 

First  National  Bank  (Covington)   __  __  160      165 

First  State  Bank  (Dallas)   __  __  130      131 

First  National  Bank  (Davenport)   __  __  300      325 

First  National  Bank  (Detroit)  __  __  198      201 

*QuotatIoQ  nearest  March  1,  1913.    No  quotation  on  that  date. 

1031 


High  Low  Bid    Asked 

First  National  Bank  (Duluth)   __  __  450 

First  National  Bank   (Erie)    __  __  210 

First  National  Bank  (Fall  River) __  __  200 

First  National  Bank  (Ft.  Worth)   __  _.  __      200 

First  National  Bank   (GaWestonj    __  __  130      140 

First  National  Bank   (Guthrie)    __  __  145 

First  National  Bank  (Harrisburg)   __  __  575      600 

First  National  Bank   (Hartford)    __  __  174 

First  National  Bank    (Hoboken)    __  __  95      100 

First  National  Bank  (Houston)   175 

First  National  Bank  (Jersey  City)  __  __  330      340 

First  National  Bank  (Kansas  City,  Mo.) *     __  __  625 

First  National  Bank  (Lancaster) 235      240 

First  National  Bank  (Lexington)    __  __  150      155 

First  National  Bank   (Los  Angeles) 725 

First  National  Bank   (Louisville)    __  __  185 

First  National  Bank  of  McAlester 160 

First  National  Bank  (Memphis) __  __  2721/2  275 

First  National  Bank  (Milwaukee)    __  __  205 

First  National  Bank   (Minneapolis) __  __  305      320 

First  National  Bank  (Morristown)   274 

First  National  Bank  (Muskegon)   165 

First  National  Bank  (New  Bedford) __  __  143       145 

First  National  Bank  (New  Haven)   183 

First  National  Bank  (New  York)   __  __  *990     1005 

First  National  Bank  (Norwich)   85 

First  National  Bank  (Omaha)   __  __  275      300   • 

First  National  Bank  (Paterson) __  __  275      295 

First  National  Bank    (Philadelphia)    *230  *230 

First  National  Bank  of  Pittsburgh __  __  160 

First  National  Bank  (Portland,  Me.) __  __  120      122 

First  National  Bank  (Reading)   __  __  150      155 

First  National  Bank   (Richmond)    __  __  277      283 

First  National  Bank  (San  Francisco) __  __  227y^     — 

First  National  Bank  (Scranton) __  __  347V2  355 

First  National  Bank  (Seattle)    __  __  225  ~  240 

First  National  Bank  (Shreveport) __  __  190      200 

First  National  Bank  (Terre  Haute) __  __  275      300 

First  National  Bank   (Toledo)    __  __  285 

First  National  Bank  (Trenton) 222  222 

First  National  Bank   (Utica)    __  __  $88.80 

First  National  Bank   (Waco)    __  __  190      215 

First  National  Bank  (Wilkesbarre)   __  __  260      270 

First  National  Bank  (York) __  __  104      105 

First  National  Copper __        2ys      2^ 

First  National  Englewood  Bank   (Chicago)—  __  __  315 

First  Savings  and  Bank  (Dayton) 150 

First  Savings  Bank  &  Trust  (Nashville) __  __  125      130 

First  Ward  National  Bank  (Boston) 180  180 

Fisk  Rubber,  Ist  pfd. __  __  __     *102ya 

Fitchburg  Gas  &  Electric  Light "125  *125 

Fitchburg   (Massachusetts)    National  Bank 170      175 

Fitchburg  Railroad,  pfd.  __  __  __       120 

Fitchburg  (Mass.)  Safe  Deposit  &  Trust __  —  145      150 

Flannery  Bolt —  __  *280 

Fleischmann,   pfd.    __  __  120%     — 

Fletcher  American  Nat'l  Bank  (Indianapolis)  __  __  242 

Fletcher  Savings  &  Trust   (Chicago) —  __  200 

Flexible   Steel   Bolting   __  __  —      'SO 

*Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1032 


High  Low  Bid  Asked 

Flint  Mills  (Fall  River)   __  __  __  97 

Florence  Gold  Fid.  Mining   (Nevada) 65e  48c 

Florida  National  Bank  (Jackson)    __  200 

Flower  of  West   (Colorado  Springs) __  __  003c  Ic 

Foard   (Jos.  R.)   Co. *100  *100 

Fore  River  Shipbuilding,  pfd. __  __  __  *23 

common    *3 

Ft.  Dearborn  National  Bank  (Chicago) __  __  254  262 

Ft.  Smith  Light  &  Traction,  pfd. __  __  90  921/3 

Ft.  Wayne  &  Jackson  Railroad,  pfd. __  __  122  130 

Ft.  Wayne  &  No.  Ind.  Trac,  com __  __  15  18 

preferred    60  70 

Ft.  Wayne,  Van  Wert  &  Lima  Trac,  pfd. __  __  *62  *65 

Ft.  Worth  National  Bank __  __  325  450 

Ft.  Worth  (Texas)  Power  &  Light,  pfd __  __  __    *104 

Ft.  Worth  State  Bank __  __  __  125 

42nd  St.  &  Grand  St.  Ferry  R.  R __  __  260  285 

Foss  (H.  D.)   &  Co.,  pfd. _»  __  *6.51%  basis 

Foster  Cobalt   Mining   __  __  7c  rac 

Fourth  &  First  National  Bank  (Washington)  >_  __  245  250 

Fourth  Atlantic  National  Bank  (Boston) __  __  192  195 

Fourth  National  Bank   (Atlanta) __  __  268  275 

Fourth  National  Bank  (Cincinnati)    270 

Fourth   National   Bank    (Dayton) _«  »»  160  164 

Fourth  National  Bank   (Grand  Rapids) __  ._  210 

Fourth  National  Bank  (Jackson)    __  __  135 

Fourth  National  Bank   (Macon)    __  __  165  167 

Fourth  National  Bank  (New  York) _«  __  __  195 

Fourth  St.  National  Bank  (Philadelphia) *315  *315 

Frances -Mohawk   Mining    (Nevada)    2c 

Frankford  &  Southwark  Pass.  __  __  $3671/2  -u- 

Frankford  Trust  (Philadelphia)   *$161  *$161 

Franklin  Bank   (St.  Louis)    __  __  __  305 

Franklin  Co.  (Maine)  *205 

Franklin  Fire  Insurance    (Philadelphia) *$46 

Franklin  Insurance    (Washington)    —  $30 

Franklin  Mining   __  __  ey^  6^^ 

Franklin  National  Bank   (Philadelphia) *500i4  *500iA      __ 

Franklin  Savings  Bank  (Fredericksburg) __  __  110 

Franklin   Teleg.    __  __  40  50 

Franklin  Trust    (Brooklyn)    __  __  __  250 

Franklin  Trust   (Philadelphia)    *$55  *$55 

Franklin  Trust  &  Savings  Bank  (Chicago)  __  __  __  160  165 

Frederick  Co.  Nat'l  Bank  (Fredericksburg)—  __  __  $211/2  __ 

Frederick  Town  Savings  Institution   (Fred'k)  >_  __  170 

Freeman  Daughaday  Co.,  pfd. *6l^%  basis 

Freemans,   Limited   —  —  —     *112l^ 

Freihofer   Baking,   pfd.    __  __  —     *100 

French  Opera  Assoc,  Ltd.   __  __  52%  95 

Fries  Manufacturing  &  Power __  —  *25 

Frisbie  &  Stansfield  Knitting,  pfd. __  -_  99  101 

Friscoville  Realty   *130 

Frost-Johnson   Lumber    __  —  *75 

Fullerton    Oil    —  __  2  31/3 

Fulton  National  Bank   (Atlanta)    .  __  —  128  132 

Fulton  National  Bank   (Lancaster)    __  —  235  240 

Fulton  Trust  (New  York) __  —  295  315 

*Quotatlon  nearest  March  I,  1913.    No  quotation  on  that  date. 

1033 


High    Low  Bid  Asked 

Gaffney  Manufacturing  (South  Carolina) __  __  55  65 

Gair  (Robert)  Co.,  pfd. •100    •100 

Galena-Signal  Oil,  pfd.   —  —  135  139 

. common    —  —  293  297 

Galveston-Houston  Electric,  com.   —  __  98 

preferred —  —  94 

Gardner  Electric  Light,  pfd.  —  ..  __  •1071/3 

common    —  —  —  —  ^157 

Gardner  Gas,  Fuel  &  Light —  —  —  flSO 

Garfield  National  Bank  (New  York) -_  __  265  275 

Garfield  Savings  Bank  (Cleveland) __  195 

Garford  Co.,  pfd.   '100 

Gary  &  Interurban __  —  ♦$14  •$171/3 

Gas  &  Electric  of  Bergen  Co. —  —  88  90 

Gas  &  Electric  Securities,  com. —  __  ^140  "150 

preferred —  —  —  *94i/4 

Gate  City  National  Bank  (Kansas  City,  Mo.)  „  —  120  123 

Gauley  Land  Coal,  pfd. _-  _>  __  •SO 

General  Acoustic  Co.  —  —  —  ^45 

General  Asphalt,  com. —  __  38%    3914 

■ preferred —  —  73  74 

General  Baking,  com.   —  —  19  22 

preferred - —  —  69  72 

General  Chemical,  com. —  >_  175  200 

preferred —  —  105  110 

General  Cigar — See  United  Cigar  Mfrs. 

General  Development  —  —  90  110 

General  Electric I3914  139 

General  Film,  pfd. __  —  —  ^95 

General  Fire  Extinguishing  Co. __  __  __  ^166 

General  Founders  Co. —  —  —  *12 

General  Gas  &  Electric,  pfd. —  —  •84  •871/3 

common    —  —  •ISi/a  ^25 

General  Manifold  &  Printing „  —  •SVg     __ 

General  Motors,  com.  vtg.  Tr.  Ctfs. __  —  SQi/o     34 

preferred —  —  75  79 

General   Petroleum    —  __  27%     28I/3 

General  Railway  Signal,  com. __  60  62 

preferred    —  —  90  96 

Genesee  Valley  Trust   (Rochester)    „  „  190  200 

Georgetown    Gaa    —  —  $85  $135 

Georgia  Light,  Power  &  Railways,  pfd. __  —  —  *96 

common    —  —  *35  ^39 

Georgia  Railroad  &  Banking  Co. —  „  256  260 

Georgia  Railway  &  Electric,  8%  gtd.  stk __  __  •llS  ^121 

preferred    __  —  831/3     841/3 

Georgia  Railway  &  Power,  com. __  __  23  241/3 

1st  preferred —  —  81  821/3 

2nd  preferred —  —  39  41 

Georgia  Savings  Bank  &  Trust  (Atlanta) —  __  175  185 

Georgia  Southern  &  Florida,  com. —  —  30  36 

1st  preferred —  —  —  95 

2nd   preferred   __  —  SOi/,     81 

German-Alliance  Insurance  (New  York) —  —  275  290 

German -American   Bank    (Baltimore) __  —  108  112 

German -American  Bank   (BuflFalo)   —  —  260 

German-American  Bank   (Detroit)   —  —  180 

German-American  Bank  (Kansas  City,  Mo.)__  —  __  600 

German -American  Bank   (Milwaukee)    —  —  135  140 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date.    t"Value"  as  of  March  1,  1913. 

1034 


High  Low  Bid    Asked 

German-American  Bank   (Minneapolis)    __  200 

German- American  Bank    (New  York)    *$105 

German- American  Bank  (St.  Louis)   197 

German -American  Bank  (Seattle) 110      125 

German -American   Coffee    *^V» 

German-American  Fire  Insurance  270 

German- American  Insurance   (Baltimore) _«  __  $40      $50 

German -American  Insurance    (New  York) —  540      650 

German -American  Nat'l  Bank  (New  Orleans)  179 

German- American  Savings  Bank  (Burlington)  __  __  __      300 

German -American  Savings  Bank   (Cleveland)  125 

German-American   Sav.  Bank    (Los  Angeles)  385      395 

German-American  Sav.  Bk.  &  Tr.  (New  Orl'ns)  *211 

German- American  State  Bank  (Saginaw) 140      145 

German-American    Sugar    *10 

German-American  Title  &  Tr.   (Philadelphia)  *$95i4  *$95i4 

German-American    Trust    (Paterson) 370 

German-American  Tr.  &  Sav.  Bk.  (Los  Ang.)  _«-  __  385      397^^ 

German   Bank   of   Baltimore 110      115 

German  Bank   (Louisville)    __  330      350 

German  Bank   (Wheeling)    __  _«  500 

German   Exchange   Bank    (New   York) __  400 

German  Insurance    (Baltimore)    $17y2  $19 

German  Insurance    (Louisville)    $50 

German  Insurance    (Pittsburgh)    __  $75      $85 

German  Insurance  Bank  (Louisville) $150 

German  National  Bank  (Cincinnati) 300      320 

German  National  Bank  (Little  Rock) __  120 

German  National  Bank  (Newport,  Ky.) 175 

German  National   Bank    (Pittsburgh) *$200  *$200 

German  Savings  Bank  (Burlington)   __  __  405      410 

German   Savings   Bank    (Davenport) 285      300 

German  Savings  Bank  &  Trust  (Memphis)—  __  __  600      700 

German  Savings  Institution    (St.  Louis) 470      480 

German  Sav.  &  Loan  Soc.   (San  Francisco) $3160 

German  Securities  Bank    (Louisville)    __  1721/3  175 

German  Theatre  Realty *^V4:%  basis 

Germania  Bank  (New  York) '475  *475 

Germania  Bank   (Savannah)    179^/2 

Germania  Half-Dlr.   Sav.  Bk.    (^Vheeling) __  __  206 

Germania  Insurance  (New  York) __  $155     $162l^ 

Germania   National    Bank    (Milwaukee) 145 

Germania  Savings  Bank  (Atlanta) 100      105 

Germania   Savings   Bank    (Charleston) __  430      450 

Germantown  National  Bank  (Covington) 135      145 

Germantown  Passenger  Railway __  __       *$105  *$113% 

Germantown   Trust    (Philadelphia) *27iy2  *27iy2 

Germany  Mining  &  Development 50c      75c 

Giant  Consolidated  Co.  '. __  119      126 

Gillette  Safety  Razor,  pfd. __  __  *102 

Girard  Avenue  Title  &  Trust  (Philadelphia)  *$70    *$70 

Girard    Copper    99c        $1 

Girard  Fire  &  Mar.  Insurance   (Philadelphia)  *$275 

Girard  National  Bank    (Philad^phia) *415  *415 

Girard  Trust    (Philadelphia)    *$990  *$990 

Giroux   Copper  Mining   3          2% 

Globe  Oil   __        __  ly^c    sy^c 

Globe  Savings  Bank  (Los  Angeles)   __  150 

^Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1035 


Bid 

Asked 



120 

__ 

110 



105 

145 

__ 

118 

120 

•108 

♦110 

5c 



.005c 

IVaC 



"10 

10c 

II1/2C 

Va 

.    Va, 

115 

8c 

10c 

2.00 

8.00 

3c 

5c 

High    Low 

Globe  Soap,  Ist  pfd.  

2nd  preferred   

special  preferred 

Globe-Wernicke,  com.  

preferred  

Goff  (D.)     Sons,  pfd. 

Gold  Bar  Min.  of  Goldfield  (Nevada) 

Gold  Bond  (Colorado  Springs) 

Gold  Car  Heating  &  Lighting 

Gold  Dollar  (Colorado  Springs) 

Gold  Hill  Mining   

Gold  &  Stock  Telegraph  Co. 

Gold  Wedge  Mining    (Nevada) 

Golden    Boulder    Mining    (Nevada) 3c        3c 

Golden  Cycle  (Colorado  Springs 

Goldfield   Bulldog  Mining    (Nevada) 

Goldfield   Consolidated   Mines    (Nevada) $2.85    $2.75 

Goldfield   Daisy    *5ya     *5y2 

Goldfield  Florence   *48      *44 

Goldfield  Kewanas  Mining    (Nevada) 4c        5c 

Goldfield  Merger  Mines    (Nevada) 26c      27c 

Goldfield  Portland  Mining    (Nevada) 

Goldschmidt  Detinning,  pfd. 

Goodrich    (B.   F.),  com.   41        41 

preferred 

Goodwins,  Limited,   com.   

preferred    

Goodyear  Tire  &  Rubber,  com. *365 

preferred  

Gorham  Manufacturing,  pfd. 

Gosnold  Mills  Co.  (New  Bedford),  pfd. 

Gotham  National  Bank  (New  York) 

Gottlieb -Bauer- Straus    

Gould  &  Curry  Mining  (Nevada) 3c        3c 

Granby  Consolidated  Min.,  Smelt.  &  Pr 

Grand  Avenue  Bank   (St.  Louis) 

Grand  Rapids   &  Indiana 

Grand  Rapids  National  City  Bank 

Grand  Rapids  Railway,  pfd. 

Grand  Rapids  Savings  Bank 

Grand  River  Valley  Railroad 

Grandma  Mining   (Nevada)    

Granite-Bi -Metallic    (St.  Louis)    

Granite  Mills  (Fall  River)   

Granite  Savings  Bank  &  Trust  (Barre) 

Graniteville  Manufacturing  (South  Carolina) 

Grasselli  Chemical,   pfd.   *104    *104 

• common    

Gray-Davis,   pfd.    ♦lOS     *105 

Gray  &  Dudley  

Great  Bend  Annex  Mining  (Nevada) 

Great  Bend  Extension  Mining   (Nevada) 

Great  Bend  Mining  (Nevada) 

Great  Falls  Manufacturing  (New  Hampshire)       ISSVa     __ 

Great  Lakes  Dredge  &  Dk. 

Great  Lakes  Engineering  

Great  Lakes  Towing,  com. 

preferred    •92 

Great  Northern,  pfd.  126%  1261/, 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1036 


•88 

*94 

97 

98y, 

40 

41 

80 

81 

103 

105 

1181/2 



89 

91 

170 



3 

4 

60% 

61 

215 



24 

30 

181 



__ 

811/4 

216 

115 

125 

Ic 

2c 

30c 

35c 



115 

100 



138 

142 

175 

•178 

105 

107 



Ic 



Ic 

127 

•130 

127 

•130 



•81 

__ 

15 

High  Low  Bid  Asked 

Great  Northern  Iron  Ore  Prop. __  35  SSy^ 

Great  Northern  Life  Insur.  (Wausau,  Wis.)—  __  __  —  *165 

Great  Western  Beet  Sugar,  pfd. __  _-  __  *101 

Great  West.  Perm.  Loan __  —  —  ISOVi 

Great  Western  Sugar,  com. _-  —  SQVg     601/3 

preferred    __  „  991/2  IOO1/3 

Greater  Gold  Belt  (Colorado  Springs) __  __  .0015e  Ic 

Greater  New  York  Development  Co —  —  —  *13 

Greeley  Square  Hotel,  pfd. —  —  —  *90 

Greeley  Square  Realty —  —  —  *26 

Green  Bay  &  Western,  com. —  —  *82  93 

Green  &  Coates  Streets  Pass.  JRy. „  __  *$115 

Green  Ridge  Bank  (Scranton)   —  „  *66  *70 

Greene  Cananea  8^^  8 

Greenfield  Electric  Light  &  Power __  __  __  tl55 

Greenfield  Tap  &  Doe,  pfd.  __  —  *5.63%  basis 

Greenpoint  National  Bank   (Brooklyn)    __  __  __  160 

Greenwich  Bank  &  Trust  (Jersey  City) —  __  275  300 

Greenwich  Bank    (New  York)    __  —  *250  260 

Greenwood  Cotton  Mills  (South  Carolina) —  _-  __  50  60 

Grendel  Mills  (South  Carolina)   —  __  95  105 

Greylock  Mills —  —  —  *122i/a 

Griffin  Wheel,  pfd.  1021/3  IO21/3 

Grinnell  Manufacturing  (New  Bedford) —  —  I671/3     — 

Guanajuato  Development   —  —  *10  *12 

Guanajuato  Power  &  Electric,  com. —  —  25  30 

preferred —  —  68  73 

Guantanamo  Sugar —  —  —  *35 

Guar.  State  Bank  &  Trust  (Dallas)  __  __  130  135 

Guarantee  Title  &  Trust  (Cleveland) *89%  — 

Guaranty  Trust   (New  York) n __  —  582  585 

Guar.  Trust  &  Safe  Deposit  (Philadelphia)  __*$156i/4  *$156iA       — 

Guarantee  Tr.  &  Sav.  Bank  (Chicago) 133 

Guar.  Trust  &  Savings  Bank  (Jacksonville )__  __  136 

Guarantee  Tr.  &  Bk.   (Atlanta)   „  __  48  55 

Guardian  Savings  &  Trust  (Cleveland) *300 

Guardian  Trust    (New  York)    __        —  80 

Guardian  Trust   (New  York)    __  __  $33  $34 

Guggenheim    Exploration    $45%  $45% 

Gulf  Lumber ._  ._  __  *128 

Guthrie  (Oklahoma)  Savings  Bank 120 

Hackensack  Water  Co.,  com. __  __  *$29i/2     — 

■ preferred —  __  __  *$29i/a 

Hadley  Falls  National  Bank  (Holy oke) __  __  140  150 

Hale  &  Kilburn,  com. __  „  68  65 

1st  preferred —  „  971/3     99 

2nd  preferred   —  —  96  98 

Hale  &  Norcross  Mining __  _-  6c  8c 

Halifax  Electric  Tramway  Co. __  »_  159 

Halifax  Tonopah  Mining   (Nevada)    __  __  $1.05 

Hall  Signal  „  ._  1/4      ^4. 

Halsted  St.  State  Bank __  „  134  138 

Hamilton  Bank  (Canada)   __  __  —  208 

Hamilton  Brown  Shoe __  __  187l^     — 

Hamilton  Manufacturing   (Massachusetts) *90 

Hamilton  Prov.  &  Loan *132 

Hamilton  Trust  (Brooklyn)  __  __  270  285 

Hamilton  Trust  (Paterson)   —  400 

*Quotation  nearest  March  1,  1913.    No  quotation  on  that  date.    f'Value"  as  of  March  1,  1913. 

1037 


High  Low  Bid  Asked 

Hamilton  Trust    (Philadelphia)    *$43  *$43 

Hamilton  Woolen  (Massachusetts)   *90 

Hancock  Consolidated  Mining _.  __  18  ISVg 

Hanover  Insurance   (New  York)    __  __  $971/2  $1021/2 

Hanover  National  Bank    (New  York) __  __  *700  *710 

Harb.-Walker  Ref.,  com. __  __  47  50 

preferred 1 __  __  101 

Hargadine,  McK.  Dry  Goods,  1st  pfd. __  __  __  80 

2nd    preferred 40 

common    10 

Hargiaves  Mills   (Fall  River)    __  __  __  65 

Harmony  Mills,  pfd. *114y2     __ 

Harriman  National  Bank  (New  York) __  __  290 

Harris  Brothers,  pfd.  *100  *100 

Harrisburg   (Pennsylvania)    National  Bank__  __  __  $58  $60 

Harrisburg,  Ports.,  Mt.  Joy  &  Lancaster *$92V2     __ 

Harrisburg  (Pennsylvania)   Trust  Co. __  __  200  210 

Harris  Trust  &  Savings  Bank  (Chicago) __  __  525 

Hart  (Colorado  Springs)   __  __  __  2c 

Hart   &  Crouse,  pfd.   __  __  *6.90%  basis 

Hart,  SchafFner  &  Marx,  pfd. __  __  97  98 

Hartford  &  Connecticut  West. __        43 

Hartford  Carpet,  com. __  122  125 

preferred 118  121 

Hartford  City  Gas  Light,  pfd. __  __  $50  $52 

common    $66  $70 

Hartford  Electric  Light   __  __  262  264 

Hartford  Fire  Insurance  (Hartford)   __  __  760  767 

Hartford  Gas  Securities,  com. $68  $70 

preferred    __  __  $50  $52 

Hartford  Insurance  __  __  760  770 

Hartford  National  Bank 185  190 

Hartford  Steam  Boiler  Insurance __  __  300 

Hartford   Trust   Co.    __  __  425 

Hartley  Silk    (Pennsylvania)    $102^/2  $1021/2 

Harwood  Electric,  pfd.   *100  *100 

common    *39  *42 

Havana  Electric  liight  &  Power,  com. 84% 

Havana  Electric  Ry.,  Lt.  &  Pow.,  pfd __  __  *94  *99 

Havana  Tobacco,  com. 4  6 

preferred    __  __  8  15 

Haverhill  Electric __  __  __  t235 

Hawaiian  Commercial  &  Sugar __  __  $341/2  $3514 

Hawaiian  Sugar  Co.  , __  __  34%     __ 

Hayden   (Colorado  Springs)    .002c 

Hayden- Clin  ton  Nat'l  Bank  (Columbus,  Ohio)  __  __  225  250 

Haymarket  Trust   (Boston)    __  __  $70  $80 

Hazark  Manufacturing *45  '48 

Hazel  Pure  Food  Co.,  pfd __  __  ._  *3i/2 

Heard  National  Bank  (Jacksonville) 127 

Hedley  Gold  Min __  _>  301/2     „ 

Heine   Safety   Boiler __        *70 

Ilelme  Co.  (G.  W.),  com 175  188 

preferred   __  __  100  106i/s 

Helvetia    Copper 50c  75c 

Hendee  Manufacturing,  pfd __  __  *150  *160 

Hennepin  Co.  Savings  Bank  (Minneapolis) __  __  265 

Henrietta  Mills    (North  Carolina) __  _-  160  175 

Hercules    Powder __  __  •91  *92Va 

*Quotatlon  nearest  March  1,  1913.    No  quotation  on  that  date.    t"\'alue"  as  of  March  1,  1913. 

1038 


High    Low  Bid  Asked 

Hermitage  National  Bank    (Nashville) 148  153 

Hernando  Insurance    (Memphis) —  —  97  100 

Herr.-Hall-Marv. 10  20 

Hestonville,  M.  &  F.,  com —  _-  —  $40 

preferred  : —  —  —  $60 

Hewson  Pure  Wool  Tex.,  pfd. *7%  basis 

Heywood  Bros.  &  Wakefield,  com —  —  120 

Hibernia  Bank  &  Trust  (New  Orleans) —  —  360  363 

Hibernia  Insurance    (New  Orleans) —  —  170  210 

Hibernian  Bank  of  Savings —  —  172^^     — 

Hibernian  Savings  Bank,  Los  Angeles —  —  117 

High  Grade  Oil,  pfd *$104  "$104 

High  Street  Bank   (Providence) —  —  $94 

Hill   Manufacturing    (Maine) *115 

Hilliard  Hotel  Co.,  pfd '100 

Hillside  Bank  (Brooklyn) __  —  .,-  125 

Hobart  Trust   (Passaic) —  —  255 

Hoboken   (New  Jersey)   Trust —  —  235 

Hochelaga  Bank  (Canada) —  —  150  155 

Hocking  Valley  Products 4  5 

Hocking  Valley  Railway —  —  —  *150 

Holland-St.  Louis  Sugar,  pfd *10 

common  —  4^       5l^ 

Hollenbeck  Press,  pfd __  —  __  *100 

Hollinger  Gold  Mines —  _-  16  17 

Holmes  (D.  H.)  Co.,  Ltd __  —  152ya  160 

Holmesburg  Trust    (Philadelphia) *$55  *$55 

Holyoke  National  Bank —  __  195  205 

Holyoke   Street  Railway —  __  180  185 

Holyoke  Water  Power __  -_  400 

Home    (Colorado  Springs) 2c 

Home  Bank  of  Canada _ .  *115 

Home  Bank  &  Trust  (Chicago) __  «_  150  154 

Home  Insurance    (New  York) 740  755 

Home  Life  Insurance  of  America *30 

Home  National  Bank  (Hoh^oke) 145  150 

Home  Saving  Bank   (Cincinnati) __  100  110 

Home  Saving  Bank   (Detroit) 350 

Home  Savings  Bank  of  Los  Angeles 140 

Home  Saving  Bank   (Toledo) _.  -_  215  217^4 

Home   Savings  Bank,  Washington __        325 

Home  Telephone,  com __  ._  10*4     10l^ 

preferred  —  —  27%     28% 

Home  Trust    (Brooklyn) __  __  118 

Homes  Manufacturing  (New  Bedford),  com.__  >_        —  100 

preferred   —  —  107  108 

Homestake    Mining _-  -_  116  120 

Homestead  Bank  (Brooklyn) __  —  85  100 

Honokaa  Sugar  Co —  7% 

Honolulu  Oil   Cons __  —  1.07ya    — 

Hood  Rubber,  pfd "116 

Hooven  Owens  &  Rent.,  pfd __  >_  -_  100 

Horner  (R.  J.)  &  Co.,  1st  pfd ^98  '98 

Hoster  Columbus  Brewing,  com 2 

preferred   14% 

Hotel  Bellev.  Tr.  (Boston) _.  __  $50 

Hotel  Somerset  Tr.   (Boston) __  __  __  $85 

Hotel  Tr.,  T'raine   (Boston) __  __  $110  $118 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1039 


Bid 

Asked 

^Vz 

4% 

$18 

$19 

$23 

__ 

70 



92 



__ 

•105 

99 

101 

285 

325 

— 

19V2 

80% 

81 

•50 



•100 

16 

19 

129 

133 

380 

400 

2% 

3M, 

7 

10 

*10 

^_ 

600 



135 

145 

4 

7 

14 



$105 



High    Low 

Houghton  Copper 

Houghton  Co.  Elec,  com 

■ preferred   

Houghton  County  Tr.,  com 

preferred  

Houghton  &  Button  Building,  pfd 

Houston  G.  &  F.,  pfd 

Houston  National  Exchange  Bank 

Houston  Oil,  com 

preferred  62%     62% 

dividend  obligation 

Howard  Investment,  pfd 

common  

Hudson  Companies,  preferred 

Hudson  Co.  Gas 

Hudson  Co.  National  Bank  (Jersey  City) 

Hudson  &  Manhattan,  com 

' preferred  

Hudson  Motor  Car 

Hudson  Trust   (Hoboken) 

Hudson  Trust   (New  York) 

Huebner-Toledo  Brewing,  com 

preferred  . 

Humboldt  Insurance    (Pittsburgh) 

Humboldt  Savings  Bank  (San  Francisco) —        —  —      129 

Huntingdon  &  Broad  Top,  com $11 

^preferred  $301/2  $30 

Huron  &  Erie *218y2     — 

Hutchinson  Sugar  Plantation 

Hyde  Park  State  Bank  (Chicago) 

Hydraulic  Pr.  Br.,  com 

• preferred   

Hygienic  Food 

Idaho  Light  &  Power,  pfd 

■ common   

Idaho  Railway,  Light  &  Power 

Illinois  Brick 70l^     70*4 

Illinois  Central,  com 123       123 

4%  stk.  tr.  ctfs.  Ser.  A 

Illinois  Central  leased  line  4%  stock 

Illinois  Crude  Oil 

111.  &  Miss.  Telegraph 

Illinois   Traction,  com 

preferred   

Illinois  Trust  &  Savings  Bank  (Chicago) 

Imperial  Bank   (Canada)    

Imperial  Life  Assurance *50 

Importers  &  Traders  Nat.  Bank  (New  York) 

Independence   Trust    (Philadelphia) ^$92     *$92 

Independent  Brewing,  com 

■ preferred   

Independent  Harvester 

Indian  Head  Mills •25%  ^25% 

Indian  Refining,  pfd 

■ common   ^_ 

Indiana  Col.  &  Eastern  Trac,  pfd 

Indiana   Lighting   

Indiana  Mining 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1040 


$16% 



142 

145 

3 

aVs 



47% 

— 

•3% 

•29 



♦4 

— 

•45 

79 

84 

•90 

•94 



5c 

$32% 

$37 

65 



94 

490 

500 

218 

220 

^547 

555 

i48/» 

$4% 

$303/^ 

— 

•60 

•25 

•35 

•5 

•11 

•50 



40 

43% 

12% 

13 

High  Low  Bid    Asked 

Indiana  National  Bank  (Indianapolis) __  __  30914     __ 

Indiana  Pipe  Line __  __  $133     $136 

Indiana  Trust   (Chicago) 202 

Indiana  Union  Tr 6% 

Indianapolis  Abattoir,  pfd. ■ :  __  __  __    *100 

Indianapolis   Gas   __  $40      $48 

Indianapolis  &  Southeast.  Tr.,  pfd. __  __  821/3     90 

Indianapolis  Street  Ry. __  __  99l^     991/3 

Industrial    Building    *85 

Industrial  Trust  (Providence)   __  __  246       251 

Industrial  Tr.,  Title  &  Savings  (Philadelphia)  *$175  *$175 

Ingersoll-Rand,  com. 105 

preferred    92 

Inland   Steel    __  __  223       225 

Inspiration  Consolidated  Copper $161/3  $161/3 

Insur.  Co.  of  North  America  (Philadelphia)—  $22  $21% 

Insurance  Co.  State  of  Pennsylvania *$250 

Integrity  Title,  Ins.,  Tr.  &  Safe  Dep.  (Phila.)  *$154  *$154 

Interborough  Metropolitan,  com. 17 

preferred 58l^ 

Intercolonial  Coal/  com.   *85 

preferred    *64 

Intercontinental  Rubber 8          9 

Interior   Mining    *5c  *5c 

International  Ag.    Corp.,   com.    40 

preferred    ^_  79        86 

International  Bank  of  St.  Louis '_  375 

International  Banking 100      115 

International  Belanger  Ring __  50c       75c 

International  Button-Hole  Sewing  Machine $51/3     $6 

International  Coal  &  Coke *40 

International    Construction    10        20 

International  Educational   Pub.,  com.   $19%  $20% 

■ preferred ! $38      $40 

International    Elevating    __  *50i/3     __ 

International  Harvester,  com.   (old)    107      108% 

preferred   (old)    __  __  II01/3  113 

International  Harvester  of  New  Jersey IO61/3  111 

International  Harvester  Corp. 107       111 

International  Lead    *90 

International  Lumber  &  Development __  __  *lli/3  *13i/3 

International  Mercantile  Mar.,  com.  stk.  ctfs.  4          4% 

preferred    : 17        18 

International  Motor  Co.,  pfd.  *19 

common    .._  *5        *8 

International  Nickel,  com.  145       147 

^preferred    IO51/3  107 

International  Ocean  Tel. __  __  90      105 

International  Paper,  com. 12        12 

preferred 45        47 

International  P-A-Y-E  Tramcar,  Limited "S^. 

International  Postal  Supply __  __       *31 

International  Rubber,  com.   8        10 

preferred    90      100 

International  Salt 2          4 

International  Shoe,  pfd.   __  __  IO41/3  105 

common    __  981/3     99 

International  Silver,  pfd.  __  131      135 

common    __  115      120 

*Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1041 


High    Low 

International  Smelting  &  Refining 

International  Smokeless  Pow.  &  Chem.,  com. 

preferred    *$50 

International  Steam  Pump,  com 

preferred  

International  Telegraph  of  Maine 

International  Text  Book   

International  Traction  (Buffalo),  com. 

preferred    

International  Trust  (Boston)   

Inter-State  Ind.  Telep.  

Inter-State  Nat'l  Bank    (Kansas  City,  Mo.) 

Inter-State  Railways,  pfd. 

Inter-State  Tr.  &  Bkg.   (New  Orleans) 

lola  Portland  Cement,  com. 

preferred    

Iowa  Central,  com. 

preferred    

Iowa   National   Bank    (Davenport) 

Iowa  State  Savings  Bank  (Burlington) 

Iron  Cap  Copper,  pfd. 

Iron  Silver  Mining  Co.   

Iron  Steamboat  Co.   (New  Jersey) 

Ironbound  Trust   (Newark)    

Irving  National  Bank   (New  York)    

Isabella my^  •131/2 

Island  Creek  Coal,  com. 1 

preferred    

Island  Copper  Co.  

Isle  Royale  Copper 

Jack  Pot  (Colorado  Springs)   

Jackson,  Lansing  &  Saginaw  

Jacksonville   Traction,   com.    

^preferred    

Jade  Oil   

Jefferson  Bank  (St.  Louis)   

Jefferson  Co.  Savings  Bank  (Birmingham) 

Jefferson -Gravois  Trust  .(St.  Louis)   

Jefferson  Realty  Corporation,  com.   

1st    preferred    

2nd   preferred   

Jefferson    Trust    (Hoboken)    140      140 

Jennie  Sample    (Colorado  Springs) 

Jerry  Johnson  (Colorado  Springs)   

Jersey  Central  Traction,  com.   

Jersey  City  Trust   (Jersey  City)    

Jim  Butler  Ton.  Mining   (Nevada) 

Johns  (H.  W.)  -Mansville 

Johns-Pratt   

Johnson  Tin  Foil  &  Metal 

Johnson  Service  Co.  ; 

Joliet  &  Chicago  (gtd.  C.  &  A.) 

Journal  Big.  Tr.   (Boston)   

Julia   Consolidated   Mining    

Jumbo  Extension  Mining   (Nevada)    32c      32c 

Justice  Gold  Mining  (Nevada)   1« 

Kal.,  Alegan  &  Gr.  Rapids . 

Kaministiquia    Power    

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  dat«. 

1043 


Bid 

Asked 

120 

124 

$20 

$23 

13 

14 

53 

57 

•331/2 

_« 

130 

133 

35 

40 

♦82 

•90 

425 

450 



*5V2 

500 

525 

$71/4 



197 

201 



$9 



$14 

8 

12 

19 

25 

285 

300 

250 

3% 

^V2 



190 

__ 

*$1 

215 



197 

201 

52 

63 



861/2 



•6I/2 

24% 

25 

51/4C 

6c 

80 

85 



115 



116 

6c 

8c 

100 



165 

175 

140 

150 

25 



991/2 



95 

— 

51/4C 

'.    6c 

5c 

5%c 



♦70 

250 



73c 

75c 

•95 

•110 

290 

__ 

180 

190 

•93 



155 

165 



$50 

~ 

2c 

ic 

__ 

125 

138_. 

124 

134 

High  Low  Bid  Asked 

Kansas  City  Brew.,  com.  *7l^ 

preferred *39 

Kansas  City  Casualty __  __  $12  $13 

Kansas  City,  Ft.  Scott  &  M.,  pfd.  cert. __  73  'ti 

Kansas  City  Home  Telephone __  __  __  116 

Kansas  City  Life  Insurance  300 

Kansas  City,  Mex.  &  Orient,  com. __  13 

preferred    __  __  2  5 

Kansas  City  Outer  Belt  &  El.  Ry.,  com. __  __  *1  *2 

preferred    *2  *5 

Kansas  City  Ry.  &  Light,  com. _^  __  16  18 

preferred    __  __  30  37 

Kansas  City,  St.  Louis  &  Chicago,  pfd. __  __  100  125 

Kansas  City  Southern,  pfd.. 6O14  601/3 

common    __  __  241/3  25 

K.  C.  Stock  Yards  of  Maine,  com. __  __  791/3  8OI/3 

preferred 7914 

Kansas  City  Stock  Yards  of  Missouri __  __  *81 

Kansas  Gas  &  Electric,  pfd. __  __  971/3  100 

Kansas  Natural  Gas   10  13 

Kansas  Trust  (Kansas  City,  Kan.)  _«  __  155  170 

Kaspar  State  Bank   (Chicago)    :  __  __  234  238 

Kayser  &  Co.  (Julius),  com. 85  95. 

1st  preferred __  __  IO21/3  110 

Kee  Lox  Manufacturing 204  206 

Kelley  Island  Lime  &  Traction *140 

Kellogg  Toasted  Corn  Flakes,  com __  __  *1234  *13i/2 

Kenduskeag  Trust   (Bangor) __  __  175 

Kennard  Carpet,  com.  __  __  __  125 

preferred    __  __  112 

Kensico  Cemetery  Association __  __  __  *65 

Kensington   National   Bank    (Philadelphia)—  *$110  *$110 

Kensington  Trust    (Philadelphia)    *$60    *$60 

Kent  State  Bank   (Grand  Rapids) 266 

Kentucky  Consolidated  Mining  (Nevada) __    .  Ic  2c 

Kentucky  Securities,  pfd. 71  73 

common    27  30 

Kent  Title  Savings  Bank  &  Tr.   (Louisville)  __  __  110 

Kentucky   Wagon    52  65 

Kenwood  Trust  &  Savings  Banks  (Chicago) __  __  170 

Keokuk  &  Des  Moines,  com.  __  __  6  8 

preferred    45 

Kerr  Lake  Mining   3^  3i/s 

Keweenaw  Copper 2l^  2% 

Keystone  Bank   (Scranton)    __  __  $100    $105 

Keystone  Con.  Min.  &  Mlg.  Co.  (Col.  Springs)  __'  __  __  Ic 

Keystone  National  Bank  (Reading)   __  __  287  300 

Keystone  Telephone,  com. __  __  $12  $121/3 

preferred    __  __  $421^  $43 

Keystone  Watch  Case *95l^ 

Eilauea  Sugar  Plan. __  __  12 

Kilburn  Mill    (New  Bedford)    __  __  __  125 

Killington  National  Bank  (Rutland) __  __  125 

Kimball  Big.  Tr.    (Boston)    __  __  __  $75 

Kimberly    Consolidated   Mines    *17c  "170 

Kinemacolor  Co.  of  America *10  *20 

King  (J.  P.)  Manufacturing,  com. __  __  80  85 

King  (John  P.)   Manufacturing,  pfd. __  __  __    *106 

King  Crowther  Corp.  __  __  __  'lO 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1043 


High  Low  Bid  Asked 

King  Paper  Co.   __  __  __  *13V3 

King  Philip  Mills    (Fall  River)    __  __  __  135 

Kings  County  Electric  Light  &  Power __  __  121  123 

Kings  County  Mortgage  Co. *90 

Kings  County  Trust    (Brooklyn)    __  __  520 

Kingston  &  Pembroke  Ry. *li4 

Kinloch  Long  Distance  Tel. __  __  llSi/g  119 

Kittie  Lane   (Colorado  Springs)    ll^c    2c 

Klots  Throwing  Co.,  pfd.   *102y2  *102y2       __ 

I^app  Co.,  pfd.  __  __  *105 

Knickerbocker  Ice,  pfd.  *75  *80 

Knoxville   Gas,   pfd.   __  __  100 

Kokomo,  Marion  &  West.  Tr. __  __  90 

Kolb  Bakery,  pfd.  >_  __  __  98y8 

Kresge  Co.    (S.  S.),  com.   __  __  71  76 

preferred    __  __  100  101 

Kroger  Grocery  &  Baking,  com. 205 

1st  preferred __  __  __  123 

2nd  preferred 125 

Kruger  Copper  &  Silver __        10c  14c 

Kuskulana   Copper    —  —  5l^  5% 

La  Belle  Iron  Works,  com. 48  50 

preferred    __  __  124  126 

La  Rose  Consolidated  Mines 2%  3 

La  Salle  Copper __  __  3y8  4 

La  Salle  Extension  University —  —  —  *10y2 

La  Salle  St.  Trust  &  Sav.  Bank  (Chicago) __  __  __  100  102 

Lackawanna  Coal  &  Lumber __  __  —  *2% 

Lackawanna  Railroad  of  New  Jersey —  —  93  96 

Lackawanna    Steamship    *95 

Lackawanna  Steel 44  44 

Lackawanna  Trust   &   Safe  Dep.    (Scranton)  __  __  $320  $325 

Laclede  Gas  Light,  com, 98  lOO^^ 

preferred  —  __  98  100 

Laconia  Car,  pfd.   __  __  *105  *115 

common __  —  *50  *60 

Lafayette  Bank  (St.  Louis)    —  —  1100 

Lafayette  Insurance   (New  Orleans)   __  __  $215  $250 

Lake  Copper  __  __  16%  17 

Lake  Erie  &  Western,  com. __  __  9  11 

^preferred    __  __  23  30 

Lake  of  Woods  Milling,  com.  __  __  133  139 

preferred    —  —  —  119% 

Lake  Shore  Bank  &  Trust   (Cleveland) *300 

Lake  Shore  Electric  Ry.,  com. *7 

1st  preferred *90 

2nd  preferred __  __  __  25% 

Lake  Shore  &  Michigan  Southern —  —  460  525 

Lake   Superior  Corporation   __  __  26y2  27 

Lakeview  Land  Co. *100 

Lake  View  State  Bank  (Chicago)    __  —  104  106 

Lakeview  Trust  &  Savings  Bank  (Chicago)—  __  —  190  200 

Lakewood  Co.  of  Maine  —  —  *94 

Lancaster  Cotton  Mills   (So.  Carolina),  com.  —  —  125  130 

preferred __  —  95  100 

Lancaster  Co.  National  Bank __  __  $131     $132 

Lancaster  Mills   (Boston  and  Clint.,  Mass.) —  —  —  —  *85 

Lancaster  (Pennsylvania)  Trust  Co. __  —  600 

*Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1044 


High    Low  Bid    Asked 

Land  Title  Trust   (Philadelphia) .—  *500    *500 

Landed  Banking  &  Loan  *140 

Landers,  Frary  &  Clark —  __  $93 

Langley  Manufacturing    (South  Carolina) —  __  __  __  75 

Lansing  Fuel  &  Gas __  __  *53 

Lanston  Monotype 85%  86Va 

Laramie,  Hahns  Peak  &  Pac. —  —  3c  4c 

Laurel  Lake  Mills  (Fall  River) „  __  _-  145 

Laurens  Cotton  Mills    (South  Carolina) __  __  127  130 

Laurentian  Granite  Co.,  Limited *40  *40 

Laurentide  Co.   __  __  214  216 

Laurentide    Paper    212  215 

Lawrence  Gas   Co —  —  210 

Lawrence  Manufacturing    (Mass.)    168 

Lawrence    (Massachusetts)    Trust   —  100 

La\vyers'  Mortgage  __  __  215  219 

Lawyers'  Title,  Ins.  &  Tr.  (New  York) __  __  203  210 

Lehigh  &  New  York,  pfd.   __  __  9  12 

Lehigh  Coal  &  Navigation __  __  $881/2  $89 

Lehigh   Coal    Sales    __  __  195  205 

Lehigh    Portland   Cement    *68 

Lehigh  Valley,  com.  $78%  $78^4 

preferred *$60 

Lehigh  Valley  Coal  Sales __  __  $©5     $105 

Lehigh  Valley  Transit,  com. __  __  $19  $191/8 

preferred    __  __  $34%  $351/2 

Lehigh  Valley  Trust   (Allentown) __  __  $230    $2371/2 

Lehigh  &  Wilkesbarre  Coal __  __  $155 

Lexington  City  (Kentucky)  National  Bank__  __  __  195  200 

Lexington   Mining   Ic 

Liberty   Mills    __  __  50  60 

Liberty  National  Bank   (New  York) __  __  630  640 

Liberty  Trust    (Boston)    __  __  165 

Library  Bureau,  pfd.   __  *95  *99 

common *13  *20 

Library  Co.    (Philadelphia)    *17 

Library  Square  Realty __  __  __  *1% 

Life  Insurance  Club  of  New  York *8 

Liggett  &  Myers  Tob.,  com. __  __  219  225 

preferred    __  __  113  115 

Lightning  Creek  Gold  Drain __  __  2%  2% 

Lincoln    Gas    40 

Lincoln  Gas  &  Electric  Light __  __  29  33 

Lincoln  Manufacturing  (Fall  River)    98 

Lincoln  National  Bank   (New  York) __  __  *360 

Lincoln  National  Bank   (Pittsburgh)    __  __  200  210 

Lincoln  National  Bank   (Rochester)    210  220 

Lincoln   National   Bank    (Washington) 152 

Lincoln  Safe  Deposit   (New  York)    __  __  __     *193 

Lincoln  Savings  Bank   (Louisville) 95  98 

Lincoln  Trust  (Boston)    150 

Lincoln  Trust   (Jersey  City)    __  __  325  335 

Lincoln  Trust   (New  York)    __  __  125  135 

Lindsay   Light    . __  __  20  25 

Lion  Hill  Consolidated  Mines 78c  80c 

Lisk  Manufacturing,  pfd.  __  __  *90 

common    *21 

Lit  Brothers   __  __  $171/2  $181/3 

Litchfield   Manufacturing    (Waterloo,   Iowa.)  *100  *100 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date.. 

1045 


High  Low  Bid    Asked 

Little  Miami __  104 

Little  Puck   (Colorado  Springs)    __  ,003e   .007e 

Little  Rock  Railway  &  Electric,  com *120 

■ preferred   •991/2  — 

Little  Sch.  Nav.  R.  R.  &  Coal $56 

Live  Stock  Exchange  Nat'l  Bank  (Chicago)  __  __  __  268      275 

Live  Stock  National  Bank  (South  America) 145       160 

Lockhart  Mills  (South  Carolina),  com __  __  55        65 

preferred  —  90      100 

Lockwood  Co.   (Maine) •103%  >_ 

Lockwood  National  Bank  (San  Antonio) 240 

Locomotive  Superheater  Co __  _>  *150     *300 

Logan  Co.  Bank  (Guthrie) __  __  120 

Logan    Trust    (Philadelphia) "135     •135 

London  &  Canada  Loan  &  Ag'y *122i4  __ 

London  Electric  ^29 

London  Street ^150 

Lone  Star  Consolidated  Mining  (Nevada) Ic        2c 

Lone  Star  Life  Insurance  (Dallas) __    •llO 

Long  Island  R.  R __  __  $201/2  $211/2 

Loose-Wiles,    com 34  34 

1st   preferred __  __  101%     __ 

2nd  preferred . 91 

Lorain  Street  Savings  Bank  (Cleveland) $182 

Lord  &  Taylor,  com __  _>  60        90 

1st    preferred 81        91 

Lorillard  Co.    (P.),  com.  __  __  185      191 

preferred    __  112      115 

Los  Angeles  Athletic  Club __  _>  8%     __ 

Los  Angeles  Hibernian  Savings  Bank 117 

Los  Angeles  Investment  Co 4.05 

Louisiana  &  Missouri  River  R.  R.,  pfd ^140 

Louisiana  &  Southern  Indiana  Traction ^250 

Louisiana  Sugar  Exchange ^65 

Louisiana  &  Missouri  River,  pfd —  130       145 

Louisiana   &  Nashville ^ 133%  1331/8 

Louisville  Bridge  Co __  __  103       105 

Louisville,  Hend.  &  St.  Louis,  com 17        21 

preferred  30        35 

Louisville  Home  Telephone 100      103 

Louisville  National  Banking  Co 150      152 

Louisville  Public  Warehouse 92% 

Louisville  Title -_  »_  125      130 

Louisville  Tobacco  Warehouse,  com __  __        89 

preferred   __  130      135 

Louisville  Trac,  com 96V^     97^4 

preferred  __  109       110 

Louisville   Trust   Co 171       172 

Lovejoy's  Wh.  Tr.  (Boston) __  __  $101    $107 

Lowell  &  Andover __  210      220 

Lowell  Bank  (St.  Louis) __  __  120      125 

Lowell  Bleachery  (Massachusetts) ^128 

Lowell  Electric  Light _«  200      205 

Lowell  Gas __            ^300 

Lowry  National  Bank  (Atlanta) __  __  248      252 

Lozier  Motor  Co ^18 

Lucky  Tiger  Comb.  Gold  Mining __  __  __  •$3.85 

Ludlow  Manufacturing  Associates ^239    '239 

Luhrig  Coal  Washing  &  Manufacturing "14 

*Quotatlon  nearest  March  1,  1913.    No  quotation  on  that  date. 

1046 


High    Low  Bid    Asked 

Lumbermans  National  Bank,  (Houston) —        —  175 

Lumbermen's  Insurance   (Philadelphia)    *$97l^ 

Luzerne  Co.  National  Bank  (Wilkes-Barre)—  __        —  130      133 

Lykens  Valley  R.  R.  &  Coal __        —  $13      $17 

Lyman    Mills    (Massachusetts) *117 

Lynn  Gas  &  Electric —        __  —     t470 

MacAndrews  &  Forbes,  pfd.  *102yz  *102ya      __ 

common  —        __  193      200 

MacDonald   (A.)   Co.,  Ltd '95       *95 

MacNamara  Mining  &  Milling  (Nevada) 21c      20c 

Machinists'  National  Bank   (Taunton) —        150 

Mackay  Companies,  com __        81        85 

—^—preferred  1-        —  65        68 

Macon  (Georgia)  National  Bank 90        95 

Macon  (Georgia)  Savings  Bank —        —  82        84 

Mahoning  Coal  R.  R.,  com _ __        _«  ._    $462^/^ 

preferred   —        ~  $50      $54 

Maine  Central -_        —  105       107ya 

Maine  &  New  Br.  El.,  Pow.,  Ltd.,  6%  deb.  stk ^104 

Maison  Blanche  Co.,  com —        —  87^^ 

preferred   —        —  105 

Majestic  Mines  —        —  46c      47c 

Maiden  Electric —        __  —     t270 

Maiden  &  Melrose  Gas  Light __        —  —    tl90 

Mallory    Steamship —        —            *21 

Manayunk  National  Bank   (Philadelphia) *263     *263 

Manayunk  Trust   (Philadelphia) *$60y8*$60y8 

Manchester  Bank  (St.  Louis) —        —  160 

Manchester   &   Lawrence —        200      225 

Manchester  (Pennsylvania)   Sav.  Bk.  &  Tr.__  *$55     *$55 

Manhattan  Amal.  Mining   (Nevada) —        —  3c 

Manhattan  Beach  Co *2 

Manhattan  Big  Four  Mining   (Nevada) 92c      89c 

Manhattan  Co.  Bank  (New  York) —        —  $175     $180 

Manhattan  Cons.  Mines  Devel.  Min.   (Nev.) 6c        6c 

Manhattan  Crescent  Mining   (Nevada) 6c        6c 

Manhattan  Dexter  Mining  (Nevada) —        —  4c        5c 

Manhattan  Ry.,  com >_        __  130ya  13iy3 

Manhattan  Savings  Bank  &  Trust  (Memphis)         630      560 

Manhattan    Shirt,   com 50        60 

preferred  —        >_  100      102ya 

Manhattan    Transit Uii    ^iVs 

Manhattan  White  Caps  Mining  (Nevada) —        —  7c        9c 

Manning,  Maxwell  &  Moore,  Inc —        —      *83 

Manomet   Mills —        —  *120     *125 

Manufactured  Rubber,  com —        —  —          $% 

preferred   —        —  $4        $6 

Mfrs.  &  Trdrs.  Nat.  Bk.  (Buffalo) 400 

Manufacturers  Light  &  Heat,  Pittsburgh — $51%  $51% 

Manufacturers  National  Bank   (Brooklyn) —        __  $12iya$129 

Manufacturers  National  Bank    (Newark) —  270 

Manufacturers  National  Bank   (Philadelphia)  •131l^*131l4 

Manufacturers  National  Bank   (Troy) _        —  450 

Manufacturers  National  Bank  (Waterbury) —  150 

Manville  Co.,  pfd —        —  5y2%  basis 

Maple  Leaf  Mill,  com —  —        60^ 

preferred  —        —  96y2     97 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date.    f'Value"  as  of  March  1,  1913. 

1047 


High    Low  Bid    Asked 

Marconi  Wireless  Telegraph  of  America __  __  __        *5% 

Marconi  Wireless  Telegraph  of  Canada *4y2 

Marconi  Wireless  Telegraph,  Ltd.,  pfd. _«  __  *17      'lOVa 

common  __  __  *20y2  *22y3 

Maricopa  Northern __  eVgC    6%c 

Maricopa    Queen 15c 

Maricopa  06  Oil __  __  32c      48c 

Marine  Bank   (Norfolk) __  __  270      290 

Marine  National  Bank    (Buffalo) __  325       350 

Marine  National  Bank   (Milwaukee) 230 

Maritime  Tel.  &  Tel.  Co.,  pfd *5.66%  basis 

common    *4%%  basis 

Market  Bank    (Buffalo) __  __  140 

Market  Exchange  Bank  (Columbus,  0.) __  __  200      210 

Market  &  Fulton  National  Bank  (New  York)  __  __  250      255 

Market  National  Bank   (Cincinnati) 240      275 

Market  Savings  Bank  (Toledo) __  __  __       108 

Market  Street  National  Bank   (Philadelphia)  *181l^*181l^ 

Market  Street  Title  &  Trust   (Philadelphia)  *$33  *$33 

Market    Trust __  __  130       140 

Market  Trust  &  Savings  Bank  (Chicago) __  __  123       126 

Marlboro  Cotton  Mills  (South  Carolina) __  __        80 

Marlborough  Electric __  __  __     t230 

:  Vlarlborough  Electric  Securities t230 

Marshall  &  Ilsley  Bank  (Milwaukee) __  __  225      230 

Mary  McKinney  (Colorado  Springs) __  __  64y2C  64730 

Mary  Nevin  (Colorado  Springs) __  __  __        Ic 

Maryland  &  Pennsylvania __  __  31        36 

Maryland  Casualty  $105  $105 

Maryland  Coal  Co.  of  Maryland __  __  __        *9 

Maryland  Coal  Co.  of  Virginia *10 

Maryland  Coal  Co.  of  West  Virginia *9l^ 

Maryland  Motor  Car  Insurance __  __  __     *115 

Maryland  National  Bank  (Baltimore) __  __  $21      $23 

Maryland  Trust  (Baltimore),  pfd __  __  119 

common 117      119 

Mascot  Copper  Co *2V4 

Mascot  Oil __  __  __       65c 

Mason  Valley  Mines 7%       7% 

Massachusetts  Bonding __  __  $145    $145 

Massachusetts  Breweries 45        50 

Massachusetts  Consolidated  Mining 414      4% 

Massachusetts  Cotton  Mills 118 

Massachusetts  Electric  Companies,  com __  __  16y2     — 

stpd.  preferred  __  __  __        jQi/^ 

Massachusetts  Fire  &  Marine  Insurance __  __  $175    $225 

Massachusetts  Gas  Companies,  com. __  __  89%    90 

preferred __  __  92y2     94 

Massachusetts  Lighting  Companies __  __  $118    $121 

Massachusetta-Pocasset  Nat'l  Bank  (Boston)  __  __  160      165 

Massachusetts  Title  Insurance __  50 

Massawippi  Valley  Railroad __  __  115 

Massoletti  Mines __  __  2          2% 

Mathieson  Alkali  Works *40 

Matoa   (Colorado  Springs)    .005 

Mattapan  Deposit  &  Trust  (Boston) __  __  200 

Maxwell  Motor,  1st  pfd __  __  __       *65 

2d  preferred __  __  __      ♦55 

♦Quotation  nearest  March  1,  1913.    No  quotation  on  that  date.    f'Value"  as  of  March  1,  1913. 

1048 


High  Low  Bid  Asked 

May  Department  Stores,  com —  —  73  75 

preferred  —  —  101  104 

Mayflower  Consolidated  Mining  (Nevada) —  —  Ic  2c 

Mayo  Mills  (North  Carolina) —  —  125  135 

Mays  Oil '- —  —  18c  20c 

McCasky  Register  Co.,  pfd —  —  —  ^lOO^j 

common —  —  —  ^lOOi/g 

McCornick  &  Co.  Bank  (Salt  Lake  City) —  —  350  355 

McElwain  (W.  H.)  1st  pfd —  —  101  102 

McKeen  National  Bank  (Terre  Haute) —  —  175  180 

McKinley-Darragh  2iW      2 

Mechanics'  American  Nat'l  Bank  (St.  Louis).  —  —  2771/2  280 

Mechanics'  Bank  (Brooklyn) —  —  108  115 

Mechanics'  Bank  (New  Hampshire) —  —  $90 

Mechanics'  &  Farmers'  Bank  (Alabama) —  —  345  355 

Mechanics'  Insurance   (Philadelphia) *$50 

Mechanics' &  Metals  Nat'l  Bank  (New  York)-  __  __  *250  255 

Mechanics'  Mills  (Fall  River) __  „  —  90 

Mechanics'  National  Bank  (Lowell) —  —  153 

Mechanics'  National  Bank  (Providence) —  —  $60 

Mechanics' National  Bank  (Trenton) __  —  $150 

Mechanics'  National  Bank  (Worcester) —  —  180 

Mechanics'  &  Traders'  Insur.  (New  Orleans)  __  __  __  160 

Mechanics'  &  Traders'  State  Bank  (Chicago).  __  __  132  138 

Memphis  Street  Railway,  com *64 

preferred  . __  82 

Mercantile  Bank  (Kansas  City,  Missouri) 125  127 

Mercantile  Bank  (Memphis) __  >_  225  230 

Mercantile  National  Bank  (Salem) 125 

Mercantile  National  Bank  (San  Francisco) 220 

Mercantile  National  Bank  (Seattle) 105  125 

Mercantile  Trust  (Jersey  City) >_  175 

Mercantile  Trust  (Little  Rock) __  __  $80 

Mercantile  Trust  (Portland,  Me.) __  __  145  150 

Mercantile  Trust  (St.  Louis) __  __  300  305 

Mercantile  Trust  &  Deposit  (Baltimore) $158i4     $158l^ 

Mercantile  Trust  &  Savings  Bank  (Chicago)—  __  __  123  126 

Mercantile  Trust  (Trenton) __  __  153 

Merchants'  Bank  (Augusta) __  __  225  235 

Merchants'  Bank  (Canada) __  __  187  190 

Merchants' Bank  (Rochester) __  __  235  250 

Merchants' Bank  (Salt  Lake  City) __  __  169  170 

Merchants'  Bank  &  Trust  (Los  Angeles) __  __  150 

Merchants'  &  Cl'k  Savings  Bank  (Toledo)  ___  __  __  300 

Merchants' Export  National  Bk.  (New  York).  __  __  *$77  *$80 

Merchants'  &  Farmers'  Nat'l  Bk.  (Charlotte)  __  __  192 

Merchants'-Laclede  National  Bank  (St.  Louis)  __  3031/2     __ 

Merchants'  Loan  &  Trust  (Chicago) __  __  432  436 

Merchants'  &  Manufacturers  Bk.  (Milwaukee)  __  __  113  115 

Merchants'  &  Mechanics'  Bank  (Scranton)___  __  __     $1021/2  $1071/, 

Mcrchants'-Mechanics'  Nat'l  Bk.  (Baltimore).  $33%  $33% 

Merchants'  &  Main  Street  Bank  (Memphis).  ..  __  123  130 

Merch.  &  Mech.  Tr.  &  Sav.  Bk.  (Birmingham)  _.  __  134  140 

Merchants'  Mills  (Fall  River) __  __  98 

Merchants'  &  Miners  Transportation _.  ._  __  *67i/j 

Merchants'  National  Bank  (Allentown) _.  __  240  260 

Merchants'  National  Bank  (Bangor) ._  __  __  300 

Merchants'  National  Bank  (Boston) _.  __  300  305 

Merchants' National  Bank  (Burlington) _.  __  __  225 

♦Quotation  nearest  March  1,  1913,    No  quoUtion  on  that  date. 

1049 


High    Low  Bid    Asked 

Merchants' National  Bank  (Chicago) __  __  209 

Merchants'  National  Bank  (Dayton) —        148 

Merchants'  National  Bank  (Harrisburg) __  __  275      280 

Merchants'  National  Bank  (Jersey  City) __  __  150      175 

Merchants'  National  Bank  (Los  Angeles). __  __  850 

Merchants'  National  Bank  (Lowell) __        198 

Merchants'  National  Bank  (Newark) 260 

Merchants'  National  Bank  (New  Hampshire)-        $67 

Merchants'  National  Bank  (New  York) __  __  *$98  *$100 

Merchants'  National  Bank  (Norwich) __  110 

Merch.  National  Bank  (Omaha) __        190      200 

Merch.  National  Bank  (Providence) __        $87 

Merch.  National  Bank   (Raleigh) 150 

Merch.  National  Bank   (Richmond) __  __  1000 

Merch.  National  Bank  (St.  Paul) __  ._  255      275 

Merch.  National  Bank  (Salem) $85  $85. 

Merch.  National  Bank  (Sav.) __  __  115 

Merch.  National  Bank  (Topeka) _«            175 

Merch.  National  Bank  (Worcester) 190 

Merch.  Public  Utilities,  pfd __  __  __      *99 

Merch.  Real  Estate  Trust  (Boston) __  __  __    $500 

Merch.  Savings  &  Trust  (Pittsburgh) __  __  __     *$30 

Merch.  Trans.  &  Storage __  __  105       120 

Merch.  Trust   (Camden) __  __  125      135 

Merch.  Trust    (Lawrence) 155 

Merch.  Union  Trust  (Philadelphia) *110  *110 

Merchants  Warehouse  Co *132  *132 

Mergentlialer  Linotype __  __  217      218^4 

Meriden  Cutlery  Co *21 

Mermod,  Jaccard  &  Co.,  pfd 90 

Merrill  Trust    (Bangor) __  __            175 

Merrimac    Chemical *$49ya*$49y2 

Merrimack  Manufacturing  (Mass.),  pfd *96 

common  33*4 

Metacomet  National  Bank  (Fall  River) __  __  125      130 

Metal  Shingle  &  Siding  Co.,  Ltd.,  pfd 'lOO  '100 

Metropolis,  Bank  of  the  (New  York) __  __  *355      365 

Metropolitan  Bank  (Canada) 200 

Metropolitan  Bank    (Minneapolis) 135 

Metropolitan  Bank  (New  Orleans) 170 

Metropolitan  Bank  (New  York) >_  __  190      197 

Metropolitan  Bank  (Seattle) _«  __  250      300 

Metropolitan  Bank   (Toronto) __            200 

Metropolitan  Gas  &  Electric,  pfd _«      *91 

Metropolitan  National  Bank   (Washington)—        205      210 

Met.  State  Bank  (Detroit) __  ..  127      140 

Metropolitan  Trust  (New  York) _-  __  440      450 

Mexican  Crude  Rubber  Co ^ 14 

Mexican  Gold  &  Silver  Min.  (Nevada) 65c  64c 

Mexican   Iron   &   Steel *8 

Mexican  Light  &  Power,  com 74%     75Vi 

Mexican    Metals __        1%      1^^ 

Mexican  Min 65  63 

Mexican  North.  Pow 20        21 

Mexican  Petroleum,  com 70*4     69% 

preferred  ._  93l^  100 

Mexican  Plantation $165  $165 

Mexican  Telegraph ._  ._  "210     *230 

*QuotatiOD  nearest  Marcb  1,  1913.    No  quotation  on  that  date. 

1050 


High 

Low 

Bid 

Asked 

__ 

$31/2 

$4 

__ 

__ 

$61/4 

__ 

*1 

__ 



__ 

♦70 



108 

110 

$221/2 

-$221/2 

__ 

_„ 





100 

^_ 



142 

146 

__ 

__ 

_^ 

♦95 





._- 

190 



__ 

__ 

•101/2 





__ 

$93 



98 

100 

__ 

__ 

UVz 

$2 



210 







99 

1003/4 





__ 

45 







93 





600 



__ 

__ 

♦75 

♦81 





— 

42c 

215 

219 

__ 

__ 

*30 

♦37 

Mexican  Telephone  &  Telegraph,  com 

preferred  

Mexican  Timberfields  Co 

Mexican  Trust  Co.  (Kansas  City) 

Mexico  Tramway 

Miami    Copper 

Miami  Pape*-,  1st  pfd 

Michigan  Avenue  Trust  (Chicago) 

Michigan  Buggy,  pfd 

Michigan    Central 

Michigan  Fence  Co 

Michigan  F.  &  M.  Insurance 

Michigan  Light,  pfd 

Michigan  Min 

Michigan  Savings  Bank   (Detroit) 

Michigan  State  Telephone,  pfd 

Michigan  Sugar,  com 

preferred   

Michigan  Trust  (Grand  Rapids) 

Michigan  United  Ry 

Michigan-Utah    Mining 

;M^id-City  Trust  &  Savings  Bank  (Chicago)—. 

Middlesex  Banking  Co 

Middlesex  Co.   (Massachusetts) 55 

Midland  Life  Insurance  Co —        —  ♦IS 

Midway  Mining  (Nevada) 54V2C  53c 

Midway    Northern —  10c 

Milford-Uxbridge    Co 

Miller   (Daniel)    Co 

Miller   (Edward)   Co.   (Connecticut) 

Miller  (Henry  F.)  &  Sons  Pianos,  pfd 

Miller    Rubber ^192 

Miller  Safety  Device  Corp 

Mills  Manufacturing    (South   Carolina) 

Milwaukee  &  Chicago  Brew 

Milwaukee  Electric  Ry.  &  Light,  pfd 

Minehill  &  Schuylkill  Haven $5714  $57l^ 

Mineral  Hill  Consolidated  Mines  (Nevada) 

Miners'  &  Merch.  Bank   (Charleston) 

Miners  Bank  of  Wilkes-Barre 

Mines  Co.  of  America 

Minneapolis  Brew.,  com 

preferred   

Minneapolis  &  St.  Louis,  com I914     I914 

preferred   

M.  S.  P.  &  S.  S.  M.,  com 136l^  I3614 

preferred  

Leased  Line  Certificates 

Minneapolis  Threshing  Mach ^102     ^102 

Minnesota  Sugar,  com 

preferred   

Miss.  Central 

Miss.  River  Power,  pfd 

common  

Mississippi  Valley  Bank  &  Trust  (Memphis)- 

Mississippi  Valley  Trust  (St.  Louis) 

Missisquoi  Marble  Co ♦IS      ♦IS 

Missouri  &  Kansas  Telephone ^65 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1051 




♦77 

♦140 

♦60 

♦63 

— 

♦110 

*1V2 

95 

100 

$16 

$20 

♦100 

♦102 

~" 

Ic 

140 

150 

$205 

$210 

2%   2% 

— 

180 

100 

— 

♦43 

— 

143 

150 

82 

83% 

42 

49 

74 

77 

40 

43 

74 

77 

45 

48 

120 

130 

300 

305 

High    Low        Bid    Asked 

Missouri,  Kansas  &  Texas,  com 25%     25% 

preferred —        —  601/^     60% 

Missouri    Pacific 37%     37% 

Mizpah  Extension  Mining    (Nevada) 

Mobile  &  Birmingham,  pfd.   (gtd.) 

Mobile  &  Ohio  stock  tr.  ctfs 

Mobile  Elec,  pfd 

Modern  Pen  Co 

Mohawk   Mining 

Mohawk  Valley   Co 

Moline   Plow,  pfd 

common  

Molsons  Bank    (Canada) 

Monadnock  Mills   (N.  H.) 

Monarch  Cotton  Mills  (South  Carolina) 

Monarch   Fence   Co 

Monarch  Knitting,  com 

preferred   

Monarch  Pitts.  Ext.  Mining  (Nevada) 17c      16c 

Monaton  Realty  Investment 

Monongahela  River  Coal  &  Coke,  pfd 

common  

Monongahela  Valley  Traction,  pfd 

Montana    Min *1.62y2*1.62i/2 

Montana  Power,  com 

preferred   

Montauk   Bank    (Brooklyn) 

Montgomery    (J.  R.)    Co 

Montgomery  Ward,  pfd 

Montpelier-Barre  Light  &  Power,  pfd 

Montreal,  Bank  of   (Canada) 

Montreal  Cottons,  com 

preferred   

Montreal  Light,  Heat  &  Power 

Montreal  Loan  &  Mortgage *190 

Montreal    Power 

Montreal  Telegraph 

Montreal   Tramways,   com 

Montreal  Tramway  &  Power 

Montreal  Welland  Land,  Ltd.,  pfd *95       *95 

Moon  Anchor —        —  —        Ic 

Moore  (Benjamin)  &  Co *160     "leO 

Moore  (L.  E.)   Stave  Co.,  pfd —        —  —     *110 

Moore-Watson  Co.    (New  York),  pfd '100     *100 

Morning  Glory   Min.    (Nevada) 

Morris  County    (New  Jersey)    Traction 

Morris  &  Essex  Extension  R.  R 

Morris  &  Essex  R.  R.,  gtd 

Morristown  (New  Jersev)   Trust  Co 

Morse  Twist  Drill  &  Machine  Co.  (N.  Bedfd.) 

Mortgage  Bond 

Mortgage  Guarantee  (St.  Louis) 

Mortgage  Trust  (Philadelphia) *101iA  *101i4 

Motzorongo  Plan  

Mount  Morris  Bank  (New  York) 

Mount  Olivet  Cemetery 

Mountain  City  Trust  (Altoona) 

Mountain  States  Telephone  &  Telegraph 

Mulford  (H.  K.)  Co 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1053 


51c 

54c 

*65 

75 



771/a 

92% 

95 

*10 

$48 

$49 

*ioiy2^ 

•^108 

1003/4 

103 

»140 



201% 

1000 



105 

115 



*2% 



86 

— 

93 

"■ 

•50 

*50 

•75 

novsj 

•20 

~ 

•85 

451/2 

46 

99 

101 



150 

90 



1071/4. 

107% 

*6%  basis 



242 

59 

6O1/4 

1041/4 

105 

*224%^ 

»225 

224% 

225 

$57% 



170 

45% 

45% 

Ic 

3c 

3 

4 



•97% 

»$82% 

.*$86 

400 

300 

__ 

103 

106 

— 

134 

" 

•5 

^300 

__ 

90 

100 

$43 

$45 

104 

105 

__ 

•56 

High  Low  Bid  Asked 

Muncie,  Hartford  &  Fort  Wayne,  pfd __         __  *60 

Municipal  Gas   (Albany) ^ —        —  265  280 

Municipal  Pub.  Service,  pfd *98  *98 

Municipal  E.  E.  Trust  (Boston) —        —  $97  $103 

Munsey  Trust  (Baltimore) ' —        —  105  107 

Murchison  National  Bk.  (Wilmington,  N.  C.)-  ~        —  160  161 

Murray  Co.,  com —  —  *150  *160 

Muskogee  Gas  &  Electric,  pfd —         —  95  971/2 

Mustang  Extension  Mining  (Nevada) —         __  Ic  2c 

Mustang  Manhattan  Mining  (Nevada) —         —  3c 

Mutual  Alliance  Trust  (New  York) —        __  135  145 

Mutual  Bank  (New  York) —         —  290 

Mutual  National  Bank  (Boston) —        —  100 

Mutual  Savings  Bank  (San  Francisco) __  __  —  $80 

Mutual   Trust    (Philadelphia) *$44  *$44 

Mutual  Trust  (Port  Chester) __  __  140  150 

Myles  Salt  Co.,  Ltd.,  com —  —  125 

preferred —  —  125 

Narragansett  Electric  Lighting __  __  $90  $92 

Narragansett  Machine,  pfd __  —  —  *102l^ 

Narragansett  Mills —  —  $115 

Nashawena  Mills  (New  Bedford) —  —  70  75 

Nashua  &  Lowell —  —  243 

Nashua  Manufacturing  (New  Hampshire) *625i4     — 

Nashville,  Chattanooga  &  St.  Louis —  —  150  170 

Nashville  &  Decatur —  —  $46%  $48 

Nashville  Gas __  —  100  105 

Nashville  Railway  &  Light,  com 102^^     — 

preferred  __  —  95%     96ya 

Nashville  Title __  __  95  102 

Nashville  Trust  Co __  __  150  160 

Nashville  Warehouse  &  Elevator __  __  20  30 

Nashville  Woolen  Mills __  __  20  30 

Nassau  &  Dutchess  Insurance  (New  York) __  __  130  140 

Nassau  National  Bank  (Brooklyn) 205  220 

Nassau  Trust  (Brooklyn) __  __  130 

National  Acme  Manufacturing *110 

National  Bank  of  Baltimore 177  179 

•National  Bank  of  Barre 120 

National  Bank  of  California,  Los  Angeles _,  __  225 

National  Bank  of  Commerce  (Baltimore) __  __  $311/3  $321/2 

National  Bank  of  Commerce  (Boston) __  __  235  230 

National  Bank  of  Commerce  (Columbus,  0.)—  __  __  135  145 

National  Bank  of  Commerce  (Dallas) __  __  200 

National  Bank  of  Commerce,  Detroit __  __  211  218 

National  Bank  of  Commerce  (Houston) __  __  $104  $106 

National  Bank  of  Commerce  (Louisiana) __  __  225  230 

National  Bank  of  Commerce  (New  York) __  __  191  I931/3 

National  Bank  of  Commerce  (Norfolk) __  __  200  205 

National  Bank  of  Commerce  (Providence) __  *67i/3 

National  Bank  of  Commerce  (Rochester) __  __  185  190 

National  Bank  of  Commerce  (St.  Louis) I491/2  I491/2 

National  Bank  of  Commerce  (Seattle) __  __  335  340 

National  Bank  of  Commerce  (Tacoma) __  __  350 

National  Bank  of  Commerce  (Toledo) __  __  140  144 

National  Bank  of  Cuba  (Havana) __  __  110  111 

National  Bank  of  Delaware  (Wilmington) __  __  215  225 

National  Bank  of  Germant'n  (Philadelphia)  _*$14 2 1/2  *$142i/3 

•Quotation  nearest  March  1,  1913.    No  quotation  on  tliat  date. 

1053 


High  Low  Bid  Asked 

National  Bank  of  Kentucky  (Louisville) __  __  200  2031/2 

National  Bank  of  New  Jersey  (New  Bruns'k)  —  —  285  300 

National  Bank  of  No.  Lib.  (Philadelphia) •253    •252 

National  Bank  of  Petersburg  (Virginia) __  __  __  300 

National  Bank  of  Republic  (Chicago) __  „  230  234 

National  Bank  of  the  Rep.  (Kansas  City,  Mo.)  —  __  160  175 

National  Bank  of  Republic  (Salt  Lake  City).  __  __  195  200 

National  Bank  of  Savannah —  —  —  2321/3 

National  Bank  of  Washington,  D.  C __  —  244  256 

National  Bank  of  West  Virginia  (Wheeling)  _  __  __  158  160 

National  Ben.  Franklin  Insur.  (Pittsburgh)  __  $100 

National  Biscuit,  com 115%  115% 

preferred  —  —  116  121 

National  Candy,  com —  —  914     10 

lat  pfd -  „  106  1071/2 

2d  pfd —  —  761/2     ._ 

National  Cap.  Bank  (Washington) __  __  224 

National  Carbon,  com —  —  118  120 

preferred  *116 

National  Cash  Register,  pfd —  __  *129 

National  City  Bank  (Baltimore) 110 

National  City  Bank  (Brooklyn)  _. „  __  275  295 

National  City  Bank  (Chicago) ._  __  195  199 

National  City  Bank  (Cleveland) —  >_  235  255 

National  City  Bank  (Indianapolis) __  __  151%  I521/2 

National  City  Bank  (Memphis) __  __  120  122 

National  City  Bank  (New  York) —  __  __  450 

National  City  Bank  of  Seattle _-  __  140  150 

National  City  Bank  (Troy) __  _.  172  175 

National  City  Bank  (Waco) __  —  95  105 

National  Commerce  Bank 164 

National  Commercial  Bank  (Albany) __  345  355 

National  Commercial  Bank  (Cleveland) ^160 

National  Cop.  Bank  (Salt  Lake  City) __  __  139  140 

National  Enam.  &  Stpg.,  com 15%  15% 

preferred __  __  87        93 

National  Exchange  Bank  (Augusta) 135  140 

National  Exchange  Bank  (Baltimore) «_  __  161  163 

National  Exchange  Bank  (Hartford) $83 

National  Exchange  Bank  (Milwaukee) __  __  212  214 

National  Exchange  Bank  (Providence) __  __  255  280 

National  Exchange  Bank  (Wheeling) __  __  223  225 

National  Fire  Insurance  (Hartford) __  __  375  385 

National  Fire- Proofing,  com __  __  $6%     $7 

preferred  __  __  $28%  $281/0 

National  Fuel  Gas __  __  __  164% 

National  Gas,  Electric  Light  &  Power,  com __  __  30 

preferred  __  __  80 

National  Glass  Brick ^6  ^6 

National  Grocer,  com _«  __  42        431/2 

preferred  __  __  74        77 

National  Howard  Bank  (Baltimore) __  __  $141/2  $151/2 

National  Insurance  (Hartford) __  __  375  385 

National  Lead,  com ^_  __  50        52% 

preferred  __  __  105  107 

National  Lettergraph,  pfd __  __  __  *25 

National  Licorice,  com. *38 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1054 


High  Low  Bid    Asked 

National  Light,  Heat  &  Power,  com „  —  8 

preferred  —  —  46        52 

National  Machine ~  —  ?15 

National  Machine  Recorder  Co . —  —  —  —        *^Y2 

National  Marine  Bank  (Baltimore) '.—  —  —  43        44 

National  Metal  Bank  (Washington) —  —  205      210 

National  Mining —  —  ~          1 

National  Nassau  Bank  of  New  York —  —  —     *215 

National  New  Haven  Bank —  —  193 

National  Newark  Banking —  —  195 

National  Pacific  Oil —  —  4y8C    __ 

National  Park  Bank  (New  York) __  „  367      373 

National  Produce  Bank  (Chicago) __  __  159       163 

National  Produce  Co.  (Chicago) __  —  *165 

National  Protection  Co —  —  —      *60 

National  Railways  of  Mexico,  1st  pfd __  —  57        60 

2d  preferred —  —  241/2     25 

National  Realty,  Ltd —  —  6 

National  Refining,  com —  —  121 

preferred  —  —  126 

National  Reserve  Bank  (Kansas  City,  Mo.)--  —  ~  152y3  153^/^ 

National  Reserve  Bank  (New  York) __  —  93        97 

National  Rock  Bank  of  Roxbury  (Boston) __  __  190 

National  Savings  &  Trust  (Washington) __  __  265      275 

National  Screw  &  Tack,  pfd *100l^     __ 

National  Security  Bank   (Boston) .___  __  __  400      450 

National  Security  Bank   (Philadelphia) *350     *350 

National  Shawmut  Bank   (Boston) __  —  240      242 

National  Siik  Dyeing,  pfd __        ^94 

National  State  Bank  (Burlington) 250 

National  State  Bank   (Camden) *200     "200 

National  State  Bank  (Newark) 115 

National  State  Bank  of  Troy __  __  210      215 

National  State  &  City  Bank  (Richmond) __  —  218 

National  Sugar  Refining,  pfd __  __  100      101*4 

National  Surety  (New  York) _-  __  *198  *205 

National  Telephone  Corp.,  pfd *27y2  *27y3 

National  Tradesmen's  Bk.  (New  Hampshire).  __  __  •  193 

National  Transit __  __  $49y2  $50y3 

National  Trust  (Canada) *222 

National  Union  Bk.  of  Maryland  (Baltimore)  __  __  143       144 

National  Union  Bank  (Boston) 222  222 

National  Union  Bank  (Reading) __  __  $160    $165 

National  Union  Insurance   (Washington) $6 

National  Water  Co.,  pfd ._  __  *67 

common *7 

Nationale,  La  Banque  (Canada) 140      143 

Natomas  Co.  of  California IIV2 

Naumkeag  Steam  Cotton  (Massachusetts) *157 

Naumkeag  Trust  (Salem) 250 

Nebraska  National  Bank  (Omaha) __  __  115       130 

Neuralgyline  Co. 156 

Nevada  Consolidated  Copper $17y2  $17l^ 

Nevada  Hills  Mining   (Nevada) $1.15    $1.15 

Nevada  Utah  M.  &  S __  __  2c        5c 

Neversink  Bank  (Reading) __  __  $65      $70 

New  Arcadian  Copper __  __  2          2*^ 

New  Baltic  Copper __  __  85c        $1 

New  Bedford  &  Onset  Street  Railway ^_        70 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  datt. 

1055 


High  Low  Bid  Asked 

New  Bedford  (Massachusetts)  Deposit  &  Tr._  __  __  250  260 

New  Bedford  Gas  &  Electric  Light —  —  SOSVg     — 

New  Britain  Machine —  —  $69 

New  Brunswick  Trust —  —  250  265 

New  Central  Coal  Co.  of  West  Virginia „  __  *$10  *$15 

New  Departure  Manufacturing,  com __  __  $165  $175 

preferred —  —  $105  $107 

New  England  Co —  —  153  154 

New  England  Cotton  Yarn,  com __  __  —  $70 

preferred  —  —  $86%  $87 

New  England  Engineering  Co __  —  —  *91 

New  England  Exploration  Co __  —  *2 

New  England  Inv.  &  Sec,  pfd._- —  —  *90  *92 

New  England  Nat'l  Bk.  (Kansas  City,  Mo.)  __  _.  „  450  475 

New  England  Power,  pfd *96  *96 

• common —  —  —  *38 

New  England  Telephone  &  Telegraph __  __  153 

New  England  Trust  (Boston) „  —  350 

New  First  National  Bank  (Columbus,  O.) —  —  230  250 

New  Haven  Gas  Light __  —  $411/3  $42ya 

New  Haven  Iron  &  Steel *40c 

New  Haven  Co.  National  Bank  (New  Haven)  __  „  $20^4     — 

New  Haven  Water __  —  $87  $89 

New  Haven  Sewing  Machine —  —  —  *98 

New  Idria  Quicksilver  Mining —  —  6 

New  Jersey  Guarantee  &  Trust  (Jersey  City)  620 

New  Jersey  Zinc __  __  620  550 

New  London  &  Northern  Railroad *200    *200 

New  Netherland  Bank  (New  York) __  __  220 

New  Orleans  Auction  Ex 310 

New  Orleans  Board  of  Trade __  __  25  50 

New  Orleans  Brewing,  com 40 

preferred 47 

New  Orleans  Cold  'Storage  &  Warehouse 75 

New  Orleans  Cotton  Exchange __  —  —  3000 

New  Orleans  Land __  __  26  27Vj 

New  Orleans  Mobile  &  Chicago,  pfd __  15  25 

• common 13 

NcAV  Orleans  National  Bank __  __  175 

New  Orleans  Railway  &  Light,  com 31*/^ 

preferred  __  __  72^/2     — 

New  Orleans  Real  Estate,  Mtge.  &  Security 96 

New  Orleans  Traction  &  Light,  com 71%  __ 

preferred  *101 

New  Pennsylvania  Petroleum __  __  42y2C    — 

New  River  Co.,  pfd __  __  __  *24 

New  York  Air  Brake 72  77 

New  York,  Brooklyn  &  Manhattan  Beach,  pfd.  __  __  *110  118 

New  York  Central  &  Harlem  River IO614  106*4 

New  York,  Chicago  &  St.  Louis,  com __  __  55  57 

Ist   preferred 97 

• 2d  preferred __  __  SOVi     90 

New  York  County  National  Bank  (New  York)  __  __  *850  875 

New  York  Curtain  Co __  __  __  *64 

New  York  Dock,  com __  __  __  19 

preferred 33  43 

New  York  &  East  River  Fer _,  _,  8  15 


"Quotation  nearest  March  1,  1913.    No  quotation  on  that  date, 

X056 


High  Low  Bid  Asked 

New  York  &  Harlem,  com.  gtd —  —  *$175  *$180 

New  York  Iron  Roofing  &  Corrugating __  „  —  *350 

New  York  &  Kentucky  Co.,  pfd —  —  —  95 

common —  —  84  85 

New  York,  National  Bank  of —  —  —  *390  405 

New  York,  Lackawanna  &  Western,  gtd __  —  ^^118  133 

New  York  Life  Insur.  &  Tr.  Co.  (New  York).  __  —  *1040  1065 

New  York  Mortgage  &  Security —  —  198  205 

New  York  Mutual  Gas  Light  Co „  __  *168 

New  York,  New  Haven  &  Hartford ISe^s  l^eVg 

New  York,  Ontario  &  Western __  —  30  30ya 

New  York  &  Queens  Elec.  Lt.  &  Power,  com.>  __  __  53  58 

preferred  „  —  ■        78  85 

New  York  Railways __  —  *20  *30 

New  York  &  Richmond  Gas __  —  57  63 

New  York  State  National  Bank  (Albany) __  __  300 

New  York  State  Railways,  com —  *88 

preferred __  __  *90  *93 

New  York  Tanning  Extract,  pfd __  __  —  *95 

common __  *'^'^V»  — 

New  York  Title  Insurance __  —  105  115 

New  York  Transit   __  __  *335  *345 

New  York  Transportation  $5  $7 

New  York  Trust   (New  York)    __  __  625  635 

Newark  Consolidated  Gas __  __  971/3  98% 

Newark  Fire  Insurance __  __  $14 

Newark  Telephone,   com.    121 

Newark  Trust   Co.    __  __  170 

Newberry  Cotton  Mills    (South  Carolina)—  __  __  130  140 

Newburyport  Gas  Light  __  __  __  *200 

Newburyport   Silver  Co.   *100    *100 

Newmarket  Manufacturing  (New  Hampshire)  *95 

Newport  &  Fall  River  St.  Ry. __  __  __  *110 

Newport   (Kentucky)   National  Bank __  __  175 

Newton   (G.  B.)    Coal,  com. __  __  231/3  24% 

1st    preferred    __  __  98  100 

2nd    preferred __  *68  *75 

Niagara  Falls  Power __  __  165  173 

Niagara  Insurance    (New  York)    __  __  $1571/3  $165 

Niagara  St.  Cath,  &  Tor. *108 

Nicholson   File    __  __  265  283 

Nichols  &  Shepard  Co.   __  __  *57 

Niles-Bemont-Pond,   com.    84  88 

preferred    90  99 

Ninth  Avenue  Railroad __  __  160  180 

Ninth  National  Bank   (Philadelphia) *267     *267 

Nipissing    Mines    __  __  8%  8% 

Nonquitt  Spinning  Co.  (New  Bedford) 93l^ 

Norfolk  &  Nashville  Steamboat __  __  200  209 

Norfolk  Railway  &  Light  __  __  $25%  $361/3 

Norfolk   Southern    __  __  421/3  471/3 

Norfolk  (Virginia)   Bank,  Savings  &  Trust 455  465 

Norfolk   (Virginia)   National  Bank __  __  190  193 

Norfolk  &  Western,  com.  IO51/3  1051/, 

Norfolk  &  Western,  adj.  pfd. __  __  *89  92 

North  Alaska  Salmon  Co.   __  __  __  103 

North   American   Co.    78%     78% 

North  American  Trading  &  Transportation *18Va 

North  Atlantic  Fisheries,  Limited,  pfd *100    *100 

*QuotatldQ  nearest  March  1,  1913.    No  quotation  on  that  date. 

1057 


High  Low  Bid  Asked 

North  Avenue  State  Bank  (Chicago) __  143  147 

North  Boston  Ltg.  Prop.,  pfd __  __  __  128 

North  Boston  Lighting  Prop.,  com t33 

North  Butte  Mining __  __  2714     271/2 

North  Carolina  Railroad   __  __  165  170 

North  Lake  Mining __  __  1%       2 

North  Memphis  Savings  Bank   (Memphis) __  450  500 

North  Pennsylvania  Railroad *$94 

North  Philadelphia  Trust *$106  *$106 

North  River  Insurance    (New  York) __  __  $371/2  $40 

North  Scranton  Bank   (Scranton) __  __  $200  $205 

North  Side  Bank   (Brooklyn)    __  __  175  200 

North  Side  Bank   (Cincinnati)    >.  __  $170  $200 

North  Side  St.  Bank  (Chicago)   ^_  __  __  115  120 

North  Star  Mining   (Nevada)    23c  22c 

North  Ward  National  Bank  (Newark) __  __  395 

Northampton    (Massachusets  Street  Railway  __  118  120 

North  Bank  &  Trust   (Seattle) __  __  140  150 

Northern  California  Power,  Cons. 371/2     39 

Northern  Canadian  Mtg.,  Ltd. , __  __  —  *115 

Northern  Central  Railway . __  __  $121  $123 

Northern  Crown  Bank  (Winnipeg)  96  97 

Northern  Idaho  &  Montana  Power,  com —  2  4 

preferred    30  40 

Northern  Indiana  Gas  &  Electric,  pfd. __  __  *82  *86 

Northern  Insurance    (New  York)    —  —  90  110 

Northern  Liberties  Gas *41  *41 

Northern  Life  Insurance __  —  *127y2 

Northern  National  Bank  (Duluth) __  __  130 

Northern  National  Bank   (Lancaster) 130  132 

Northern  National  Bank   (Philadelphia) *206  *206 

Northern  National  Bank  (Toledo)    154 

Northern  Ohio  Light  &  Traction,  com. —  —  75 

preferred    __  —  —  105 

Northern  Ohio  Traction   __  _>  73  77 

Northern  Ontario  Light  &  Power,  com. __  —  16  20 

preferred    —  __  59%     62 

Northern   Pacific    116  1151/2 

Northern  Pipe  Line   —  __  *112  *115 

Northern  Railroad  (New  Harashire)   __  __  128  130 

Northern  Railroad  of  New  Jersey —  __  81  90 

Northern  St.  Louis  Trust —  —  125 

preferred —  30  40 

Northern  Securities —  __  105  110 

Northern   Star   *22  *21i/2 

Northern  States  Power,  com.  —  —  2314    241/2 

preferred __  __  84Vi     851/2 

Northern  Texas  Electric,  com.  __  __  105  111 

preferred    —  —  97 

Northern  Trust  Co.  Bank    (Chicago) __  —  332  338 

Northern    Trust    (Philadelphia) *450  •450 

Northern  Trust  &  Savings  (Lancaster) __  __  $125  $127 

Northwest  F.  &  M.  Insurance  (Minnesota)—  __  —  199  207 

Northwest  National  Bank   (Minneapolis) __  —  285  300 

North  West  St.  Bank ._  —  198  202 

N.  W.  States  Port.  Cem.,  com __  —  15  25 

preferred —  —  84  90 

Northwestern  Bank  (Philadelphia) '390  *390  —  ^  __ 

•Quotation  nearest  March  1,  1913.    No  quotation  on  tliat  date.    t"Value"  as  of  March  1,  1913. 

1068 


High    Low 

Northwestern  Power,  com. 

preferred    

Northwestern  Savings  Bank   (St.  Louis) 

North  Western  Teleg. — 

North  Western  Trust   (Philadelphia) *$185  *$185 

Northwestern  Trust  &  Sav.  Bank   (Chicago) 

Norwich  &  Worcester,  pfd.  *195     *195 

Nova  Scotia,  Bank  of  (Canada)   

Nova  Scotia  Car  Works,  1st  pfd.  *7.44%  basis 

Nova  Scotia  Clay  Works,  pfd. *7.52%  basis 

Nova  Scotia  Steel  &  Coal,  com. —        —  80 

• preferred    123       120 

Oakland  (California)   Bank  of  Savings __        __  200 

Oakland  Park  Land  Co. *1        'l 

Occidental  Life  Insurance   

Occidental  Mining   (Nevada)    

Ogden  Mine  Railroad 

Ogilvie  Flour  Mills,  com. 

preferred . _•___ 

Oglethorpe  Savings  &  Trust  (Savannah) 

Ohio   Copper    %         % 

Ohio  Fuel  Oil 

Ohio  Fuel  Supply 

Ohio  National  Bank  (Columbus,  Ohio) 

Ohio  Oil  . 

Ohio   Petroleum  Co.   

Ohio  Savings  Bank  &  Trust  (Toledo) 

Ohio  Traction,  com.  

preferred 

Oil  Fields  of  Mexico   

Ojibway  Mining 

0.  K.   (Colorado  Springs)    

Oklahoma  Natural  Gas 

Oklahoma  State  Bank  (Guthrie) 

Old  Boston  National  Bank   (Boston) 

Old  Colony  Copper   

Old  Colony  Railroad 

Old  Colony  Trust   (Boston)    

Old  Colony  Trust  &  Savings  Bank  (Chicago) 

Old  Detroit  National  Bank    (Detroit) 

Old  Dominion  Co.   

Old  Dominion  Tr.  Rcpts. 

Old  Dominion   Steamship   

Old  Gold   (Colorado  Springs) 

Old  National  Bank   (Grand  Rapids)    

Old  Second  National  Bank  (Bay  City) 

Old  South  Bldg.  Association 

Old  Town  National  Bank   (Baltimore) 

Olinda  Land  Co.   » 

Olive  Branch    (Colorado   Springs) 

Oliver  Bldg.  Trust  (Boston)  

Omaha  &  Council  Bluffs  St.  Ry.,  com. 

preferred    

Omaha  &  Council  Bluffs  St.  Ry.  &  Bdge.,  com. 

Omaha  Electric  Light  &  Power,  pfd 

Omaha  National  Bank  

Omaha   Stock   Yards   

Oneco  Copper  Mining 

Oneida  National  Bank  (Utica)  

^Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1059 


Bid 

Asked 



8 



45 

295 

300 

^$581/2 

*$60 

268 

272 

2601/4 

261 

125 

140 

70c 



100 



123 

127 



120 

1671/3 

— 

*$16% 

*$17 



$451/8 

275 

285 

$123  ! 

$125 



*25 



140 

39 

45 

70 

85 

IVa 

1% 

2 

2y4 



.0050 

691/jj 

70 

125 



125 

127 

sy^ 

6 

175 

330 

340 

117 

120 

194 

200 

48 

481/2 

5 

7 

103 

107 

21/2C 

3c 

208 

212 



125 



$65 

$121/2 

$14 



391/2C 

002 



$101 

68 

__ 

82 



•631/2 





♦85 

175 

200 

♦96 

1% 

1% 

225 

235 

High    Low 

Oneida-Regal  Textile,  pfd.  

Onomea  Sugar  Co.   

Ontario  Loan  &  Deb.   *172 

Ontario   Power   

Ontario  &  Quebec  Railway 

Ontario  Silver  Mining  Co.  

Ophir  Silver  Mining   (Nevada)    

Orangeburg  Manufacturing,  pfd. 

Oro  Electric  Corporation,  com. 

preferred 

Oro  Mining  (Nevada)   12c      12c 

Oro  Water,  Light  &  Power  Co 

O'Rourke  Eng.   Constr.   

Orr  Cotton  Mills  (South  Carolina)   

Osage  &  Oklahoma  Gas *61      'CI 

Osborn  Mills   (Fall  River)    

Osborn  Paper  Co.,  pfd.  *26      *26 

Osceola   Consolidated   

Oswego  &  Syracuse . 

Otis  Elevator,  com. 

preferred    

Otis-Fenson  Elevator,  Limited,  pfd. *100    *100 

Ottawa,  Bank  of  (Canada)    

Ottawa  Light,  Heat  &  Power 

Ottumwa  (Iowa)  Railway  &  Light,  pfd. 

Overman  Mining   (Nevada)    

Owens  Bottle -Machine  

Owisso  Sugar  Co. 

Oxford  Linen  Mills,  "A"  stk. 

"C"  stk.   

Oxweld  Acetylene  Co.   

Ozark  Power  &  Water  Co 

Paauhau  Sugar  Plan 

Pabst   Brewing,   pfd.    

Pacific  &  Atlantic  Teleg.  

Pacific  Aux.  Fire  Al.  (San  Francisco) 

Pacific  Bank  (New  York)  

Pacific-Burt  Co.,  com. 

preferred    

Pacific  Coast  Borax,  com. 

preferred 

Pacific  Coast  Casualty  

Pacific  Coast  Co.,  com.  

1st  preferred 

2nd  preferred   

Pacific  Crude  Oil  

Pacific  Gas     Electric  (Arizona),  pfd. 

Pacific  Gas  &  Electric  (California),  com. 

Pacific  Gas  &  Electric  (California),  orig.  pfd. 

Pacific  Insurance  (New  York)   

Pacific  Lighting,  com.    

preferred  

Pacific  Mail  Steamship  

Pacific  Mills   (Massachusetts) 1^2y4 

Pacific  Mutual  Life  Insurance 

Pacific  National  Bank   (Lawrence)    

Pacific  National  Bank    (Tacoma)    

Pacific  Power  &  Light,  pfd. 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1060 


Bid 

Asked 



n02i/a 

32 

83 

841/2 

142 

145 

2V2 

3 

18c 

20c 



75 

143/4 

1534 

— 

721/4 

100 



•85 

90 

100 

— 

1121/2 

$86 

$87 

$1021/2 

$110 

82 

83 

98 

100 

207 

y_ 

1861/2 



90 

921/2 

20c 



*445 



•73/4 



*3 

__ 

*13/4 

*83 

*48 

*53 

16% 

107 

110 

$161/2 

$181/2 



4ya 

$178  * 

$133 



39 

_ 

90 

80 



1001/2 

101 

115 

127 

80 

95 

80 

100 

80 

100 

45c 

50c 

87 

90 

58% 

593/4 

89 

SlVa 

$433/4 

108 

115 

743/4 

__ 

26 

28 

425 

600 

120 





275 

100 

103 

High    Low  Bid    Asked 

Pacific  Smelting  &  Mining ^      7-33 

Pacific  Tel.  &  Tel.  Co.,  com. _  861/2    39 

• preferred ^__  __  __  92      100 

Package  Machinery,  pfd.   *100 

Packard  Motor,  pfd. __      104 

Packers  National  Bank  (So.  Om.)   __  __  110      135 

Pacclet  Manufacturing   (South  Carolina) __  __  98       103 

Paddock  Trust  (Boston)   __  _.  $90 

Paducah  Tr.  &  Lt.,  com. __  __  7        10 

preferred —  __  30 

Page  Manufacturing  (New  Bedford) 96 

Paint  Creek  Colleries,  stk.  rets. __  —  *8        *9 

Pairpoint  Corp.   (New  Bedford)   __  __  175      325 

Palmer  Oil  __  __  15c 

Pangborn  (T.  W.)  Co. '11  *11 

Park  Bank   (Los  Angeles)    __  __  115      135 

Park  National  Bank  (New  York)   __  __  360 

Park  National  Bank  (Holyoke)   __  »_  100      105 

Parke,  Davis  &  Co. __  __  119 

Parker  Cotton  Mills,  com. __  15        20 

guaranteed    __  90        98 

preferred __  __  55        60 

Parker  Mills  (Fall  (River)  __  ._  __        75 

Passaic   (New  Jersey)   National  Bank 310 

Passaic  Trust  &  Safe  Deposit __  __  225 

Paterson  &  Pas.  G.  &  El. __  __  921/3     95 

Paterson  National  Bank __  __  310 

Paterson  Safe  Deposit  &  Trust __  __  360      400 

Paterson  Savings  Institution    (Paterson) 370      380 

Paton  Manufacturing 691/3 

Pawtucket  Gas,  pfd. __  __  89        94 

Pay-As-You-Enter  Car,  pfd. _>  __  *40      *46 

Pearl  St.  Market  Bank  (Cincinnati)  __  __  105      115 

Pearl  St.  Savings  &  Trust  (Cleveland) >_  _>  $275 

Peck,  Stow  &  Wilcox,  com. __  -_  $331/3  $36 

• preferred *100 

Peerless  Motor  Car,  pfd.   *100    *100 

Pelham  Trust    (Philadelphia)    *$130  *$130 

Pelzer  Manufacturing  Co.  (South  Carolina) 130 

Pem'ton  Bldg.  Tr.    (Boston)    __  __  __      $60 

Pemigewasset  Valley  Railroad *110  *110 

Penguico  Mines,  pfd.   __  __  *11      *15 

Peninsular  State  Bank,  Detroit __  210 

Penmans,  Limited,  com.   54        55i^ 

■ preferred —  __  __        84 

Penn  Metal  Ceiling __  __  __     *300 

Penn  National  Bank   (Philadelphia) *$192i4  *$192i4     __ 

Penn  National  Bank   (Reading)    __  __  325       329 

Penn  Traffic   —  —  $1%     _. 

Pennsylvania  Academy  of  Fine  Arts *19  *19 

Penn.  Co.  for  Ins.  on  Lives  &  Grtg.  An *$645  *$645 

Pennsylvania  Fire  Insurance  (Philadelphia) $40614 

Pennsylvania  Lighting,  com.   __  __  18        21 

preferred  —  __  75        80 

Pennsylvania  Midway  Oil —  __  71/3C    __ 

Pennsylvania    Railroad    $60  $59% 

Pennsylvania   Salt  Manufacturing   __  __  $1051/3  $106 

Pennsylvania  Steel,  com.   —  5( 

-preferred    93 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1061 


High  Low  Bid    Asked 

Pennsylvania  Textile __  __  24        26 

Pennsylvania  Trust  (Reading)   —  __  500 

Penn.  Whg.  &  Safe  Dep.  (Philadelphia) *$86i4  $8614 

Pennsylvania  Water  &  Power __  __  65        66 

Pennsylvania  Wire  Glass  •46ys  •46y8 

Pensacola  Electric  Co.,  com. . __  23        28 

preferred    __  __  82        85 

People's  Bank  (Buffalo)   >_  __  200 

People's  Bank   (New  York) ._  __  *$60    *$62i/2 

People's  Bank   (Troy)    __  _.  210      215 

People's  Bank   (Wheeling)    __  __  $33      $35 

People's  Bank    (Wilkesbarre)    __  __  340      350 

People's  Bank  &  Savings  (Cincinnati)   __  110      120 

People's  Bank  &  Trust  (New  Haven)   __  __  145 

People's  Bank  &  Trust   (Passaic)    __  —  290      300 

People's  Gas  Light  &  Coke 111%  III8/4 

People's  National  Bank   (Barre,  Vt.)    __  __  105 

People's  National  Bank   (Brooklyn)    145      155 

People's  National  Bank  (Charleston) __  145       150 

People's  National  Bank  (Kansas  City,  Kan.)-  —  --  95       100 

People's  National  Bank    (Lancaster) 185      190 

People's  National  Bank    (New  Brunswick)—  __  __  250      275 

People's  National  Bank  (Scranton) __  __  IGGi/o  1691/2 

People's  National  Bank  of  Roxbury  (Boston)  __  __  125      130 

People's  National  Fire  Insur.    (Philadelphia)  $181/3     __ 

People's  Nat.  Gas  &  Power __  __  __      $31 

People's  Safe  Deposit  &  Trust  (Jersey  City)  __  __  325 

People's  Savings  Bank  (Bay  City) 150 

People's  Saving  Bank  (Cleveland)   —  __  $220 

People's  Savings  Bank  (Grand  Rapida) __        250 

People's   Savings   Bank    (Saginaw) __  __  260      270 

People's  Savings  Bank  (Wilmington,  N.  C.)-_  —  „  $18%  $20 

People's  Savings  Bank  &  Trust   (Covington)  __  __  120 

People's  Saving  Bank  &  Trust  (Memphis)  ___  __  __  205       215 

People's  State  Bank,  Detroit   __  _.  271      280 

People's  Stock  Yards  St.  Bk.    (Chicago) __  __  240      250 

People's   Trust    (Brooklyn)    __  __  295      305 

People's  Trust    (Lancaster)    $300 

People's   Trust    (Philadelphia)    ♦$45  •$45 

People's  Trust  &  Savings  Bank  (Chicago) __  __  300      310 

People's  Water  Co.,  com. 4          4% 

People's  Water  Co.,  pfd. __  __  __        60% 

Peoria  &  Bureau  Vy. __  __  165      178 

Peoria  &  Eastern __  __  11        15 

Pepperell  Manufacturing   (Maine)    304% 

Pequonnock  National  Bank   (Bridgeport) 165 

Peregrina  Mining  &  Milling,  pfd. *12      *1Q 

Pere  Marquette,  com.   3          6 

1st  preferred __  __  14        18 

2nd  preferred   __  __  6        11 

Perkins  (Rhode  Island)  Horse  Shoe,  pfd __  __            *50 

Petersburg  (Virginia)   Savings  &  Ins __  __  __    $100 

Pettibone  Mul.,  com.  26  35 

1st  preferred __  __  92        96 

2nd  preferred   __  .    __  __       *83 

Pfandler  Co.,  pfd.  __  __  __    •130 

Pharmacist    (Colorado   Springs)    __  __  li^e    2%c 

Phelps-Dodge  &  Co __  ._  200 

Phenix  National  Bank  (Providence) __  __  $105 

♦Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1063 


High  Low  Bid    Asked 

Phil  Carey,  pfd. __  ._  lOOVa  105 

Philadelphia  &  Trenton  Railroad 240y2     __ 

Philadelphia  Bourse,  pfd.  ,___  *$4  *$4 

common    *$1  *$! 

Philadelphia  City  Passenger  Railway *$156y3 

Philadelphia  Co.,  com. $44%  $45% 

6%    preferred    $39%  $451/2 

5%   preferred   $38  $441/2 

Philadelphia   Electric   __        __  $22%  $231/3 

Philadelphia  &  Erie  *$65  •      __ 

Philadelphia,  Germantown  &  Norristown __        __  $142    $145 

Philadelphia  &  Gray's  Ferry  Pass.  Ry *$80i4     __ 

Philadelphia  Life  Insurance   $10l^     __ 

Philadelphia  Mortgage  &  Trust *15  *15 

Philadelphia  National  Bank ♦478  *478 

Philadelphia  Rapid  Transit,  vot.  tr.  ctfs __        $25%  $26 

Philadelphia    Traction    $83%  $83 

Philadelphia  Trust,  Safe  Deposit  &  Ins.  Co.-  *741i/4*741% 

Phillipine  Tel.  &  Tel. __        __  2414     __ 

Phillips  Buttorff  Manufacturing __        140      145 

Phoenix  Third  National  Bank   (Lexington)  __  __  163       163 

Phoenix  Fire  Insurance    (Hartford) __        330      340 

Phoenix  Insurance  (Memphis) 96      100 

Phoenix  Insurance    (Memphis) __        96      100 

Phoenix  National  Bank   (Hartford)    __        __  155      161 

Physical   Culture   Restaurant   __        __  *4 

Piedmont   Manufacturing    (South    Caroclina)  175 

Pierce,  Butler  &  Pierce  Manufacturing,  pfd.__  __  101      104 

Pierce  Manufacturing  (New  Bedford)    340 

Pinelawn  Cemetery  Co. *3l^ 

Pioneer  Trust   (Kansas  City,  Mo.) 250      260 

Pittsburgh,  Bessemer  &  Lake  Erie,  com. __         __  $29      $32 

preferred __        $62      $68 

Pittsburg  Brew.,  com.  __        $10      $101/3 

preferred    $37% 

Pittsburgh -Buffalo  Co.,  pfd.  __        __  125 

Pittsburgh,  Cine,  Chic.  &  St.  Louis,  com __        __  96%     97 

preferred 100      115 

Pittsburgh  Coal,  com.   21%     21% 

' preferred 87%     88 

Pittsburgh,  Ft.  Wayne  &  Chicago,  gtd. _-        __  ♦161     *163 

special  guaranteed ^148     *156 

Pittsburgh  Insurance $86 

Pittsburgh  &  Lake  Erie __        __  $195     $205 

Pittsburgh,  McKeesport  &  Youghiogheny,  gtd.  ♦$62l^ 

Pittsburgh  Oil  &  Gas  __        __  $7%     $8 

Pittsburgh  Plate  Glass __        __  101       102 

Pitts.  Silver  Peak  Gold  Mining,  (Colorado)  __        60c      60c 

Pittsburgh   Spring  &   Steel  __        __  *100    *130 

Pittsburgh  Steel,  pfd.   __        __  95      100 

Pittsburgh    Trust    __        __  __     ^200 

Pittsburgh,  Youngstown  &  Ashtabula,  pfd. ^162    ^167 

Pittsfield  Electric __        __  __     t200 

Plant  (Thomas  G.)  Co.,  pfd. __        __  __     ♦lOl 

Planters*  Loan  &  Savings  Bank  (Augusta) $40      $45 

Planters'  National   Bank    (Richmond) 800 

Plimpton    Manufacturing    120      124 

Plymouth   Cordage   Co.   __        __  __    ♦237l^ 

Plymouth  Rubber,  pfd.  ♦lOO  •100 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date.    fValue"  as  of  March  1,  1913. 

1063 


High    Low  Bid    Asked 

Pneumatic  Scale  Corporation,  Limited,  pfd.__  *$10y2  *$10y2 

common __        *5 

Pocasset  Manufacturing   (Fall  River) __  __  __      108 

Poe  (F.  W.)  Manufacturing  (South  Carolina)  __  __  105      115 

Pomeroy  Ink  Co.   (New  Jersey) *$1  *$1 

Pond  Creek  Coal  __  __  23%    24 

Ponemah  Mills   (Providence),  com.  __  __  109 

preferred    __  __  108      112 

Pope  Manufacturing,  com.  $22      $25 

■ preferred $68 

Porcupine  Gold  Mines __  __  15c      20c 

Porcupine  Twins  Mining *8c  *8c 

Portland   (Maine)   Electric  Co.,  pfd. *100  *100 

Portland  Gas  &  Coke,  pfd.  __  __  101      103 

Portland   (Maine)    Gas  Light   __  __  $95     $100 

Portland   Gold  Mining __  __  98c      $1 

Portland   (Maine)   National  Bank __  __  170      180 

Portland  Railroad  __  __  __    *115 

Portland  Railway,  Light  &  Power,  1st  pfd._-  __  __  67     .    68y2 

Porto  Rican -American  Tobacco   __  -_  240      250 

Porto  Rico  Railways,  com. __  __  __      *72 

preferred    *110 

Postal  Life  Insurance  Co.  __  __  *8 

Potomac  Fire  Insurance  30 

Potomac  Insurance  (Washington)    $30 

Potomska  Mills  (New  Bedford)   __  __  __      119 

Potosi  Mine   (Nevada) 2c        2c 

Prairie  Oil  &  Gas _.  _-  *327    *330 

Pratt  &  Cady __  __  __      $96 

Pratt  &  Whitney,  pfd.  „  __  101      103 

Pratt  Read  Co. __  __  *90    *105 

Pray  Bldgs.  Tr.    (Boston)    __  __  __      $30 

Premier  Oil   __  __  25c      31c 

Pressed  Steel  Car,  com. 27  26% 

• preferred 971/2     97 

Preston  East  Dome  Mines __  __  3c        5c 

Price   Brothers —         73 

Price  Cereal  Prod.,  pfd. •lOO  *100 

Procter  &  Gamble,  com __  __  550      600 

preferred 190 

Produce  Exchange  Bank  (Kansas  City,  Mo.)         160 

Produce  Exchange  Bank  (New  York) __  „  168      173 

Producers   Oil   „  __  130 

Producers  Transportation 90 

Proprietors  of  Revere  House   (Boston) •I 75  *175 

Providence  Bank  (Scranton)   __  __  *105     *107V3 

Providence   Gas    —  __  $100    $104 

Providence  Ice  Co.,  pfd.  —        *58 

Providence    (Rhode  Island)    National  Bank 217 

Providence  National  Bank  (Waco)   __  __  215 

Providence    Telephone    —  —  $5iy2  $53% 

Providence,  Warren  &  Bristol  Railroad „  __  145 

Prov.  Wash.  Ins.   (Providence) >_  __  $83      $90 

Providence  &  Worcester __  __  270      275 

Provident  Life  &  Trust  (Philadelphia) *875  •875 

Prov.  Savings  Bank  &  Trust  (Cincinnati)  _._  __  __  $23y2  $24 

Prudential  Life  lisurance  __  __  $262y2     __ 

Public  Service  Co.,  Nor.  111.,  com. __  __  80        81 

^preferred —  —  98        99 

♦Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1064 


High  Low  Bid    Asked 

Public  Service  Corporation  of  New  Jersey __  __  116      119 

Public  Service  Investment  Co.,  pfd. *5.95%  basis 

Public  Utilities,  com. '.  __  __  $50 

■ preferred __  __  $48      $52 

Pueblo  Smelting  &  Refining 2^  2 

Puget  Sound  Traction,  Light  &  Power,  com.         65        67 

■ — ^preferred __  __  107      108 

Pullman   Co.   USYz  1581/2 

Pullman  Trust  &  Savings  Bank  (Chicago) __  180 

Pure  Oil  __  __  $15*4  $151/3 

Puritan  Trust    (Boston)    __  __  200 

Pyle  National  Electric  Headlight „  __  *105 

Quaker  City  National  Bank  (Philadelphia)  __  "120    *120 

Quaker  Oats,  com __  __  265      270 

■ ^preferred __  __  IO6I/2  IO71/2 

Quarter  Savings  Bank   (Wheeling) __      150 

Quebec  Bank  (Canada)    125 

Quebec  Railway,  Light,  Heat  &  Power __  __  18l^     18% 

Queensboro  Corporation,  pfd. *100 

common    __  __  _>      *95 

Queensboro  Development  Co -  '116    *116 

Queensbury  Mills  (Massachusetts),  com. 175      200 

preferred __  __  115      117l^ 

Queens  County  Trust   (Jamaica) __  __  100      110 

Quicksilver  Mining,  com.   3%      4 

■ ^preferred 4          7 

Quincy  Electric  Light  &  Power __  __  __     t200 

Quincy  Mark.  R.  E.  Tr.  (Boston) __  ._  $100    $103 

Quincy  Mining  __  _.  661/2    67% 

Railway  Steel-Spring,  com 29  29 

preferred    __  __  981/2  100 

Railways  Co.  General _>  __  $9        $91^ 

Raleigh  (North  Carolina)  Banking  &  Trust__        __  125 

Raven  &  B.  Hill  (Colorado  Springs) __  __  6c        71/2C 

Raven  Copper  16c      20c 

Rawhide  Coalition  Mining    (Nevada) Ic 

Ray  Consolidated  Copper $18  $17% 

Reading  Co.,  com. $78%  $78 

1st  preferred __  $45      $45l^ 

2nd  preferred   __  __  $44l^  $45l^ 

Reading  National  Bank 275      285 

Reading   Traction    __        $25      $30 

Reading  Trust    __  _-  205      210 

Real  Estate  Assoc.  (Boston)   $85 

Real  Estate,  Banking  &  Trust   (Savannah) __  __  __  137      138l^ 

Real  Estate  Loan  &  Savings '100 

Real  Estate  Title  Insurance  —        95 

Real  Estate  Title  Ins.  &  Trust  (Philadelphia)  *300    *300 

Real  Estate  Tr.    (Philadelphia),  pfd. '61  *61  ,    __ 

common    *96i/8  *96% 

Real  Est.  Trust    (Pittsburgh)    „  __  __      155 

Realty  Assoc,  of  Brooklyn __        $110    $115 

Realty  Realization,  pfd. —  __  __      *90 

Realty    Syndicate    —  —  1331^     __ 

Red  Hills  Mining  (Nevada)    __  Ic        2c 

Red  Top  Extension  Mining  (Nevada) __        __        Ic 

Reece  Button-Hole —  —  $15      $15% 

"Quotation  nearest  ^iJircji  1,  1913.    No  quotation  on  that  date.    t"Value"  as  of  March  1,  1913. 

1065 


High    Low 

Reece  Folding  Machine  

Reed-Prentice  Co.,  pfd.  

Regina  Lace  (Rhode  Island)   

Reliance  Insurance    (Philadelphia)    $83 

Remington  Typewriter,  1st  pfd. 

2nd  preferred  

common 

Renfrew  Manufacturing,  pfd.  

Rensselaer  &  Saratoga  

Reo  Motor  Car  Co. 1 

Reo  Motor  Truck  Co. 

Republic  (Colorado  Springs)   

Republic  Iron  &  Steel,  com. 

■ preferred 

Republic  Railway  &  Light,  com. 

preferred 

Republic  Trust  (Philadelphia) *$66     *$66 

Requa  Savage  

Rescue  Eula  Mining   (Nevada)    13c      13c 

Revere  Sugar,  pfd.  

Reynolds   (R.  J.)   Tobacco  

Rhode  Island  Coal 

Rhode  Island  El.  Protect. 

Rhode  Island  Hosp.   Tr.    (Providence) 

Rhode  Island  Perk.  Horse  S.,  pfd. 

Rhode  Island  Safe  Deposit 

Rice  Ranch  Oil 

Richelieu  &  Ontario  Navigation 

Richmond  Bank  &  Trust  

Richmond,  Fredericksburg  &  Pot.  Div.  Oblig. 

common 

6%  guaranteed 

7%  guaranteed   

Richmond,    Fredericksburg    &    Potomac,    and 
Richmond    &    Petersburg    Railroad    and 

Connection  Co.   ($70  par)    

Richmond  Lace  Works  

Ridge  Avenue  Bank  (Philadelphia) *$60    *$60 

Ridge  Ave.  Pass.  R.  R. *$245 

Riggs  National  Bank   (Washington)    

Riker-Hegeman,  com.  

Rio  Grande  Southern 

Rio  Plate  Mining 

Rittenhouse  Trust   (Philadelphia) ♦$55    *$55 

Ritter  (W.  M.)  Lumber,  pfd. 

Riverside  Home  Tel.  &  TeL 

Riverside  Trust  (Hartford)   

Rivett  Lathe  &  Grinder,  pfd. 

Roanoke  (Virginia)  Gas  Light,  pfd. 

common 

Roanoke  Mills  (North  Carolina)   

Rochester  &  Genesee  Valley  Railroad 

Rochester  Railway  &  Light,  pfd. 

Rochester  Trust  &  Safe  Deposit , 

Rock  Island  Co.,  com.  22%    22% 

preferred 38        38 

Rockford  Electric,  pfd 

Rockford  Life  Insurance  Co. 

Rockport  Granite •31^4  •3I14 

^Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1066 


Bid 

Asked 

31/2 

474 

*6.80% 

basis 

~ 

1021/8 

*99 

•looy. 

*99 

*100i/a 

*39i/2 

*4oy8 



♦1071/, 

♦178 

♦183 

201/3 

21% 

♦i2y. 

.005 

.007 

24 

25y4 

851/2 

87 

26 

28 

77 

80 

— 

3c 

" 

♦100 

265 

268 

5c 

10c 

130 



3350 





55 

110 



1.10 

113% 

114 

$271/2 

320 

330 

320 

330 

320 

330 

320 

330 

115 

120 

— 

♦95 

580 

605 

♦75 



5 

10 

♦40 

♦80 

♦103 

"■" 

18 

160 





•100 

♦85 

♦15 

♦20 



160 

115 



93 

95 

400 

— 

~ 

♦96 



♦17 

High  Low  Bid    Asked 

Rogers  (Wm.  A.)  Limited,  com. 170 

preferred __  __  __       115 

Rome  &  Clinton  Railroad __  130      145 

Rome,  Watertown  &  Ogdensburg '. *120 

Rose  Niehol    (Colorado   Springs)    __  __  .006 

Roseville  Trust  (Newark)  __  __  175 

Ross  Mining  &  Milling *5e  *5c 

Rotary  Ring  Spinning 1          li^ 

Round  Mountain  Mining  (Nevada) 45c  35c 

Royal  Baking  Powder,  com. __  __  200      205 

preferred 105       108 

Royal  Bank  of  Canada 222 

Royal  Weaving  Co, __  __     *155 

Rubber  Goods  Manufacturing  Co.,  pfd. __  *100     *110 

Rugby  Fuel  Co. __  __  __      ♦45 

Rumely  (M.),  pfd. 92  92 

common    __  71         72^3 

Russell  Motor  Car,  com. __  __        90 

preferred __  __  __        971/2 

Rutland  County  National  Bank 133 

Rutland  Railroad,  pfd.    __  __        49 

Rutland  (Vermont)  Trust __  __  200 

Saco-Lowell  Co.,  com. 200 

■ preferred __  107      109 

Safe  Deposit  &  Trust  of  Baltimore __  600 

Safe  Deposit  &  Trust  (Pittsburgh) __  __  __       290 

Safety  Car  Heating  &  Lighting,  com 114l^  II5I/3 

Safety  Fd.  National  Bank  (Fitchburg) __  __  165       170 

Sagamore  Mills    (Fall  River)    __  __  __      175 

St.  Anthony  Falls  Bank  (Minneapolis) 150 

St.  Ives  Mining   (Nevada)    __  __  30c 

St.  James  Importing  Co.  *3 

St.  John  Railway  *75i4     __ 

St.  Joseph  &  Gr.  Island,  com. __  __  *18 

Ist    preferred    *50 

2nd  preferred __  __  *36 

St.  Joseph  Lead __  __  8%      8% 

St.  Joseph  Ry.,  Light,  Heat  &  Power __  __  __        90 

common    __  53%     __ 

St.  Lawrence  &  Chicago  Steam  Navigation..  __  __  108      110 

St.  Lawrence  Flour  Mills,  Limited,  pfd *100    *100 

St.  Lawrence  Milling,  pfd *100     *100 

St.  Louis  Bridge,  1st  pfd. __  __  110      123 

2nd  preferred   50        55 

St.  Louis  Car  Co.,  pfd. __  __  __      *51 

St.  Louis  Catering,  pfd.  __  __  __        1914 

St.  Louis  Cotton  Compress __  __  37        40 

St.  Louis  Mining   (Nevada)    __  __        2c 

St.  Louis,  Rocky  Mountain  &  Pacific,  com. 20        35 

preferred    —  55        60 

St.  L.  &  S.  F.,  1st  pfd. 59  56 

2nd  preferred   24%    24% 

common    __  __  13        16 

St.  Louis  Southwestern,  com. __  __  30        34% 

preferred    —  __  __  73l^     75 

St.  Louis  Union  Trust __  __  __      477 

St.  Mary's  Mineral  Land __  __  38 

St.  Paul  &  Tacoma  Lumber __  __  *115    *140 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1067 


High  Low  Bid    Asked 

St.  Paul  F.  &  M.  Ins. —  __  420 

St.  Paul  Title  &  Trust *$17l^     „ 

Salem  (Massachusetts)  Electric . __            68l^ 

Salera    (Massachusetts)    Gas  Light —  —            250 

Salem  (Massachusetts)  Safe  Deposit  &  Trust  —        150 

Salmon  Falls  Mfg.   (New  Hampshire) '275 

San  Antonio  Copper 5 

San  Diego  Home  Tel.  &  Tel. __  __  5 

San  Joaquin  Light  &  Power —  —  *15 

San  Francisco,  Oakland  Term.  Rys.,  "A"  pfd.  __  __  __        80 

San  Toy  Mining  *22c  •22e 

Sanborn  Map   'GS 

Sandstorm -Kendall  Consol.  Mines  (Nevada) —        2e 

Sandusky  Portland  Cement,  com.  *20 

^preferred    *90 

Sanitol  Chemical   __  __  __        *2% 

Santa  Cruz  Portland  Cement 45 

Santa  Fe  Gold  and  Copper __  __  1%      1% 

Santa  Monica  B.  H.  T.,  pfd. „  __  9 

Santa  Ysabel  Mining __  __  2c        3c 

Saratoga  &  Schenectady  Railroad 160      170 

Sauer    Dough    __  __  $1.40 

Savage  Mining   (Nevada) __  __  3c        4c 

Savannah  Bank  &  Trust „  —  1721/2     __ 

Savannah  Electric,  com.  —  —  8 

preferred 25 

Savannah  Trust  Co.  >-  __  143V8     — 

Savings  Bank  (Richmond)    —  —  $94 

Savings  Trust  (St.  Louis) __  __  105      110 

Sav.  Un.  Bk.  &  Tr.   (San  Francisco) „  __  245 

Savoy   Oil    —  __  M        *5y8 

Sawyer  Massey  Co.,  com.   __        __        481/2 

^preferred    —  —  90 

Scandinavian- American  Bank    (St.  Paul) —  —  220 

Scandinavian- American   Bank    (Seattle)    —        250      255 

Scandinavian- American   Bank    (Spokane) —        115      120 

Scandinavian -American    Bank    (Tacoma) __  —            105 

Scandinavian-Amer.  Nat.  Bank  (Minneapolis)  __        148 

Schuylkill  Valley  Bank  (Reading) __  __  $150    $153 

Scientific  American  Compiling  Co.,  pfd *5 

Scioto  Valley  Traction,  1st  pfd. __  _«  __      100% 

2nd  preferred  —        83 

common    __        __        19*4 

Scituate  (Massachusetts)  Water,  pfd. 100  100 

Scorpion  Mining  (Nevada)    __  __  5c        6c 

Scotten -Dillon    Co.    „  ._  __     •130 

Scovill  Manufacturing  Co.   __  __  __     ♦153 

Scranton  Bolt  &  Nut „  __  *103    '106 

Scranton  Electric,  pfd.   "lOO  '100 

Scranton   Savings  Bank   __  __  800      825 

Seaboard  Air  Line,  pfd.  44  44 

common    __  __  19        19V8 

Seaboard  National  Bank   (New  York)    415 

Seaboard  National  Bank    (Norfolk)    __  __  125       130 

Seaconnet  Mills    (Fall  River) __  __  __        63 

Seager  Engine  Co —  —  __      *10 

Sears,  Roebuck,  com. 198  198 

preferred    —  —  123      124% 

'Quotation  nearest  ATarch  1,  1913.    No  quotation  on  that  d&te. 

1068 


High    Low  Bid    Asked 

Seattle  National  Bank  —  —  310      315 

Second  &  Third  Streets  Pass.  Ry. $250 

Second  Avenue  Railroad —  —  13 

Second  National  Bank  (Allentown) —  —  320      330 

Second  National  Bank   (Altoona)    __  —  200      210 

Second  National  Bank    (Baltimore) —  —  200 

Second  National  Bank  (Bangor) __  —  —      325 

Second  National  Bank   (Boston) __  —  290      300 

Second  National  Bank    (Hoboken)    —  —  390 

Second  National  Bank   (Lexington)    —  —  155 

Second  National  Bank  (New  Haven)   __  —  194 

Second  National  Bank  (New  York) —  —  200      210 

Second  National  Bank  (Paterson)   —  —  225 

Second  National  Bank   (Philadelphia) *290     *290 

Second  National  Bank    (Pittsburgh) *$195  *$1943/4 

Second  National  Bank   (Reading) __  __  285      293 

Second  National  Bank  (Saginaw) —  —  *375      400 

Second  National  Bank   (Toledo)    —  —  —      276 

Second  National  Bank    (Utica)    __  —  200      225 

Second  National  Bank   (Washington)    __  —  162l^  170 

Second  National  Bank    (Wilkesbarre) „  __  340      350 

Sec.  Sav.  Bk.  &  Safe  Dep.  (Cincinnati) —  —  200      205 

Security  Bank   (Chicago)    —  —  235 

Security  Bank  (New  York) —  —  *133      140 

Secur.  Bank  &  Trust  (Memphis)   —  —  100      105 

Security  Bank  &  Trust   (Toledo)    —  —  134 

Security   Co.    (Hartford)    __  —  195 

Security  Insurance   (New  Haven)    __  __  $43      $50 

Security  National  Bank   (Kansas  City,  Mo.)  __  __  130      140 

Security   National    Bank    (Minneapolis) __  —  492      510 

Security  Savings  Bank  (Charleston) —  —  250      255 

Security  Savings  Bank  (San  Francisco) __  __  $330    $375 

Security  Savings  &  Trust   (Erie)    __  —  170 

Security  Storage   —  —  210 

Security  Title  &  Trust   (York)   —  __  $50      $52 

Security  Trust    (Camden)    __  —  270      275 

Security   Trust    (Detroit) —  —  255 

Security  Trust   (Harrisburg)    —  —  $33       $37., 

Security  Trust   (Hartford)    __  —  195 

Security    Trust    (Indianapolis) —  —  128*^     — 

Security  Trust  (Rochester)   —  __  500 

Security  Trust  (Troy)   —  —  200      205 

Security  Trust    (Wheeling)    __  __  170      175 

Seccurity  Tr.  &  Safe  Dep.  (Wilmington,  Del.)  __  —  235      245 

Security  Trust  &   Sav.  Bank   (Los   Angeles)  __  __  446 

Seg-Belcher  Mining  (Nevada)    —  —  3c        6c 

Semet-Solvay  Process —  --  *130 

Seminole  Fruit  &  Ld. *13  *13 

Seminole  Manufacturing,  com.  —  —  15        25 

1st  preferred —  —  90      100 

2nd  preferred   —  —  40        50 

Sen-Sen  Chiclet  *115%     ~ 

Seneca   Mining   —  —  27        40 

Shannon   Copper    —  —  11        lll^ 

Sharon    Railway —  —  $54 

Sharp  Manufacturing   (New  Bedford),  pfd.__  __  __  105      107 

Shattuck-Arizona  Copper  —  __  25 

Shawinigan  Water  &  Power —  __  136      138 

Shawnee  State  Bank   (Topeka) —  _- .  —      175 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1069 


High  Low  Bid    Asked 

Sheffield  Farm s-SIawson -Decker,  pfd __  __  *98i/o     __ 

Sheldon   Axle  Co.   __  ._  *100     *103 

Sheridan  Trust  Savings  Bank __  ._  133       136 

Sheriff  St.  Mkt.  &  Stge. __  __^  60        70 

Sherman   National   Bank    (New   York) __  __  135 

Sherwin-Williams,    com.    *240 

6%  preferred *110 

• 7%    preferred    123l^  __ 

Shredded   Wheat,   com.    __  __  __        82 

■ preferred    92% 

Sibley  Manufacturing    (Georgia)    __  52        57 

Siegel  Stores  Corporation,  com. 25 

preferred    __  __  88        90 

Sierra  Nevada  Mining   (Nevada)    lie  lOe 

Sierra -Pacific  Electric,  com. __  *16 

-preferred    __    .  __  __      *85i4 

Silk  City  Safe  Deposit  &  Trust  (Paterson)..  __  __  220 

Silver  Hill  Mining   (Nevada) __  4c        4c 

Silver  King  Consolidated  Mining —  —  %          1 

Silver  Peak   Mining   '570    *57c 

Silver  Pick  Consolidated  Mines  (Nevada) 6c  6c 

Silversmiths    Co.    96 

Simpson  Dry  Dock  —  *35 

Singer  Manufacturing   295       300 

Single  Service  Pkg.  Corp.,  pfd —  *25 

Sioux  City  Stock  Yards,  com __  __  20        25 

preferred —  __  871/2     90 

Sixth  Avenue  Railroad   __  __  *115     *124 

Sixth   National   Bank    (Philadelphia)    *200  *200 

Skenandoa   Cotton    (Utica)    __  __  133       138 

Slosa- Sheffield  Steel  &  Iron,  com. __  __  35        43 

preferred    —  —  9I1/2    98 

Smart  Bag,  com.  —  —  120 

Smith  (John  E.)  Manufacturing,  pfd. __  _-  __    '100 

Smyth  Manufacturing   __  __  230      240 

Snell  &  Simpson  Biscuit,  pfd. __  __  __      *97l^ 

Solar  Refining  —  „  *640    *660 

Somerset,  Union  &  Middlesex  Lt. 70        73 

Soule  Mills   (New  Bedford)   „  __  __        99 

South  Bend  Life  Assurance *11 

South  Carolina  Light,  Power  &  Rys.,  pfd "100 

South  Carolina  Loan  &  Trust  (Charleston)—  __  155       160 

South  Chattanooga  Co.   *100    *100 

South  Chicago  Savings  Bank  (Chicago) __  200 

South  End  National  Bank  (Boston)   __  __  112 

South  Eureka  Mining   (Nevada)    __  __  $2.50 

South  Jersey  Gas  &  Elec.  &  Trac __  __  __     "130 

South  Lake  Mining , __  __  7          7% 

South  Live  Oak __  __  13 

South  National  Bank  (Wilmington,  N.  C.)—  __  —  155       160 

South  Penn  Oil —  —  *945     ^960 

South  Porto  Rico  Sugar,  com. __  __  *64i4  *69y2 

preferred    —  —  ♦IO414  •1081/3 

South  Shore  Realty  *60  *60 

South  Side  Bank  (St.  Louis)    *  __  '  __  375 

South  Side  Bank  (Scranton)  __  __  $160    $170 

South  Side  Bank   (Wheeling)    __  ._  $152    $175 

South  Side  State  Bank  (Chicago) __  __  130      135 

South  Side  St.  Bank   (Minneapolis) __  __  250 

*Quotation  nearest  March  1,  1913.    No  quotation  on  tbat  date. 

1070 


High  Low  Bid    Asked 

South  St.  Trust  (Boston) __  >.  $100 

South  Term.  Tr.   (Boston)    _«  __  $70      $85 

So.  Tex.  Com'l  Nat.  Bk.  (Houston) __  ._  310      325 

South  Utah  Mines %  % 

South  West  &  B.  Oil 16c  16c 

South  West  Penn  Pipe  Lines __  __  __     *173 

South  West  Trust  &  Savings  Bank __  __  125       133 

Southern  &  Atlantic  Tel. __  __  $21^4  $23% 

Southern  Calif.  Ed.,  com. __  __  STVg     90 

preferred    __  __  931/2     95 

Southern  Ice,  pfd —  —       *81 

Southern  Loan  &  Savings  Bank    (Charlotte)         160 

Southern  National  Bank    (Louisville) 132      135 

Southern  New  England  Telephone __  __  138      140 

Southern  Pacific 99%  99% 

Southern  Pipe  Line __  __  *255    *262 

Southern  Railway,  com.   26  25% 

' preferred SOi/g  SOYs 

Southern  Railway,  M.  &  O.  stk.  tr.  ctfs __  77^4 

Southern  Trust  (Little  Rock)   __  __  *27y2     — 

Southw'k  National   Bank    (Philadelphia) *145i4  •145l^       — 

Southwestern  Com'l  &  Sav.  Bank  (St.  Louis)         219 

S.  W.  Nat'l  Bank  of  Com.  (Kansas  City,  Mo.)  —  __  ISSVs  1891/2 

Southwestern  Miami  Dev. 3          4 

Southwestern  National  Bank    (Philadelphia)  *118    *118 

Southwestern  Power  &  Light,  pfd. 97      100 

Southwestern  Railroad  of  Georgia 104      107 

Southwestern  Utilities,  pfd. __  __  *31 

-common    *30 

Spanish  River  Pulp,  com.   67%     68 

preferred 94 

Spartan  Mills  (South  Carolina)   __  __  110      120 

Spearhead  Gold  Mines    (Nevada)    3c  3c 

Spencer  Heater,  pfd.   *90      *97Vi 

common    *30      *50 

Spitzer-Roe  Tr.  &  Bk.  (Toledo)  __  __  125 

Spokane  &  East.  Tr.  (Spokane)   __  __  235       250 

Spokane  International  Railway *53 

Spokane    Title    __  __  __      "75 

Spring  House  &  Hillt'n  Turnpike *41  *41 

Spring  Valley  Water __  __  62%     63% 

Springfield  Avenue  Trust  (Newark)   120 

Springfield  Gas  Light __  __  __     t280 

Springfield  (Ohio)  Light,  Heat  &  Power __  __  __        571/3 

Springfield  (Massachusetts)  National  Bank 210      215 

Springfield   (Massachusetts)    Safe  Dep.  &  Tr.  __  __  225       232 

Stafford  Mills   (Fall  River)    __  __  __        921/, 

Standard  Bank   (Toronto)    __  __  __     $1121/2 

Standard   Coupler,   com.    __  35        40 

preferred    —  105       111 

Standard  Fabric  Co. __  __  __    *105 

Standard  Fire  Insurance   (Hartford)    $84      $90 

Standard  Gas  &  Electric,  com.   __  __  $16      $17% 

preferred    __  __  $46i^  $48 

Standard  Heating  &  Ventilating,  pfd. __  __  *100    *115 

common —  —  —     •llO 

Standard  Loan  Co.  of  Tor. __  *84 

Standard  Milling,  com.   35        39 

preferred —  —  63%     66 

•Quotation  nearest  March  1,  1913.     No  quotation  on  that  date.     f'Value"  as  of  March  1,  1913. 

1071 


Bid 

Asked 

•21/4  __ 

1185 

1220 

700 

800 

*186 

*188 

*330 

*335 

*565 

*580 

♦405 

*420 

*310 

*340 

*650 

*660 

*270 

*280 

High    Low 

Standard  Motor  Construction  Co. 

Standard  Oil   (old)   

Standard  Oil  (subsidiaries)    

Standard  Oil  of  California  

Standard  Oil  of  Indiana 

Standard  Oil  of  Kansas 

Standard  Oil  of  Kentucky 

Standard  Oil  of  Nebraska 

Standard  Oil  of  New  Jersey 374      371 

Standard  Oil  of  New  York 

Standard  Oil  of  Ohio 

Standard  Oil  Cloth,  com.  *61 

preferred    *89i4     __ 

Standard  Paint  Co.   __        __  __    *105 

Standard  Roller  Bearing,  pfd. *12y8  *12y8 

Standard  Screw,  com.  

preferred  A 

Standard  Steel  Car  Co. 

Standard  Tr.  &  Sav.  Bk.   (Chicago) 

Standard  Underground  Cable 

Standard  Wall  Paper 

Stanfield's,  Limited,  pfd.   1 *6.66%  basia 

Stanley  Rule  &  Level , 

Stanley    Works    

Stark  Tusc.  Brew.,  com. 

preferred    *20 

Starrett  (L.  S.)  Co.,  com. 

State  Bank  of  Chicago 

State  Bank    (Hartford)    

State  Bank  of  Italy  (Chicago)   

State  Bank  of  Kansas  City 

State  Bank   (New  York)   

State  Bank  of  Maryland  (Baltimore) 

State  Bank  of  Seattle 

State  Bank  &  Trust  (Cleveland)  *107 

State  Bank  &  Trust  (Hartford)   

State  Bank  &  Trust   (San  Antonio) 

State  Company  of  Can. *7%%  basis 

State  Exchange  Bank  (Oklahoma  City) 

State  Line  &  Sullivan  Railroad 

State  National  Bank  (Little  Rock) 

State  National  Bank    (Oklahoma  City) 

State  National  Bank  (St.  Louis)  

State  Savings  Bank  (Charleston) 

State  Savings  Bank  (Memphis)   

State  Sav.  Bank  &  Trust  (Columbus,  Ohio) 

State  St.  Assoc.  (Boston)  

State  St.  Ex.   (Boston)    

State  St.  Trust  (Boston)   

State   Trust    (Nashville)    

Steam  Boiler  Ins.  (Hartford) 

Steel  Co.  of  Canada,  com 

preferred 

Sterling  Bank  of  Canada 

Sterling  Cork  &  Seal 

Sterling  Oil  &  Dev. 

Sterling  Typewriter,  pfd. 

Stem  Bros.,  pfd.  

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1072 




75 

91 

95 

•300 

•400 

172 

174 

•275 

•280 

•90 

~ 

390 

398 

$55 

$56i/a 

~ 

eVa 

•200 

395 

398 

195 

__ 

140 

145 



•160ya 

200 

250 

$32 

$36 

130 

140 

195 

~~ 

200 

— 

115 

11 

•121/, 

>  — 

100 

110 

150 



210 



135 

150 

265 

275 

135 

140 



$75 

$75 

__ 

275 

__ 

90 

100 

$300 

__ 

25 



861/3 

881/4 

•96 

•103 



•15 

1.05 





•97ya 

74 

78 

High  Low  Bid  Asked 

Stetson   (J.  B.),  com. 420 

preferred    -. *180 

Stevens  Manufacturing   (Fall  River) __  __  __  I26I/2 

Stewart  Mining  11/2  ll^ 

Stewart -Warner  Speedometer,  pfd. __  __  __  *99 

Stock  Yards  Bank  (Louisville)  __  __  140 

Stock  Yards  Bank  &  Trust   (Cincinnati) __  __  145  175 

Stockyards  National  Bank   (Fort  Worth) __  __  130  150 

Stock  Yards  National  Bank  (St.  Paul) __  __  150 

Stock  Yards  National  Bank  (So.  Om.) __  __  200  250 

Stock  Yards  Savings  Bank  (Chicago) __  __  300 

Stockmen's  Trust,  Savings  Bank  (Chicago) 150  155 

Stonega  Coke  &  Coal,  com. __  __  *14  *17 

Stray  Dog  Mining  (Nevada)   __  __            3c 

Streets  W.  Stable  Car,  com. 8  8  __  __ 

^preferred 45  50 

Stromberg-Carlson  Manufacturing,  com 9l^     12 

preferred 50 

Studebaker   Corporation,   com.    29  32 

preferred    __  •  __  88  93 

Stuyvesant  Insurance  (New  York) __  __  140  155 

Submarine   Signal   5  7l^ 

Suburban  Realty 10l^ 

Suffolk  R.  E.  Tr.   (Boston)   __  __  __  $750 

Sulzberger  &  Sons,  pfd. .  __        97  100 

Summer  St.  Tr.    (Boston)    __  __  __  $92 

Sun  &  Hastings  Loan  Co. __  __  __  $85 

Sun  Drug __  __  0.95 

Sun  Insurance  (New  Orleans)  %  2^2 

Superior  &  Boston  Copper __  __  3%      A% 

Superior  Copper  Mining __  __  28  28^4 

Superior  Savings  &  Trust   (Cleveland) __  __            295 

Superior  Water,  Light  &  Power,  com 50 

preferred 87 

Swan  &  Finch  Co. __  __  __  *210 

Swift   &  Co.   106%  106% 

Swinehart  Tire  &  Rubber __        __  *93 

Symington  (T.  H.)   Co.,  pfd. __  __  *60  •  *72 

common    *10 

Tabasco  Plantation  Co. __  _•_  *30 

Taber  Mill   (New  Bedford)    __  __  __  1071/3 

Tacoma  Gas,  com. 20 

preferred    68 

Tacony  Trust    (Philadelphia)    *225     *225 

Tamarack  Mining  __  30  32 

Tampa-Cuba  Sugar __  __  *15i^  *18 

Tampa   Electric    __  __  150  155 

Taunton  Gas  Light __  __  _„  fl^S 

Taunton  (Massachusetts)  National  Bank 107 

Taylor  &  Fenn __  __  165 

Tear-Off  Bottle  Seal  Co.  __  __  __  '36 

Tecopa  Consolidated   Mining    (Nevada) —        10c  15c 

Tecumseh  Mills   (Fall  River)    __  __  115  120 

Tenderfoot  Hill  (Colorado  Springs) __  __  .0035c  Ic 

Tenn    Copper    $37%  $37 

Tenn.  Ry.,  Light  &  Power,  com. __  __  21  22 

preferred    —        751/3     761^ 

Tenth  &  Twenty-third  St.  Ferries __  __  25  35 

•Quotation  nearest  March  1,  1913.     No  quotation  on  that  date.     f'Value"  as  of  March  1,  1913. 

1073 


High  Low  Bid    Asked 

Tenth  National  Bank  (Philadelphia) *117l^  *117i4 

Term.  Hotel  Tr.  (Boston),  pfd. __  __  __      $95 

Terre  Haute  &  East.  Indiana  R.  R.,  pfd __  __  __      *60 

common    *13V2 

Terre  Haute  National  Bank __  __  150      160 

Terre  Haute  Traction  &  Light,  pfd. __  __  IO314  lOTVs 

Terry,  Trench  &  Proctor  Tun.  Mch. __  —  __        *4y3 

Teutonia  Insurance   (New  Orleans)    122 

Teutonia  Insurance    (Pittsburgh)    $103 

Teutonia  Loan  &  Building  *97 

Teutonia  National  Bank  (Dayton)   __  140 

Texas  &  Pacific I81/2  ISy^ 

Texas  &  Pacific  Coal __  _-  95      100 

Texas  Bank  &  Tr.   (Beaumont) __  __  125 

Texas  Bank  &  Trust  (Galveston) __  __  215      225 

Texas    Co.    115  115 

Texas  Pacific  Land  Tr.  Cert.  __  _.  $91    $105 

Texas  Power  &  Light,  pfd. __  __  97      100 

Texas  State  Bank  (Ft.  Worth)  __  __  125 

Texas  Traction,  com. __  __  __        15 

preferred    __  __        75 

Textile   National   Bank    (Philadelphia) *125y8  *125%       — 

Thames  National  Bank  (Norwich) __  —  __      170 

Thanksgiving  Mining  (Nevada)    —  —  __        Ic 

Third  Avenue  Ry. 36  36 

Third  National  Bank  (Atlanta)  „  __  240      255 

Third  National  Bank   (Buffalo)    __  __  150      160 

Third  National  Bank  (Dayton)   __  „  __      200 

Third  National  Bank  (Jersey  City) „  „  290      300 

Third  National  Bank   (Philadelphia) •250^*25014      __ 

Third  National  Bank  (St.  Louis) __  __  __      258 

Third  National  Bank  (Scranton)  __  __  900      910 

Third  National  Bank  (Springfield) ._  __  225      233 

Thirteenth  &  Fifteenth  Sts.  Pass.  Ry. *$249y2  — 

Thomas  Iron,  pfd. —  —  *24      ^31 

Thompson  Starrett,  com.   —  __  *161    '167 

preferred    —  —  —    *112ya 

Thomdike  Co.    (Massachusetts)    (par  $1,000)  __  __  1500 

Tippecanoe  Securities,  pfd.   —  —  *10V2  *11 

Title  Guarantee  &  Trust   (New  York) __  __  480      490 

Title  Guaranty  Trust  (St.  Louis) „  __  72        72% 

Tobacco   Products,  com.   —  120      140 

preferred    —  —  90        93 

Toledo  Home  Tel.  __  —  100      100% 

Toledo,  Peoria  &  Western __  __  15^4     __ 

Toledo  Ry.  &  Light  —  —  —        12y3 

Tol.  St.  L.  &  W.,  pfd. 27y8  27 

common    —  —  10        12 

Toledo  (Ohio)  Savings  Bank  &  Trust —  —  255      300 

Tonopah  Belmont  Dev.  —  —  7y8      7*4 

Tonopah   Extension    Mining    (Nevada) $1.75    $1.75 

Tonopah  Gypsy  Queen  Mining   (Nevada) __  __  3c        4c 

Tonopah  Merger  Mining   (Nevada)    85c  81c 

Tonopah  Mining  of  Nevada   -$6  $6 

Tonopah  76  Consolidated  Mining  (Nevada)—  __  —  __        7c 

Tooke   Brothers,   pfd.    —  —  90 

Toronto,  Bank  of    (Canada) —  —  —      208 

Toronto  General  Trusts ^200 

Toronto   Mortgage    *140 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1074 


High  Low  Bid    Asked 

Toronto  Paper  __        78 

Toronto  Railway __  __  138      1381/3 

Toronto    Savings    *185 

Toronto  Structural  Steel,  pfd. *97y2  *97y2 

Torrington  Co.,  com.  __        __  $27l^  $28 

preferred    __  $27      $28 

Traders'  National  Bank   (Birmingham)    __        __  160      170 

Traders'  National  Bank   (Ft.  Worth)    __  __  300      325 

Traders'  National  Bank    (Kansas  City,  Mo.)  160 

Traders'  National  Bank   (Rochester)    __  165       180 

Traders'  National   Bank    (Scranton)    __  220      225 

Traders'  National  Bank    (Spokane)    __         __  190      250 

Traders'    Oil    __  __  691/2     72 

Tradesmen's  National  Bank   (Philadelphia)—  *250    *250 

Tramp  Consolidated  Mining  (Nevada) __        __  __        Ic 

Tramps   Merger   *81  *81 

Tramps   Mining   *li^  *li^ 

Traute   &  Hine   __  __  $55      $60 

Travelers'   Insurance    (Hartford) __  __  640      650 

Travelers'  Life  Insurance    (Hartford)    630      640 

Tremont  Bldg.  Tr.   (Boston)    __  __  $102    $107 

Tremont  &   Suffolk  Mills    (Massachusetts)—  *110%  __ 

Trenton  Banking  Co.  *$112  *$112 

Trenton  Potteries,  com. 4  7 

preferred    50        65 

Trenton  Trust  &  Safe  Deposit 278  278 

Trethewey   Silver    Cobalt    __  40c      43c 

Ti-Bullion  Smelting  &  Develop. ^  1/2 

Trim'tn  Tr.    (Boston)    __  __  $90 

Trinidad   Electric,   pfd.    *75  *75 

common    *$3.60   *$3.60 

Trinity    Copper    __  __  4%      41/3 

Ti-State  Tel.  &  Tel.,  com. __  __  $10 

preferred    __  __  $91/2  $10 

Trow  Directory   'le^A  *16l^ 

Troy   &  Greenbush  __  __  $80      $85 

Troy   (New  York)    Gas   —  __  210      225 

Troy    Trust    Co.    __  __  170      175 

Trust  &  Guarantee  Co.  of  Toronto __  __  __       *95 

Trust  Co.   of  Georgia    (Atlanta) 247      251 

Trust  Co.  of  New  Jersey  (Hoboken) __  __  380      410 

Trust  Co.  of  St.  L.  Co. __  __  __    $198 

Tucapan  Mills    (South  Carolina) __  __  300      350 

Tuckett's  Tobacco,  com.   57        59 

Tularosa  Mining __  —  1/2     % 

Tuolumne  Copper  Mining 21J       2% 

Turners  Falls  Power  &  Electric __  __  __     tl65 

Twenty-third  Street  Railway —  __  240      265 

Twenty-third  Ward  Bank  (New  York) __  __  175 

Twin  City  Rapid  Transit,  com __  __  105      108 

preferred —  —  138l^  145 

Uncas  National  Bank  (Norwich) __  __  100 

Underwood  Computing  Machine —  —  —       *40 

Underwood  Typewriter,  com __  __  93        97 

preferred  —  —  __  111       113 

Union  &  New  Har.  Trust  (New  Hampshire) —  155 

Union  &  Planters'  Bank  &  Trust  (Memphis).  __  __  170      172 

Union -American  Cigar,  com *30 

•Quotation  nearest  March  1,  1913,     No  quotation  on  that  date.    fValue"  -as  of  March  1,  1913. 

1075 


High    Low        Bid    Asked 

Union  Bag  &  Paper,  pfd 341/2    341/2 

• common 5%       Syg       —        -- 

Union  Bank  (Altoona) . 

Union  Bank  of  Canada 

Union  Bank  of  Chicago 

Union  Bank  (Richmond) 

Union-Buffalo  Mills  (South  Carolina)  1st  pfd. 

Union  Carbide 

Union  Consolidated  Mining  (Nevada) 10c        9c 

Union  Construction  Co 

Union  Copper  Land  &  Mining 

Union  Cotton  Manufacturing  (Fall  River) 

Union  Dairy  (St.  Louis) 

Union  Exchange  National  Bank  (New  York). 

Union  Ferry  (New  York  and  Brooklyn) 

Union  Gas  &  Electric  (Cincinnati),  com 

preferred 

Union  Life  Insurance  Co 

Union  Manufacturing,  New  Britain 

Union  Mines 

Union  National  Bank  (Charlotte) 

Union  National  Bank  (Cleveland) *165 

Union  National  Bank  (Houston) 

Union  National  Bank  (Louisville) 

Union  National  Bank  (Newark) 

Union  National  Bank  (Philadelphia) *213     *213 

Union  National  Bank  (Scranton) 

Union  National  Bank  (Troy) 

Union  National  Bank  (Wilmington,  Dela.) 

Union  Natural  Gas 

Union  Oil    

Union  Pacific,  com 153%  I521/2 

preferred  84%     84% 

Union  Passenger  Railway  (Philadelphia) *$193 

Union  Provident  Co 

Union  Railway,  Gas  &  Electric,  com 

preferred 

Union  Safe  Deposit  &  Trust  (Portland,  Me.)_ 

Union  Sand  &  Mat 

Union  Savings  Bank  (Augusta)   

Union  Savings  Bank   (Toledo)    

Union  Savings  Bank   (Washington) 

Union  Savings  Bank  &  Trust  (Cincinnati) 

Union  Savings  Bank  &  Trust  (Memphis) 

Union   Savings   &  Loan    (Cleveland) *114 

Union  Savings  &  Trust  (Seattle)   

Union  State  Bank   (Minneapolis)    

Union  Station  Bank  (St.  Louis) 

Union  Steam  Pump  

Union  Stock  Yards  Bank   (Buffalo) 

Union  Stock  Yards  (South  Omaha) 

Union  Sugar  Co.  

Union  Switch  &  Signal,  com. 

preferred    

Union  Tank  Line   

Union  Traction   (Philadelphia) 

Union  Trust    (Albany)    

Union, Trust    (Baltimore)    

Union  Trust    (Canada)    'ISO 

*Quotatlon  nearest  March  1,  1913.    No  quotation  on  that  date. 

1076 


160 

175 

150 

152 

170 

175 

$360 





40 

185 

187 

•8 

•18 

iy4 

IVa 

210 

__ 

145 

160 

170 

15 

19 



5 



65 



•51/2 

$52 

Vs 

y4 

162 

198 

201 

245 

265 

375 

~ 

135 

140 

60 

621/2 

$83 

$90 

129 

130 

92 

921/8 

loiys 

1041/8 

61 

64 

87 

901/2 

180 

200 

__ 

77 

$80 



220 

245 

246 



410 

500 

320 

350 

135 

—-■ 

115 

__ 

140 



•50 



128 

130 

951/2 

1  96y. 

271/2 

,  30 

$1261/2 

$127ya 

$129 

*67 

•69 

$49% 

,  $501/8 

350 



$63 

$66 

High  Low  Bid    Askea 

Union  Trust   (Chicago)    __  __  320 

Union  Trust    (Detroit)    , __  __  185      190 

Union  Trust   (Harrisburg)    135 

Union   Trust    (Indianapolis)    313 

Union  Trust   (Jersey  City) __  __  105      115 

Union  Trust   (Lancaster)   $148    $150 

Union  Trust   (Little  Rock)    __  __  180 

Uion  Trust  (Nashville)   __  __  95      100 

Union  Trust  Co.  (New  York)  __  __  $1290    1300 

Union   Trust    (Providence)    >.  __  175      1801/2 

Union  Trust   (Rochester)    __  190      215 

Union  Trust   (Springfield,  Mass.)    __  __  230      240 

Union   Trust    (Washington)    __  __  136y8  136^^ 

Union  Trust  &  Savings  Bank  (Spokane) 120      135 

Union  Typewriter,  com.   __  __        33l^ 

1st   preferred    102      105 

2nd  preferred  97        99 

Union  Wadding  Co.  (Rhode  Island) ._  __  __    *118 

United  Bank  &  Savings   (Cleveland)   *285 

United  Box  Board __  __  li/s       1% 

United  Cigar  Manufacturers,  com.   49        53l^ 

preferred    __  __  981^  103 

United  Cigar  Stores,  com. 101%  101% 

preferred 114      116 

United  Copper,  com. %        % 

United  Dry  Goods,  com. __  961/3    98 

preferred    __  __  99%  10^^ 

United  Electric  Light  of  Springfield __  __  __     t285 

United  Electric,  New  Jersey 90        95 

United  Electric  Securities,  pfd.  __  112 

United  Equities  Corp.  of  Virginia,  pfd *97  *97 

United  5  «&  10  Cent  Stores __  __  *42      *43 

United  Firemen's  Insurance   (Philadelphia)—  $15 

United  Fruit  __  __  1701/2  171 

United  Gas  &  Electric,  pfd. __  __  85        90 

United  Gas  Improvement __  __  $88%  $88% 

United  Gold  Mines   (Colorado  Springs) 5c        5%c 

United  Illuminating  (New  Haven) __  __  '195      205 

United  Light  &  Railways,  com. 80        83 

1st  preferred __  80        81 

2nd  preferred 74        77 

United  Mercantile  Co.,  pfd. __  *7 

United  National  Bank  (Providence)   210 

United  National  Bank  (Troy)   __  __  295      300 

United  N.  J.  R.  R.  &  Canal __  __  235      238 

United  Oil  __  __  35        36 

United  Petroleum __  __  103%  104% 

United  Public  Utilities    (Delaware)    __  25 

United  Railways  &  Electric  (Baltimore),  com.  $23%  $231/2 

United  Railways  Investment,  com. __  __  26%    27% 

^preferred    49        52 

United  Railways  of  St.  Louis,  com. __  13%     13% 

preferred __  __  39%     40% 

United  Sec,  Loan,  Ins.  &  Tr.   (Philadelphia)  *140     *140 

United  Shoe  Machinery,  com. __  __  $49%  $50 

preferred __  __  $27%  $28 

United  States  &  Mexican  Trust __  *80 

United  States  Bank  (Hartford)   __  __  475 

♦Quotation  nearest  March  1,  1913.     No  quotation  on  that  date.     fValue"  as  of  March  1,  1913. 

1077 


High    Low 

United  States  Bob.  &  Shut.,  com. 

preferred    

United   States   Cashier   Co.    

United  States  Casualty 

U.  S.  C.  I.  P.  &  F.,  com. 131/2     131/3 

preferred    

United  States  Envelope,  com. 

preferred    

United  States  Express  

United  States  Fidelity  &  Guar.   (M.) 

United  States  Finishing,  com. 

preferred    

United  States  Gypsum,  pfd. 

United  States  Hotel  (Boston)  *nO    'ITO 

United  States  Industrial  Alcohol,  com. 

preferred    

United  States  Insurance   (New  York)   

United  States  Light  &  Heat,  com. 

preferred    

U.  S.  L.  D.  T.  &  S.  Co.,  pfd. 

United  States  Metal  Products,  pfd. 

common    

United  States  Motor,  com. 

preferred    

New   

1st  preferred 

2nd  preferred 

United  States  Mortgage  &  Trust  (New  York) 
United  States  National  Bank   (Los  Angeles) 

United  States  National  Bank  (Omaha) 

United  States  Operating  Co. 

United  States  Playing  Card 

United   States   Printing   of  Ohio 

United  States  Radiator,  com.  

preferred 

United  States  Realty  &  Improvement 

United  States  Reduction  &  Refining,  com. 

preferred    

United  States  Rubber,  com. 62%    62 

1st    preferred    IO614  106l^ 

2nd  preferred   

United  States  Safe  Dep.   (New  York) 

U.  S.  Safe  Dep.  &  Sav.  Bank  (New  Orleans) 

United  States  Smelt.,  Ref.  &  Min.,  com 

preferred 

United  States  Steel,  com. 6I1/8     6014 

preferred  1071/5  IO71/2 

United  States  Telephone   (Cleveland),  com *32 

preferred  *79i/^     __ 

United  States  Title  Guar.  &  Ind. 

United  States  Trust   (Louisville)    

United  States  Trust  Co.  (New  York) 

United   States  Trust    (Terre  Haute) 

United  States  Trust   (Washington) 

United  States  Worsted,  pfd. 

United  Traction    (Pittsburgh),  pfd.   

United  Traction  &  Electric,  com. 

preferred    1 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  data. 

1078 


Bid 

Asked 

25 



100 

105 



*100 

190 

200 

54 

62 

115 

125 

102 

106 

50 

55 

195 

200 

*15 

*20 

♦40 

__ 

~ 

•79 

35 

95 

100 

$16 



8 

10 

55 

65 

10 

15 



•100 

•40 

^ 

% 

% 

IVs 

10 



71 



35 

460 

470 

150 



300 

350 



*n% 

148 

160 

761/4 

82 

*9% 

•40 

50 

69 

70 

1 

1% 

3 

6 

71 

81 

190 



235 



$39% 

$39% 

$48 

$48% 



87y2 

138 

140 

1100 

1115 

90 

100 

137 

140 



•1001/2 



$35 

100 

1031/, 

77i 

}  baiifl 

High  Low  Bid  Asked 

United  Utilities,  com. 37  4u 

preferred __  __  100  lOSVa 

United  Wine  &  Trading , __  __  *40 

United  Wire  &  Supply,  pfd. __  __  __  lOSy^ 

United  Xpidite  Finishing *3i4 

United  Zinc,  com.   __  8c  20c 

preferred 1%  2Vi 

Universal  Trading  &   Supply   "4 

University  Assoc.   (Cambridge)   $100 

Upham  Bros  &  Co.,  pfd. *102i/2  *102y8 

Upson  Nut,  pfd. 108 

Utah-Apex  Mining   1%  2 

Utah  Consolidated  Copper 9^/4  9^ 

Utah  Copper  $548/3  $52% 

Utah  Gas  &  Coke,  com. __  102l^ 

Utah  Metal  Mining 94c  $1 

Utah  Mining   (Nevada)    5c  6c 

Utah  Savings  &  Trust   (Salt  Lake  City) __  __  102  103 

Utah   Securities   __  23  23ya 

Utah  St.  National  Bank  (Salt  Lake  City) __  __  295  301 

Utica  &  Black  River,  gtd. __  __  *1Q9 

Utica  &  Willowvale  Bleachery __  __  200 

Utica,  Chen.  &  Susq.  Vy. __  __  141  146 

Utica  City  National  Bank __  $25.85  $26Vi 

Utica,  Clinton  &  Binghamton __  65  75 

Utica  Knitting,  pfd. __  100  103 

Utica  Steam  &  Mohawk  Valley  Cott.  M __  __  165  167 

Utica  Trust  &  Deposit  Co __  __  400 

Utilities  Improvement,  com. __  __  69  75 

preferred    __  __  75l^  76% 

Vacuum  Oil  Co.  __  __  *175  *180 

Valley  Railroad  (New  York)    __  __  115  125 

Valley   Steamship    *85 

Van  Camp  Hardware  &  Iron,  pfd •lOO 

Vanadium  Sales  Co.  of  America '325 

Vandalia  Coal,  com. 5 

preferred 7  15 

Vandalia  Railroad 85^4 

Vandeveriter  Trust    (St.  Louis) . 100  110 

Vermont  &  Massachusetts  Railway 150 

Vernal  Mining    (Nevada)    ^ 12c  13c 

Veronal    "U  *14 

Victor  Talking  Machine,  com. *310 

Victoria  Copper  Mining __  __  1^  ly^ 

Virginia  Building  &  Loan __  110 

Virginia-Car.  Chemical,  com.  32%     32% 

preferred 108%  108% 

Virginia  Fire  &  Mar.  Insurance    (Richmond)  __  __  $81  $83 

Virginia  Iron,  Coal  &  Coke —  __  51  54 

Virginia  National  Bank   (Norfolk)    __  140  150 

Virginia  National  Bank   (Petersburg) __  135 

Virginia  Railway  and  Power,  com. 51%  50% 

preferred    —  89 

Virginia  State  Insurance,  com. __  __  $10 Va  $lll^ 

preferred —  __  $16  $17 

Virginia  Trust  Co.    (Richmond)    _  __  __  158  160y, 

Virginian  Railway —  15  20 

Vulcan  Detinning,  com. —  __  16%  20 

preferred —  —  35 

♦Quotation  nearest  March  1,  1913.    No  quotation  on  that  dat«. 

1079 


High    Low  Bid    Asked 

Vulcan  Tube  Cleaning *47ya  *47i/8 

Vulcanite  Portland  Cement  __        __      "TS 

Wabash,    com.    4  314 

preferred    11  IQV2 

Wagner  Electric  Co. __  __  __    *134 

Walker  Bros.  (Salt  Lake  City)  __  __  225      230 

Walpole  Rubber,  pfd. •100    'lOO 

Waltham  Watch,  com.   __  __  25        28 

preferred    __  -_  100      104 

Wampanoag  Mills   (Fall  River)    —        90 

Wamsutta  Mills  (New  Bedford) __  __  119      123 

Ward  Baking  Co.,  pfd.   .-  -_  *93       *95 

Ward   (Montgomery),  pfd.  __ _>  __  lOiy^  107% 

Ware  River  Railroad _-  -_  174      176 

Warner   (Charles)   Manufacturing,  pfd. __  __            *100 

common    —  —  —      $25 

Warren  Mfg.  (South  Carolina),  com. 70        80 

preferred —  __  100 

Warren  Railroad   (New  Jersey)    __  __  $811/2  $83Va 

Warwick  Iron  &  Steel __  —  $101/2  $10% 

Washburn  Wire,  com. —  —  __    *115 

preferred —  —  *QVs%  basis 

Washington,  Baltimore  &  Annapolis  El.,  com.  $14 

preferred    $35 

Washington  (D.  C.)  Gas  Light ._  __  $851/3  $851/2 

Washington  Heights  Bank   (New  York) 275 

Washington  Hotel  Realty,  1st  pfd. __  __  *29      ♦32 

Washington  Loan  &  Trust __  „  238      250 

Washington  Market  __  __  $17%     __ 

Washington  Mills  (Virginia),  pfd. __  __  106      110 

Washington  National  Bank __  —  244      256 

Washington  Oil ~  —  $31      $35 

Washington   Park   National  Bank    (Chicago)  __  __  200 

Washington  Railway  &  Electric,  com. __  __  84%     85 

preferred    —  —  87%     88% 

Washington  Trust    (New  York)    „  __  375       395 

Washington  Trust  (Pittsburgh)   __  __  160 

Washington  Trust   (Spokane)   —  __  120      130 

Washington -Virginia  Railway,  com. '51 

preferred *80 

Washington  Water  Power __  __  130      133 

Waterbury  National   Bank   __  __  $80      $85 

Waterbury  Trust  Co. —  „  100 

Waters-Pierce  Oil    —  —  *1400  *1550 

Wayne  Co.  Savings  Bank  (Detroit) __  __  335      351 

Wayne  Jet.  Tr.  (Philadelphia) "110    "110 

Webb  Mfg.  (Nashville,  Tenn.) __  __  70        90 

Webster  &  Atlas  National  Bank  (Boston)  ___  __  __  185      190 

Webster  &  Southbridge  Gas  &  Electric __  __  __     tl45 

Webster  Citizens  Ice  —  —  __    '100 

Weetamoe  Mills  (Fall  River)   —  _-  __        90 

Wellington   Mines   —  —  —        *6i/2 

Wellman-Seav.-Morg.,  com.   31 

preferred    *10Q 

Wells-Fargo   Express   —  —  105       112 

Wells-Fargo  Nev.  Nat.  Bank  (San  Francisco)  __  __  170 

Welsbach   Co.,   com.    —  —  —        40 

West  Coast  Oil,  pfd.  —  —  70 

•Quotation  nearest  March  1,  1913.     No  quotation  on  that  date.     fValue"  as  of  March  1,  1913. 

lOSO 


High    Low 

West  End  Bank  (Richmond) 

West  End  Bank  &  Trust  (Cincinnati) 

West  End  Consolidated  Mining  (Nevada) $1.35    $1,321/2 

West  End  Land  Co. —        —  *12 

West  End  Mining *135     *130 

West  End  Sav.  Bank  &  Trust  (Pittsburgh)  __  *$153  *$153 

West  End  Street  Railway,  com. 

preferred 

West  End  Trust   (Philadelphia)   *$118  *$118 

West  Englewood-Ashl'd  St.  Bk.  (Chicago) 

West  Point  Manufacturing  

West  India  Electric *7 

West  Jersey  &  Seashore,  com. $52      $51 

West  Jersey  Trust   (Camden)    185       185 

West  Penn  Railways,  pfd. 

West  Penn  Traction,  pfd. 

common    *80      *80 

West  Penn  Tr.  &  Water  Power,  pfd. 

common    

West   Philadelphia   Passenger   Railway *$205 

West  Philadelphia  Title  &  Trust *$133  *$133 

West  St.  Louis  Trust 

West  Side  Bank  (Milwaukee)   

West   Side  Bank    (New   York) 

West  Side  Bank   (Scranton) 

West  Side  Dime  Sav.  Bank,  (Columbus,  Ohio) 

West  Side  Trust  (Newark)    

West  Side  Trust  &  Savings  Bank   (Chicago) 

West  Virginia  Traction  &  Electric,  pfd 

West  Point  Manufacturing   

Westchester  &  Bronx  T.  &  M.,  guar 

Westchester  Insurance   (New  York)^  

Westchester   Trust    (Yonkers)    

Western  Canada  Flour  Mills *12 

Western  Cities  Gas  &  Electric,  pfd *90      *90 

Western  Exchange  Bank  (Kansas  City,  Mo.) 

Western  German  Bank  (Cincinnati)   

Western    Insurance    (Pittsburgh)     $60      $50*4 

Western  Maryland  Railway,  com. 

-preferred    

Western  National  Bank   (Baltimore) 

Western  National  Bank  (Ft.  Worth) 

Western  National  Bank   (Oklahoma  City) — . 

Western  National  Bank  (York) 

Western  Ohio  Railway,  com.   *23 

1st  preferred 107 

2nd    preferred    

Western  Pacific   

Western  Power,   com.   

preferred    

Western  R.  E.  Tr.  

Western  Silo  Co.,  pfd.  

Western  States  Gas  &  Electric,  com. 

• preferred 

Western  States  Portland  Cement,  com. 

preferred    — 

Western  Stone  — 

Western  Union  Oil  

Western  Union  Teleg.  69        69 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1081 


Bid 

Asked 

43 

45 

142 

146 

$771/2 

78 

$95 

97 

148 

150 

*104 

~ 

•79 

*80 

*80 

*85i/2 

79 

80 

32 

331/2 

120 

125 

250 

300 



535 

$180 

$185 



120 

270 

__ 

275 





100 

*104 

__ 

165 

$571/2 

$621/2 

150 

160 

400 

— 

375 

400 

401/3 

44 

60 

641/2 

$3914 

$40 

135 

150 

165 

__ 

— 

100 

70 

75 

7 

8I/2 

20 

22 

48 

50 

$135 

__ 

H 

•100 

48 

55 

90 

95 



10 



50 

11% 

13 

81 

100 

High  Low  Bid  Asked 

Westinghouse  Air  Brake __  __  $138  $143 

Westinghouse  Auto  Air  &  St.  Coupler __  __  __  3 

Westinghouse  Electric  &  Manufacturing,  com.         $34V2  $35 

lat  preferred __  _.  $571/2  $59y8 

Westinghouse   Machine    *$25  *$27 

Westminster  Bank    (Providence)    __  __  $63 

Westmoreland  Coal $79 

Westport  Avenue  Bank  (Kansas  City,  Mo.) 250 

Wettlaufer  Silver  Mines 14c  13c 

Weyman-Bruton,    com.    _>  270  300 

• preferred    105  125 

Weymouth  Light  &  Power t210 

Weymouth  Water  Power tllO 

Wheeling  &  Lake  Erie,  com. CVg      ^Va 

1st  preferred 19  24 

2nd  preferred   lOi/g  lOVa 

Wheeling  Mould  &  F. __  __  $57  $59 

Wheeling  Steel  &  Iron __  __  147  148 

White  Co.,  pfd. __  __  IO71/2     — 

Wliite  (J.  G.)  &  Co.,  pfd. __  __  *78  •83 

common    *67 

White  Star  Line  __  —  __  501/2 

White   Star   Oil   —  __  __  19 

Whitman  Mills   (New  Bedford)    __  —  __  155 

Whitney  Central  Nat'l  Bank   (New  Orleans)  '315 

Whitney  Manufacturing  (South  Carolina) 110  120 

Wichita  Union  Stock  Yards __  __  __  *76 

Wilkesbarre  Dep.  &  Savings  Bank __  __  $204  $210 

Williamsburg   City   Insurance    (Brooklyn) __  225  250 

Williamson  Trust   (Memphis)   __  __  100  105 

Willys-Overland  Co.,  com. 64  64 

preferred    __  __  93  98 

Wilmington  Gas  Co.,  pfd. __  __  *80  *85 

common    —  —  —  *^^V2 

Wilmington    (North  Carolina)    Sar.   &  Trust  __  __  $175 

Wilmington   Trust   Co.    __  __  $120  $130 

Wilson  &  Co. — See  Sulzberger  &  Sons. 

Winchester  Repeating  Arms  —  1,100 

Winnipeg  Electric  —  214 

Winnipeg  Paint   &  Glass,  Limited __  „  *7i4%  basis 

Winona   Copper    __  21/,       3 

Winters  National   Bank    (Dayton) __  __  165  175 

Winthrop  Bldg.  Tr.    (Boston)    __  __  __  $65 

Winthrop   National   Bank    (Boston) __  __  325 

Wireless  Liquidating  Co.   __  __  __  *1% 

Wisconsin  Central  Railway  48  51 

Wisconsin  National  Bank  (Milwaukee) __  —  205 

Wisconsin  Sugar,  pfd.  *100    "100 

Wisconsin   Trust    (Milwaukee) __  —  160 

Woburn  Gas  Light ._  __  —  t200 

Wollaston  Land —  _-  %      ll^ 

Wolverine  Copper  Mining ^ __  __  67  67i/a 

Wolverine  Oil  —  —  50c 

Wolverine   Portland   Cement   Co „   -  „  2i/,       3 

Woman's   Hotel   —  __  70  75 

Woodland  Savings  &  Trust  (Cleveland) •2101/3  „ 

Woodlawn   Cemetery    __  __  '130 

Woodlawn  Trust  &  Savings  Bank  (Chicago)  „  __  200  203 

'Quotation  nearest  March  1,  1913.     No  quotation  on  that  date.     t"Value"  as  of  March  1,  1913. 

1082 


High  Low  Bid    Asked 

Woodside  Cotton  Mills,  com. —  —  35        40 

preferred  guaranteed   —  —  95       100 

preferred    — _ —  —  —        93 

Woolworth   (F.  W.),  com 96ya  96 

preferred    —  —  113      113 

Worcester  Electric  Light —  —  —     t300 

Worcester  Gas  Light —  —  —     1'310 

Worcester,  Nashua  &  Rochester —  —  149 

Worcester    (Massachusetts)    National  Bank—  —  —  225 

Worcester  Suburban  Electric —  —  —     tl65 

Worcester  (Massachusetts)    Trust —  —  225 

Work    (Colorado   Springs)    —  —  —      .01c 

Worthington  (H.  R.),  pfd. —  _.  IO41/2  106 

Worthington  Pump  Co.,  limited  pfd —  —  *90ya     — 

Wright  Wire  Co.,  pfd. 'llO    "110 

Wrightsville  &  Tennille,  com. —  __  $24      $26 

Wurlitzer    (R.),   pfd. —  __  1031/3     „ 

Wyandot  Copper   —  —  %       1 

Wyoming  National  Bank    (Wilkesbarre) __  __  $325     $335 

Wyoming  Valley  Tr.   (Wilkesbarre) __  —  $155    $160 

Yale  &  Towne  Manufacturing __      *45 

Yale  National  Bank  (New  Haven) 140 

Yellow  Jacket  Gold  &  Silver  Min'g  (Nevada)  __  __  21c 

Yellow  Taxicab,  com  __  10        15 

preferred    40        50 

Yellow  Tiger  Consolidated  Mining    (Nevada)  2c        3c 

York  County  National  Bank  (York)   __  __  $541^  $55 

York  Manufacturing   (Maine)    *135 

York  National  Bank  __  __  $44      $45 

York  Railways,  com. __  __  12        12% 

preferred    __  __  35%     36^4 

York   (Pennsylvania)   Trust  Co. __  $60      $65 

Yorkville  Bank  (New  York) __  __  690      610 

Young  (J.  S.)   Co. __  __  170      180 

Youngstown  &  Ohio  River,  com. __  __  TVa 

preferred    *60l^ 

Youngstown  Sheet  &  Tube,  com. *260 

preferred    *113 

Yukon  Gold  Mines  —  __  3          3^8 

Zions  Saving  Bank  &  Trust  (Salt  Lake  City)  __  __  420      425 

*Quotation  nearest  March  1,  1913.     No  quotation  on  that  date.     fValue"  as  of  March  1,  1913. 


1083 


BONDS 


High    Low 

Aberdeen  Light  &  Power  1st  6s,  1931 

Acker,  Merrall  &  Condit  Deb.  6s,  1923 

Acquackanock  Water  5s,  1958 

Adams  Express  Coll.  48,  1947 

Adams  Express  Deb.  4s,  1948 

Adirondack  Electric  Power  1st  5s,  1962 

Adirondack  Railway  1st  41/28,  1942 

Advertising  Bldg.  (Chicago)  1st  51/28,  1914-22- 

Agricultural  Credit  Coll.  5s,  1913 

5s,    1914 

5s,    1915    

Akron  &  Barberton  Belt  4s,  1942-. 

Akron,  Bedford  &  Cleveland  5s,  1915 

2d  Con.  5s,  1921 

Alabama  Central  1st  6s,  1918 

Alabama  Cons.  Coal  &  Iron  5s,  1933 

Alabama  Great  Southern  1st  5s,  1927 

^general  5s,  1927 

equipment  4ygS,  1916 

Alabama  Midland  Railway  1st  5s,  1928 

Alabama,  N.  Orl.,  T.  &  Pac.  Jc.  Deb.  A  58, 1940 

B  5s,  1940 

C  5s,  1940 

Alabama  &  New  Orleans  Transp.  1st  6s,  1932_ 

Alabama  Steel  &  Shipbuilding  6s,  1930 

Alabama,  Tennessee  &  Northern  5s,  1956 

Alabama  &  Vicksburg  Con.  5s,  1921 

Alaculsey  Lumber  Ist  6s,  1912-21 

Alamagordo  &  Sacramento  Mtn.  Ry.,  5s,  1928 

Alameda  Art.  Water  5s 

Albany  Railway  Cons.  5s,  1930 

^general  5s,   1947 

Albany  Southern  1st  5s,  1939 

Albany  &  Susquehanna  31/2S,  1946 

Albaugh  Dover  Co.  6s 

Albia  Interurban  Ry.  6s,  1914-30 

Alden  Mills  68,  1932 

Alexandria  Co.  Lighting  1st  5s,  1931 

Algonia  Central  Terminal  1st  5s 

Algoma  Steel  Ist  Ref.  5s,  1962 

Allegheny,  Bell.  &  Perrysville  Ist  5s,  1935 

Allegheny  Valley,  Gen.  4s,  1942 

Allegheny  &  Western  1st  4s,  1998 

AUentown  Gas  5s,  1924 

Allentown  &  Kutztown  Traction  5s,  1932 *77ya  *77y2 

AUentown  &  Reading  Trac.  Cons.  5s,  1937 

Allentown  Terminal  4s,  1919 

Alliance  Gas  &  Electric  Ist  5s,  1929 I_         " 

Alliance  Gas  &  Power  1st  &  Ref.  5s,  1932 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1084 


Bid 

Asked 



•1011/2 

•80 



•81 

79y 

I     8II/2 

80 

81 

96 

98ya 

101 



•100 



•99  4/5 

• 

98.72 



♦97.43 

90 



100 

103 

95 

__ 

105 

__ 

•731/5 

,  __ 

102 

__ 

102 

104 

5% 

4% 

•105 

•107 

104 

106 

101 

103 

92 

94 

. 

♦100 

104 

108 

90 

97 

96 

100 



•100 

__ 

♦80 



98 

1031/2 

105 

1031/2 

105 

94 

98 



881/8 



♦77 

•100 



103 

105 



•901/2 

__ 

•95 



♦93 

— 

•991/4 

991/4 

993/4 

95% 

— 

•1031/2 

•72y2 

97y2 

100 

100 

1001/2 



97 

High  Low  Bid    Asked 

Allis-Chalmers  1st  5s,  1936 —        65% 

Cent.  Tr.  Ctfs.  of  Dep —  —  55        eiVg 

Stamped    —  —  ~        SOVa 

Alton,  Granite  &  St.  Louis  1st  5s,  1944 —  —  89        90 

Alton  Railway,  Gas  &  Electric  5s,  1939 —  —  *96 

Alton  Railway  &  Illuminating  1st  5s,  1915 —  —  —    *100 

Altoona  &  Logan  Val.  Elec.  Con.  41/2,  1933 —  —  89        90 

Altoona  Gas  1st  5s,  1933 —  —  98      100 

Amalgamated  Copper  5%  Notes,  1913 —  —  —    *100 

Amalgamated  Corp.  5%  Notes,  1913 —  —  99%  lOOi/g 

Amarillo  Gas  1st  6s,  1915 —  —  —     *100 

American  Agr.  Chem.  Co.  1st  Con.  5s,  1928 IOO1/2  lOOVg 

American  Bank  Note  5%  Notes,  1916 —  —  —      *99i4 

American  Brake  Shoe  and  Foundry  58,  1952—  —  —  *102i4     — 

American  Can  Deb.  5  s,  1928 —  —  —      *97i4 

American  Cement  Serial  6s —  —  —     *100 

American  Cities  5s,  63,  1919 —  —  921/2     931/2 

American  Cotton  Oil  Deb.  41/2S,  1915 .—  —  —  96I/2    97 

Debenture  5s,  1931 —  —  931/2     93% 

American  District  Telegraph  5s,  1926 —  —  *93 

American  Dock  &  Imp.  Co.  1st  5s,  1921 —  —  1031A  IO51/2 

American  Gas  Conv.  6s,  1914 —  —  100      101 

^Non-Convertible  5s,  1920 —  —  95%     961/3 

American  Gas  &  Electric  Col.  5s,  2007 —  —  86        861/2 

American  Graphophone  6s,  1930 —  *88 

American  Hide  &  Leather  6s,  1919 —  —  IOI1/2  102 

American  Hominy  5s,  1927 —  —  ->    *100 

American  Ice  R.  E.  &  Gen.  6s,  1942 —  __  98I/3    991/2 

American  Ice  Sec.  Deb.  63,  1925 741/2  741/3 

American  La  France  Fire  Eng.  1st  6s,  1924 —  —  —  85 

American  Lithographic  1st  5s,  1921 —  *90 

American  Locomotive  5%  Notes,  1914 __  —      1001/4 

American  Locomotive  6%  Notes,  1915-17 —  —      5.35-15%  basis 

American  Malting  6s,  1914 __  __  101       102 

American  Petroleum  6s,  1920 >_  __  871/3     95 

American  Pipe  &  Construction  5s,  1927 —  —  *99    *100% 

Secur.  6s,  1922  ._  __  *99 

American  Pipe  &  Foundry  6s,  1928 __  __  100      IO21/2 

American  Pipe  Manufacturing  "A"  5s,  1927—  __  —       *99 

American  Pneumatic  Service  Coll.  5s,  1928 —  *90 

American  Power  &  Light  6%  Notes,  1921 __  __  991/2     99% 

American  Pub.  Serv.  1st  6s,  1943 __  __  —       100 

American  Pub.  Util.  Coll.  58,  1942 —  „  —        921/2 

American  Railways  Conv.  5s,  1931 93        96 

Collateral  Trust  5s,  1917 __  —  96 

American  Railways  (Johnstown)  5s,  1930 —  —  —      *95 

('Scranton)   5s,  1935 __  —  *93      *95 

American  Real  Estate  6s __  __  *95 

American  Refrigerator  Trans.  Equip.  5s,  1921_  *100 

5s,   1922 __  __  __     *100 

American  Road  Mach.  6s,  1938 __  __  __     *100 

American  Rolling  Mill  6%  Notes,  1914-15 —  —  —    "lOO 

American  Sales  Book  Ist  6s,  1927 —  —  —    *100 

American  School  Furniture  6s,  1939 __  __  —       *85 

American  Sewer  Pipe  1st  6s,  1920 —  —  87        90 

American  Smelters  Securities  6s,  1926 __  „  104l^     105 

American  Spirits  Manufacturing  1st  6s,  1915_  —  —  __        99i/^ 

American  S.  S.  of  West  Virginia  1st  5s,  1920—  —  __  *100%     — 

^Quotation  nearest  March  1,  1913.    No  quotation  on  tbat  date. 

1085 


High  Low  Bid    Asked 

American  Steel  Foundries  6s,  1935 __  __  991/2  101 

Debenture  4s,  1933 —  —  711/4     731/2 

American  Tel.  &  Tel.  Coll.  4s,  1929 —  —  871/2     871/3 

Convertible  4s,  1936 —  —  IO21/2  103% 

Convertible  41/2S,  1933 _.  —  103       103 

American  Thread  1st  4s,  1919 —  —  93        94 

American  Timber  6s —  —  —      *95 

American  Tobacco  6s,  1944 —  __  120      I2I1/2 

American  Tobacco  4s,  1951 97  97 

American  Trust  Bldg.  (Chic.)  Ref.  5s,  1914-41  __  __  __    *100 

American  Type  Founderi,  Deb.  6s,  1939 __  __  991/2  101 

American  Writing  Paper  1st  5s,  1919 __  __  891/3     891/2 

Americus  Gas  &  Electric  5s,  1942 25  25 

Ames  Plow  Ist  53,  1932 —  —  __     *101 

Anacostia  &  Potomac  5s,  1949 —  —  98 

Anacostia  &  Potomac  (Guaranteed)  5s,  1949—  __  __  103      IO414 

Annapolis  Gas  &  Electric  1st  6s,  1921 __  __  •105 

Annapoli*  Gas  &  Electric  Cons.  53,  1953 __  __  __      *95 

Ann  Arbor  Railway. — 

5%  Notes,  1913 —  __  —      *98 

Equipment  5s,  1919 __  —  *100 

"B"  5s,  1913-21 -_  —  —     'lOO 

Ist  4s,  1995 __  —  75        76 

Annuity  Realty  (St.  L.)  S.  F.  Part.  Ctfs.,  1952  —  __  __      *97i/2 

Annville  &  Palmyra  Gas  &  Fuel  1st  5s,  1930  __  __  __      *95 

Appalachian  Power  5%  Notes,  1914 *99 

Appalachian  Power  6%  Notes,  1914 __  *6i/2%  basis 

Appalachian  Power  1st  5s,  1941 __  __  77        78 

Ardmore  Street  Railway  5s,  1958 __  __  96        98 

Arizona  Power  1st  6s,  1933 __  __  80        86 

Arkansas  Natural  Gas  6s,  1922 __  __  __      *96 

Arkansas,  Oklahoma  &  Western  1st  63,  1947—  —  —  93      100 

Arkansas  Water  6s,  1914 __  __  *99%     __ 

Armour  &  Co.  Ist  41/38,  1939 __  ._  90%     91 

Aroostook  Construction  5%  Notes,  1917 —  —  —       *96% 

Aroostook  Northern  1st  58,  1941 __  __  __     'lOli/g 

Aroostook  Valley  Electric  41/2S,  1929 >_  —  '97    *100 

Arundel  Sand  &  Gravel  6s,  1923 __  __  —        98i^ 

Ashdown  Hardware  5s,  1928 __  __  __      *90.20 

Asheville  Power  &  Light  1st  5s,  1943 __  —  93        96 

Asheville  &  Spartansburg  1st  4s,  1995 „  __  80        85 

Ashland  Light,  Power  &  St.  Ry.  1st  5s,  1939_  —  —  95        99 

Ashland  Water  6s,  1929 __  „  —     *100i/2 

Associated  Gas  &  Electric  5s,  1939 —  —      "95 

Associated  Oil  5s,  1922 __  __  __       102 

Associated  'Simmons  Hardware  Coll.  5s,  1917-  —  —  514%  basis 

Astoria  (N.  Y.)  Veneer  Mills  &  D.  1st  6s,  1941  —  —  100      105 

Atchison  &  Eastern  Bridge  5s,  1928 __  —  82        85 

Atchison  Railway,  Light  &  Power  1st  5s,  1935  __  —  90        961/2 
Atchison,  Topeka  &  Santa  Fe  Railway. — 

California  &  Arizona  "B"  41/oS,  1962 —  __  100      IOO1/2 

S.  F.  Pres.  &  Ph.  5s,  1942 __  _.  *106%     ._ 

(East  Oklahoma  Division)  1st  4s,  1928—  _^  —  —        95% 

5s,   1917 _.  __  101%  102 

Deb.  4s,  "L,"  1914 __  __  991/2     — 

Convertible  4s,  1955 ._  __  10114  102 

Convertible  4s,  1960 10014  lOOVg 

Trans.  Sh.  Line  1st  4s,  1958 „  —  __        90i4 

^Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1086 


High  Low  Bid    Asked 

General  4s,  1995  (Coupon) —  —  96%     97 

General  4s,  1995  (Regular) —  —  96        971/2 

Adj.  4s,  1995  (Coupon) —  —  —        88 

Adj.  4s,  1995   (Regular) —  —  —        871/3 

Adj.  4s,  1995  (Stpd.) —  ~  87         88 

Adj.  4s,  1995  (Reg.  &  Stpd.) —  —  —        871/3 

A^thens  Rv.  &  Electric  1st  5s,  1950 —  —  85        90 

Athens  Terminal  5s,  1937 —  —  *91 

Athol  &  Orange  Street  Railway  1st  5s,  1915—  —  —  —       100 

Atlanta,  Birmingham  &  Atlantic  Railway. — 

1st  5s,  1936 —  —  25 

Equip.  5«  due  to  1917 —  —  —       100 

5%  Rec.  Ctfs.,  1913 —  —  —     *100 

Atlanta  Cons.  St.  Ry.  5«,  1939 —  —  1041^  104% 

Atlanta  Gas  Lt.  1st  5»,  1947 —  —  102 

Atl.,  Knoxville  &  Nor.  Ist  Ss,  1946 __  —  107 

Atl.,  Knoxville  &  Nor.  Cons.  48,  2002 —  —  —        93 

Atlanta  Northern  Ry.  1st  5s,  1954 __  —  99      IO21/3 

Atlanta  Steel  Serial  6s,  1911-30 —  —  —     *100 

Atlanta,  Tennessee  &  Ohio  1st  6s,  1913 __  __  100 

Mlanta  Water  &  Elec.  Power  1st  5s,  1943 —  __  *89 

Atlantic  Ave.  Con.  53,  1931 —  —  102      104 

Atlantic  Avenue  Imp.  5s,  1934 __  __  *100%     __ 

Atlantic  &  Birmingham  1st  4s,  1933 —  __  84 

Atlantic  &  Birmingham  l«t  58,  1934 __  __  99       101 

Atlantic  City  Elec.  Ist  &  Ref.  5s,  1938 __  —  97        99 

Atlantic  City  Gas  1st  58,  1960 __  __  86I/3     871/3 

A^tlantic  City  R.  R.  53,  1919 __  __  IO21/3  IO31/3 

Atlantic  City  R.  R.  1st  Cons.  4s,  1951 __  __  93        94 

Atlantic  Coast  Elec.  1st  5s,  1945 __  __  96 

Atlantic  Coast  of  Conn.  Irr.  5s 103 

Atlantic  Coast  of  Conn.  Irr.  4s,  1925 __  901/3 

Atlantic  Coast  Line  of  S.  C.  Gen'l  4s,  1948 __  __  941/3     95 

Atlantic  Coast  Line  R.  R. — 

Conv.  Deb.  43,  1939 __  _.  97        971/3 

Unif.  4s,  1959 __  __  88I/3     891/3 

Equip.  4s,  1917 __  __  __       *98% 

Equip.  41/2S,  1921 __  __  __       *99i/3 

1st  4s,  1952 __  __  93         94 

Coll.  4s,  1952 90%  90% 

Ala.  Mid.  5s,  1928 __  __  105l^     __ 

Charl.  &  Sar.  7s,  1936 __  __  128 

L.  &  N.  Col.  4s,  1952 __  __  901/3     90% 

Sav.,  Fla.  &  W.  6s,  1934 ._  __  118%  I2314 

Sav.,  Fla.  &  W.  5s,  1934 __  __  IO61/2  II21/3 

Atlantic  &  Danville  1st  4s,  1948 __  __  88l^     — 

Atlantic  &  Danville  2d  4s,  1948 __  __  83 

Atlantic,  Gulf  &  W.  I.  S.  S.  Lines  5s,  1959 __  __  60        62 

Atlantic  &  Yadkin  1st  4s,  1949 __  __  83%     __ 

Atlas  Portland  Cement  1st  6s,  1925 __  >_  101      IO31/2 

Atlas  Powder  Inc.  6s,  1923 __  __  *97i/3  *99% 

Auburn  &  'Syracuse  1st  5s,  1942 __  98      100 

Auburn  Gas  1st  5s,  1927 __  __  *94 

Auburn  Gas  Cons.  5s,  1930 __  *98 

Augusta- Aiken  Ry.  &  E.  Corp.  5s,  1935 __  __  90        94 

Augusta  Factory  1st  6s,  1915 __  __  99      100 

Augusta  Ry.  &  Electric  5s,  1940 __  __  101       103 

Augusta  Southern  5s,  1924 __  __  90        95 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1087 


Bid 

Asked 

112 

117 

931/4 

" 

100 

105% 



*100 

__ 

95 

80 

84 



*63 



•993/4 



*96 

~ 

•943/4 

100 

loovg 



•100 

103% 

104 

74 

76ya 

100 

100V2 



106 

97 

104 

__ 

High     Low 

Augusta  Terminal  Ist  6s,  1947 

Aurora,  Elgin  &  Chicago  1st  58,  1941 *100%     __ 

Aurora,  Elgin  &  Chicago  1st  5s,  1946 

Austin  &  Northwestern  1st  5s,  1941 

Austin  Gas  Light  Ref.  6s,  1931 

Austin  St.  Ry.  1st  53,  1936 

Automatic  Elec.  Ist  6s,  1938 

Autosales  Gum  &  Chocolate  68,  1931 

Ayer  Mills  41/oS,  1913-15 

Ayer  Mills  41/2%  Notes,  1916 

Ayer  Mills  41/3%  Notes,  1917 

Baden  &  St.  Louis  1st  5s,  1913 

Bagdad  Land  &  Lumber  1st  6s,  1915 

Baldwin  Loco.  Wks.  5s,  1940 

Baltimore  &  Ann.  Short  L.  5s,  1946 

Bait.  Catonsv.  &  Ellicott  Mills  Pass.  5s,  1916 
Baltimore,  Chesapeake  &  Atlantic  1st  5s,  1934 

Baltimore  Co.  Water  &  Electric  5s,  1946 

Baltimore  &  Cumberland  Valley  1st  6s,  1929_ 
Baltimore  &  Cumberland  Valley  Ex.  6s,  1931_ 

Baltimore  Electric  1st  5s,  1947 99l^     9914 

Baltimore  &  Harrisburg  5s,  1936 __        __  __       105 

Baltimore  &  Harrisburg  1st  5s,  1938 __        100 

Baltimore  &  Ohio  R.  R.— 

41/2  Notes,  June,  1913 

Equip.  41/2,  1933 

(Pitts.  June.)  1st  6s,  1933 

(Southwestern)  31/38,  1925 

Conv.  41/2S,  1933 95^^     951/2 

Prior  Lien  31/2S,  1935  (Coup.) 

Prior  Lien  31/2 s,  1935  (Reg.) 

Pitts.,  L.  E.  &  W.  Va.  4s,  1941 

Monon.  River  5s,  1919 

Gen'l  4s,   1948 96        96 

Gen'l  4s,  1948  (Reg.) 

Pitts.  Jc.  &  Mid.  31/3S,  1935 

Baltimore,  Sparrows  lPt&  Ches.  1st  41/3S,  1953 

Baltimore  Trac.  5s,  1939 

Baltimore  Trac.  (No.  Bait.  Div.)  1st  5s,  1943. 
Bangor  &  Aroostook  R.  R. — 

1st  5s,  1943 

Cons.  4s,  1951 

Piscat.  Division  5s,  1943 

St.  John's  River  Ext.  53,  1939 

Van  Bur.  Ex.  5s,  1943 

Wachburn  Ex.  5s,  1939 

Car  Tr.  "C"  5s,  1906-16 

Bangor  Power  A  &  B  Bonds,  1931 

Bangor  Ry.  &  Elec.  1st  Cons.  5s,  1935 

Barber  Asphalt  Paving  Deb.  6s,  1916 

Barney  &  Smith  5s,  1936 

Barrett  Mfg.  6s,  1939 

Battle  Creek  &  Sturgis  1st  38,  1989 

Bay  City  &  Battle  Creek  1st  3s,  1989 

Bay  City  Gas  1st  5s,  1930 

Bay  Counties  Power  Co.  5s,  1930 

Bay  of  Quinte  Ry.  1st  5s,  1927 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1088 


99% 

100 

45/8% 

4%% 

88 

891/4 

901/4 

90% 

91 

881/3 



881/4 

893/4 

^1031/3 

.. 

97% 



88 

95 

95% 

105 

107 

108 

105 

108 

78 

80 

99 

101 

93 

97 

100 

104 

93 

95 

« 

100 

931/4 

99 

98% 

101 

•97% 



90 

•90 





72 

67 



•90 



101 

10134 

— 

96% 

High    Low 

Bay  State  St.  Ry.  5%  Notes,  1913-32 

Beaver  River  Power  1st  6s,  1914-28 

Beaver  Valley  Trac.  Gen.  5s,  1953 — ^— 

Beaver  Valley  Water  1st  53,  1932 

Beech  Creek  Coal  &  Coke  58,  1944 

Beech  Creek  Ext'n  1st  31/28,  1951 

Beech  Creek  R.  R.  Extd.  4s,  1936 

Beech  Creek  R.  R.  2d  5s,  1936 

Bel.  Air  Elec.  1st  6s,  1940 

Beld-Paul-Cortic.  Silk,  Deb.  5s,  1936 

Belleville  &  Carondelet  1st  6s,  1923 

Belleville  Gas  &  Electric  1st  5s,  1922 

Bellingham  Bay  &  Brit.  Col.  1st  5s,  1932 

Bells  Gap  Cons.  6s,  1913 

Bell  Tel.  of  Can.  Deb.  5s,  1925 

Beloit  Water,  Gas  &  Elec.  5s,  1937 

Belt  R.  R.  &  Stk.  Yards  1st  43,  1939 

Belt  Ry.  of  Chattanooga  1st  5s,  1945 

Belt  Ry.  of  Chattanooga  2d  43,  1945 

Belvidere  Delaware  R.  R.  Cons.  31/33,  1943 

Belvidere  Delaware  R.  R.  Cons.  4s,  1927 

Bennington  &  Rutl.  41/2S,  1927 

Benton  Harbor,  St.  Jos.  Gas  &  Fuel  5s,  1926— 

Bergen  Turnpike  Ist  53,  1951 

Bergner  &  Engel  Brew.  63,  1921 

Berkshire  St.  Ry.  1st  5s,  1922 

Berlin  Mills  5s,  1931 

Bethlehem  Steel  5s,  1926 951/3     951/2 

Bethlehem  Steel  1st  Ref.  53,  1942 

Bethlehem  Steel  P.  M.  6s,  1998 

Big  Lost  River  Irr.  1st  6s,  1915-23 

Big  Sandy  Ry.  1st  4s,  1944 

Binghamton  Gas  Wks.  1st  5s,  1938 

Binghamton  Lt.  Ht.  &  Pr.  1st  5s,  1942 

Binghamton  Ry.  5s,  1931 

Birmingham  Belt  1st  4s,  1922 

Birmingham,  Ensley  &  Bess.  Ist  5s,  1941 

Birmingham,  Knox.  &  Allent'n  6s,  1931 

Birmingham  Ry.  &  Elec.  1st  5s,  1924 

Birmingham  Ry.,  Lt.  &  P.  Gen.  Ref.  41/38,  1954 

Birmingham  Ry.  Lt.  &  Pr.  6s,  1957 

Birmingham  &  Southeastern  1st  63,  1961 

Birmingham  Terminal  1st  4s,  1957 1 

Bitter  Root  Valley  Irrig.  1st  6s,  1914-19 

Blackstone  Val.  Gas  &  Elec.  Ss,  1939    

Blackwell  Lumber  1st  6s,  1912-21 

Blazier  Timber  1st  &  Gen.  6s,  1912-17 

Bleecker  St.  &  Fulton  Ferry  1st  48,  1950 

Bliss  (E.  W.)  Co.  6s,  1932 

Bloomfield  St.  Ry.  1st  5s,  1923   

Bloomingham  &  Normal  Ry.  &  Lt.  1st  Ss,  1928 
Blooming.  Decat.  &  Champ.  1st  &  Ref.  5s,  1940 
Bloomington  &  Nor.  Ry.  El.  &  Ht.  1st  5s,  1927 
Bloomington,  Pontiac  &  .Joliet  EL  1st  5s,  1935 

Blue  Creek  Coal  &  Land  1st  5s,  1938 ^_- 

Blue  Ridge  Electric  1st  5s,  1940 

Blue  Ridge  Power  Gtd.  5s *6%  basi» 

Bluflf  Point  Land  Imp.  1st  4s,  1940 __        __  85        90 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1089 


Bid 

Asked 



100 

*6%  basis 

*93 

*96 

*90 

■ 

♦911/3 

84 

98 



106 



*90 



__ 

•89 

IO8I/3 



*94 





99 

100 



100 

1001/3 

*92 





98 

100 



*70 



87 



97 

__ 

95 

__ 

♦93 

♦94 



100 

*101 

♦103 

~ 

♦100% 

85 

86 

117 

117y2 



♦30 

851/8 

873/4 

98 

100 

97 

100 

*96 

♦97% 



90 

__ 

♦70 

106l^  107% 

104 

105 

89 

91 

102 



98 

101 

85 

88 



♦100 

99 

101 



♦100 



♦991/2 

68 

76 

'1021/2 



•99 

♦97 

•911/3 

__ 

*96 

__ 

♦321/3 

♦50 

__ 

♦75 

'Q%  basis 

High  Low  Bid    Asked 

Boca  &  Loyalton  6s,  1923 —  __  105 

Boise  City  Gas  Lt.  &  Coke  Ss,  1941 __  ._  *90 

Boise-Payette  River  Elec.  Pow.  6s,  1921 __  __  *95 

Bon  Air  Coal  2d  6s,  1928 —  —  90      100 

Boomer  Coal  &  Coke  Equip.  5s,  1915-17 —  —  *98%     __ 

Boone  Elec.  1st  6s,  1931 —  „  —     *100 

Boonville  R.  R.  Bridge  1st  4s,  1951 __  __  80 

Boonville,  St.  L.  &  Son.  5s,  1951 —  „  —      101 

Booth  Fisheries  Deb.  6s,  1926 __  __  __        96 

Booth  Mfg.  1st  Conv.  4y2»,  1931. „  __  __     *100 

Bonner  Coal  &  Coke  5s,  1912-17 —  __  *98%     _. 

Boston  &  Albany  R.  R. — 

41/81,   1937 —  -_  —       103 

48,  October,  1913 __  __  99l^     99% 

4s,    1933    __  __  94         96 

4s,   1934__J __  __  94         96 

4«,   1935 >_  __  '  94         96 

31/38,   1951 __  _-  83         85 

Ref.  3i/a8,  1952 —  __  83         85 

Equip.  41/aS,  1913-27 __  __  __     *100 

Boston  Elec.  Light  1st  5s,  1924 —  __  "107 

Boston  Elevated  Deb.  4s,  1937 —  —  94 

Boston  Elevated  Deb.  41/2S,  1941 __  „  931/2     — 

Boston  Elevated  53,  1942 __  —  101 

Boston  Elevated  Ry.  4s,  1935 __  —  88        91 

Boston  &  Lowell  R.  R. — 

41/2S,   1933 __  __  1011/2  1025/8 

4s,   1915 __  „  98I/2     991/3 

4s,   1916 __  _-  98        99 

Oct.  1st  4s,  1918 —  -_  97         9314 

31/28,  1919 __  __  94         951/3 

31/28,    1921    __  -_  _-         94% 

4a,   1932 _-  __  94        961/9 

Boston  &  Maine  R.  R. — 

41/2S,   1929 __  __  97        991/3 

4s,  1926 __  __  921/2     94l^ 

31/aS,  1921 __  _.  901/2  92 

31/2S,  1923 __  __  90    91 

3s,  1950 __  ._  69    72% 

6s,  1914 __  __  *99y8  __ 

41/2S,  1944 __  __  97    991/2 

48,  1937 ._  __  90    913/8 

4s,   1942 __  __  891A     901/2 

4%   Notes,   1913 „  ._  ._     *100fs 

Boston  &  New  York  Air  Line  1st  4s,  1955 __  __  95 

Boston  &  Northern  St.  Ry.  4s,  1954 __  __  —        89 

Boston  &  Providence  4s,  1918 __  __  98      100 

Boston  &  Worcester  St.  Ry.  1st  41/38,  1923 __  __  91        96 

Boston  Rev.  Bch.  &  Lynn  1st  41/28,"  1927 __  __  98I/2     _- 

Boston  Terminal  31/2S,  1947 __  __  901/2     93 

Boyer  Valley  Ist  SVgS,  1923 __  ._  91 

Braden  Copper  7s __  175       180 

Braden  Copper  Conv.  6s,  1919 ...  ._  *199i/2»210y2 

Brandon  Gas  &  Pow.  1st  6s,  1929 __  __  —     *104 

Brandram-Henderson  1st  6s,  1936 6%%  basis 

Bremerton -Charleston  Lt.  &  Fuel  6s,  1928 —  —  —     *100 

Bridgeport  Gas  Lt.  1st  4s,  1952 __  __  92 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1090 


High    Low 

Bridgeton  &  Millv.  5a,  1930 

Bristol  Gas  &  El.  1st  5s,  1939 

Broadway  Realty  58,  1926 ^_ 

B'way  &  Seventh  Ave.  5s,  1943 

B'way  &  Seventh  Ave.  5s,  1943  (Reg'd) 

Broadway  &  Seventh  Av.  2nd  5s,  1914 

Broadway  Surface  R.  R.  1st  5s,  1924 

Brockton  Gas  Lt.  1st  5s,  1928 

Bronx  Gas  &  Elec.  5s,  1960 

Brooklyn,  Bath  B.  &  W.  E.  5s,  1933 

Brooklyn,  Bath  B.  &  W.  E.  5s,  1917 

Bklyn.  Borough  Gas  5s,  1945 

Bklyn.  Borough  Gas  5s,  1938 

Brooklyn  City  &  Newt.  1st  5s,  1939 

Bklyn.  City  R.  R.  Cons.  5s,  1941 

Bklyn.  Ferry  Cons.  5s,  1948 

Brooklj-n  Heights  1st  5s,  1941 

Bklyn.  &  Montauk  2nd  5s,  1938 

Bklyn.  &  N.  Y.  Ferry  1st  6s,  1911 

Bklyn.,  Queens  Co.  &  Sub.  Cons.  5s,  1941 

Bklyn.,  Queens  Co.  &  Sub.  1st  5s,  1941 

Bklyn.  Rap.  Tran.  5s,  1945 

Bklyn.  Rap.  Tran.  Ref,  48,  2002 

Brooklyn  Rap.  Trans.  5s,  1918 

Bklyn.  Union  Elev.  1st  5s,  1950 

Bklyn.  Union  Elev.  1st  5s,  1950  (stpd.  guar.). 

Bklyn.  Union  Gas  1st  Cons.  5s,  1945 

Brooks-Scanlon  Lumber  Co.  1st  6s,  1916 

Brownsville  Av.  5s,  1926 

Brownsville  &  Matamoras  Bridge  1st  5s,  1930 

Brunswick  &  Western  1st  4s,  1938 

BufiFalo,  Bellevue  &  San.  53,  1927 

Buffalo  City  Gas  Ist  5s,  1947 

Buffalo  Creek  Ist  5s,  1941 

Buffalo  Gas  1st  5s,  1947 

Buff.  Gen.  El.  1st  5s,  1939 

Buff.  Gen.  El.  1st  Ref.  5s,  1939 

Buffalo  Iron  5s,  1925 

Buffalo  &  Lockport  1st  5s,  1938 

Buffalo,  Lockp,  &  Roch.  1st  5s,  1954 

Buff.,  N.  Y.  &  Erie  1st  7s,  1916 

Buffalo  &  Niag.  Falls  Elec.  1st  5s,  1935 

Buffalo  &  Niag.  Falls  Elec.  2nd  5s,  1921 

Buff.  &  Niag.  Falls  El.  Lt.  &  Pr.  1st  5s,  1942— 

Buffalo  Ry.  1st  5s,  1931 

Buffalo  Ry.  Deb.  6s,  1917 

Buffalo,  Rochester  &  Pittsburgh  R.  R. 

Equip.  41/28  Ser.  E,  1922 

Equip.  41/28  Ser.  F,  1927 

Equip.  4s  Ser.  G,  1929 

Gen.  58,  1937 

Cons.   41/28,  1957 

Roch.  &  Pits.  6s,  1921 

Roch.  &  Pitts.  6s,  1922 

Equip.  41/2S  "D,"  1919 

Buff.  &  Southw.  1st  5s,  1918 

Buff.  &  Southw.  2nd  58,  1918 

Buff.  &  Susq.  Iron  deb.  5s,  1926 

Buff.  &  Susq.  Iron  5s,  1932 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1091 


Bid 

Asked 

98 

99 



87 

*98 



103% 





102 

99 

100 

^101  ' 

*103 

30 



99 

101 

97 

101 



*96 

96 

981/a 

*96 

*98y3 

99 

101 

1011/2 

1021/4 



12 

101 

103 

^102 



85 

90 



981/^ 

*99 

1021/4 

1021/3 

881/4 

88% 

961/2 

96% 

100% 

101 

100% 

101 

105 

105% 

' 

*100 

99 

1011/3 



•100 

91 

__ 

100 



50 

55 

102 



50 

55 

103 

__ 



1001/3 

65 

75 

98 

100 

__ 

♦73 

107 

110 

103 

104 

102 

__ 

99 



1031/2 

105 

1041/2 

— 

»101 

4%% 

472% 

4%% 

41/2% 

109 

1093/4 

10414  1041/a 

1101/4 

-.-. 

112 





*101 

102 

102% 

95 



85 



97 

__ 

Buffalo  &  Susquehanna  R.  R. — 

1st  &  Ref.  4s,  1951 

Equip.  5s  "C,"  1917 

1st   41/28,    1953 

Buffalo  Trac.  1st  5s,  1948 

Burl.,  Ced.  Rpds.  &  N.  1st  5s,  1934 

Burl.  Gas  Lt.  (Vt.)  1st  5s,  1955 

Burlington  &  Mo.  (Neb.)  Con.  6s,  1918 

Burlington  Ry.  &  Light  1st  5s,  1932 

Burns  (P.)   Co.  6s,  1924 

Burns  (P.)  1st  &  Ref.  6s,  1931 

Bush  Terminal  1st  5s,  1952 

Bush  Terminal  Cons  6s,  1955 

Bush  Terminal  Bldgs.  5s,  1960 

Business  Real  Estate  Tr.  1st  4s,  1921 

Butte  El.  &  Pow.  1st  5s,  due  serially 

Butte  Elec.  &  Pr.  5s,  1951 

Cahaba  Coal  Mining  1st  6s,  1922 

Calgary  Brew.  &  Malting  1st  5s,  1942 

Calgary  Power  1st  5s,  1940 

CaUf.  Cable  R.  R.  1st  5s,  1915 

Cal.  Cent.  Gas  &  Elec.  5s,  1931 

Calif.  Elec.  Gen.  1st  5s,  1948 

Cal.  Gas  &  Elec.  (Gen.  Mtge.  &  C.  T.)  5s,  1933 

Calif.  Gas  &  El.  Un.  &  Ref.  5a,  1937 

California  Northwestern  1st  5s,  1928 

California  St.  Cable  Co.  5s,  1920 

California  Wine  Ass'n  5s,  1925 

Calumet  &  Copper  Creek  6s 

Calumet  &  So.  Chic.  1st  5s,  1927 

Camaguey  Co.  1st  5s,  1946 

Cambria  &  Clearfield  1st  5s,  1941 

Cambria  &  Indiana  R.  R.  1st  5s,  1936 

Camden  &  Rockland  Water  4s,  1925 

Camden  Suburban  1st  5s,  1946 

Cameron  Lumber  1st  6s,  1916-22 

Canada  Bread  1st  6s,  1941 

Canada  Cement  Ist  6s,  1929 

Canada  Southern  Cons.  58,  1962 

Canada  Starch  6s,  1930 

Canadian  Car  &  Foundry  Ist  6s,  1939 

Cnadian  Cons.  Felt  1st  6s,  1940 

Canadian  Cons.  Rubber  6s,  1946 

Canadian  Cottons  1st  5s,  1940 

Canadian  Interlake  Line  1st  6s,  1927 

Canadian  Lt.  &  Pow.  1st  5s,  1949 

Canadian  Locomotive  1st  6a,  1951 

Canadian  Northern  Ry. — 

"D"  4V^s 

Equip.  «G"  4y2S 

Equip.  «F-1"  41/28 

Equip.  «E-1"  41/2 

4s,   1919 

Deb.  4s,  1939 

Can.  Nor.  48,  1929 

Imp.  Roll.  Sk.  41/28,  1922 

Winnipeg  Ter.  41/2S,  1932 

'Quotation  nearest  Marcb  1,  1913.    No  quotation  on  that  date. 

1092 


High    Low 


Bid 

Asked 

381/2 



•100 

10 

15 

104 

__ 



109% 

94 

951/, 

102 

1021/2 

941/2 

961/2 

103 

104 

100 

101 

__ 

89 

94 

96 



97 



•99 

931/2 

94% 

9!> 

97y2 

•1031/2 

•110 



•85 



•921/2 

101 

101% 

103 

82 

841/, 

101% 

951/2 

953/4 

•104 

101 

102 



98% 



•70 

97 

981/2 

•88 

1011/2 

__ 

*95 



•95y, 

105 

106 

' 

•101 

•871/2 





99% 

IO6I/2 

1071/a 



100 

__ 

105 



•98y, 

93 

94 

803/4 

81 

*100 



76% 

— 

100 

5%  basis 

._  •99.29 

5%  basis 

-_     ♦lOO 

100 



95 

__ 

95 

. 

51/4% 



51/4% 

5% 

High    Low        Bid    Asked 
Canadian  Pacific  Ry. — 

1st  Deb.  5s,  1915 __ 

Cons.  Deb.  Perp.  4s 

Aroostook  Valley  41/38,  1929 

New  Brunswick  1st  5s,  1934 

New  Bninswick  Cons.  Perp.  4s 

Canadian  Puget  Sound  Lumber  6s,  1915-21 

Canadian  Puget  Sound  Saw  Mills  1st  6s,  1915 

Canadian  Venezuelan  1st  6s,  1927 

Canal  &  Clairborne  R.  R.  1st  6s,  1946 *12iyz     — 

Canton  &  New  Phila.  5s,  1923 

Canton-Akron  Ry.  1st  5s,  1932 

Canton-Akron  Cons.  Ry.  Cons.  5s,  1933 

Canton  Elec.  1st  &  Ref.  5s,  1937 

Canton  Massillon  Ry.  1st  58,  1920 

Cape  Breton  Coal,  Iron  &  Ry.  1st  5s,  1933 

Cape  Breton  Elec.  1st  5s,  1932 

Capital  Traction  5s,  1947 

Carbondale  &  Shawneetown  1st  4s,  1932 

Carbondale  Ry.  5s,  1933 

Carolina  Central  1st  Cons.  4s,  1949 

Carolina,  Clinchfield  &  Ohio  1st  58,  1938 

Carolina  Power  &  Light  1st  5s,  1938 

Carolina  Terminal  1st  5s,  1937 

Carolina  &  Yadkin  River  1st  5s,  1962 

Carondelet  Bridge  1st  41/28,  1938 

Carthage  &  Adiron.  1st  4s,  1981 

Carthage,  Watert'n  &  Sack.  Har.  R.  R.  5s,  1931 

Carlton  Cons.  Lumber  1st  6s,  1921 

Cass  Ave.  &  Fair  Grounds  Ext.  4l^s,  1922 

Caswell  Hotel  1st  5s,  1915 

Cataract  Pow.  &  Cond.  1st  5s,  1927 

Catawba  Power  Ist  6s,  1933 

Catawissa  R.  R.  Cons.  4s,  1948 

Catlettsb'g,  Ken.  &  Ceredo  Wat.  Cons.  5s,  1933 
Cedar  Rap.,  la.  Falls  &  Northw'n  1st  5s,  1921 

Cedar  Rpids  &  M.  1st  7s,  1916 

Central  Ark.  &  Eas.  1st  5s,  1940 

Central  Branch  Ry.  1st  4s,  1919 

Central  Branch  (U.  P.)  1st  4s,  1948 

Central  Calif.  Gas  1st  6s,  1932 

Central  Calif.  Traction  Co.  58,  1936 

Central  Coal  &  Coke  Gen.  &  Cons.  6s,  1913-25 

Central  Colorado  Power  5s,  1946 

Central  Crosstown  1st  6s,  1922 

Central  Electric  5s,  1914 

Central  Georgia  Power  5s,  1939 

Central  Hudson  Steamboat  5s.  1919 

Central  Hlinois  Pub.  Serv.  Ist  &  Ref.  5s,  1952 

Central  Hlinois  Utilities  1st  6s,  1916-32 

Central  Indiana  Ry.  1st  48,  1953 

Central  Leather  5s,  1925 951/3     951/2 

Central  Maine  Power  5s,  1939 

Central  Maine  Power  5%  Notes,  1915 

Central  Market  1st  5s,  1922 

Central  Mass.  Elec.  1st  6s,  1924 

Central  Mex.  Lt.  &  Pow.  1st  68,  1940 

Central  National  Bank  (Cleveland) *168 

Central  New  England  48,  1961 90i4     9014 

'Quotation  nearest  March  1.  1913.    No  quotation  on  that  date. 

109S 


101 

103 

991/3 

1001/2 

97 

100 

107 

109 

97 

99 



♦100 



♦981/3 

~ 

♦93 

95 

98% 

97% 

99 

♦921/3 

951/3 

971/3 

97 

99 



♦90 



951/3 

110 

111 

90 

_ 

95 

971/3 



91% 

95 

100 

901/2 

931/3 

♦99 

__ 

♦911/3 

95 

100 

88 

*1083/4 

__ 

»100 

96 

96% 



51/2% 



1011/3 

♦101 

981/2 

991/3 

95 

1011/2 

106 

107 

108 



971/3 

91% 

771/2 

__ 



100 



95 

*100 



^30  fl. 



104 

__ 

93 

96 

*80 



98 

100 



95 

■' 

»100 

87 

~ 

97 

99 

•991/4 



96 

97 

♦99 



83 

86 

High  Low  Bid    Asked 

Central  N.  Y.  Gas  &  Elec.  5s,  1941 __  __  *93i/2     ~ 

Central  N.  Y.  Gas  &  Elec.  6%  Notes,  1916 __  __  __    ♦100 

Central  of  Georgia  Ry. — 

Cons.  5s,  1945 ._  __  106%  107 

1st   58,  1945 __  __  110 

Chatt.  Div.  4s,  1951 __  __  __        90 

Macon  &  Nor.  5s,  1946 __  __  *105y8     __ 

Middle  Ga.  &  Atl.  5s,  1947 __  __  *105y8     ._ 

Equip.  41/2S,  Series  «H,"  1916 __  __  51/8       4% 

Equip.  41/28,  Series  "I,"  1917 __  __  SVs      4% 

Equip.  41/38,  'Series  "K,"  1917 __  __  51/3       4% 

Mobile  Div.  5s,  1946 __  __  106       108 

Oconee  Div.  1st  5s,  1945 __  __  106       108 

Eatonville  Br.  5,  1926 __  __  100 

Central  Ohio  R.  R.  1st  Cons.  41/38,  1930 __  __  100 

Central  Pacific  1st  Ref.  48,  1949 __  __  __        95 

Central  Pacific  1st  Ref.  31/2S,  1929 __  __  __        9014 

Central  Pacific  Thro.  Sht.  Line  1st  4s,  1954__  __  __  __        9214 

Central  R.  R.  &  Bkg.  of  Ga.  Col.  5s,  1937 __  __  __      101% 

Central  R.  R.  of  Haiti  1st  Coll.  6s,  1919 __  __  ♦95     *100 

Central  R.  R.  of  N.  J.  Gen.  58,  1987 __  __  1171/3  118% 

Central  R.  R.  of  N.  J.  Col.  4s,  1951 __  ._  __        96I/3 

Central  R.  R.  of  N.  J.  Equip.  4s,  April,  1913—  __  __  99%     __ 

Central  R.  R.  of  South  Carolina  6s,  1921 __  __  110 

Central  Ry.  Con.  58,  1932 __  __  107      108 

Central  Ry.  Ext.  Imp.  5s,  1932 >_  __  105       107 

Central  States  Elec.  5%  Notes,  1922 __  __  __      *94i/2 

Central  Terminal  1st  Chic.  Term.  48,  1941 __  __  95        961/2 

Central  Traction  1st  5s,  1929 __  __  102      103% 

Central  Union  Gas  5s,  1927 __  __  102       103 

Central  Vermont  1st  4s,  1920_I __  __  _>        89 

Central  Vermont  Equip.  5s,  1915 __  __  __     ^10014 

Central  Vermont  Equip.  5s,  1917 __  __  _,     ♦lOO^ 

Central  Vermont  Equip.  5s,  1918 —  -_  —     MOOyg 

Cent.  Vermont  Trans.  "B"  5s,  1921 _.  __  ♦100%^100% 

Centralia  &  Chehalis  Gas  1st  51/2S,  1930 __  __  __     ♦lOO 

Chadwick  Brass  1st  S.  F.  6s __  __  __        971/3 

Champaign  &  Urbana  Wat.  1st  5s,  1932 __  __  __        98 

Champaign  Lumber  1st  6s,  1914-28 __  __  __     ♦lOO 

Charleston  &  Sav.  1st  7s,  1936 __  __  *127%     — 

Charleston  &  West.  Car  1st  5s,  1946 __  __  105       106 

Charleston  City  Ry.  1st  5s,  1923 _>  __  103       104 

Charleston  Cons.  Ry.  &  E.  5s,  1999 «._  _.  951/2     97 

Charleston  Gas  &  Elec.  1st  5s,  1922 __  __  ♦821/2     __ 

Chateaugay  Ore  &  Iron  4s,  1942 __  —  85 

Cliattahoochee  &  Gulf  5s,  1930 __  —  100 

Chattanooga  Elec.  Rys.  1st  5s,  1919 __  -_  'lOO^     __ 

Chattanooga  Gas  1st  53,  1927 -_  __  96 

Chattanooga  Rys.  1st  Cons.  5s,  1956 __  __  ♦951/3  ♦§? 

Chattanooga  Ry.  &  Lt.  1st  &  Ref.  53,  1956 >_  __  93        96 

Chatt.,  Rome  &  Sou.  5s,  1947 _ 105 

Chattanooga  Station  1st  4s,  1957 __  _«  88        91 

Cherry  Riv.  Boom  &  Lumber  1st  Ref.  5s,  1929_  __  __  ♦99i/2»100% 

Clies.'&  Del.  Canal  1st  5s,  1916 ._  _.  __        66 

Chesapeake  &  Ohio  Ry. — 

Car  Tr.  Ser  H  4s,  1916 „  „  5%  4%% 

Coll.  Notes  41/2S,  1914 98%     9914 

R.  &  A.  Div.  1st  4s,  1989 __  >_  ^91%  ^94 

R.  &  A.  Div.  2nd  4s,  1989 __  _.  88 

"Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1094 


High     Low 

Elevator  Co.  4s,  1938 

Conv.  41/28,  1930 -_         90%     90% 

Gen.  5s,  1929 

Com.  5s,  1939 __  "  __ 

Gen.  4s,  1939 

41/28,  1993 IGOVs  lOOi/s 

Craig  Valley  5s,  1940 

Potts  Creek  4s,  1946 

Warm  Springs  Valley  1st  5s,  1941 

dies.  &  Pot.  Tel.  5s,  1909-29 

Ches.  S.  S.  1st  Equip.  58,  1914-24 

Chester  Co.  Gas  1st  cons.  58,  1925 

Chesterfield  &  Lancaster  1st  5s,  1955 

Chester  Water  1st  5s,  1921 

Chicago  &  Alton  R.  R. — 

Deb.  5s,  1922 

5%  Notes,  1915 

Eq.  Assn.  4s,  1915 

Eq.  Assn.  4s,  1914 

Impt.  &  Equip.  5%  Notes,  1913 

1st  Lien  31/28,  1950 

Ref.  3,  1949 

Chic.  &  Atl.  Term.  5s,  1918 

Chic.  Athletic  Assn.  5s,  1926 

Chic.  Audit.  1st  6s,  1929 

Chic.  B'd  of  Trade  5s,  1927 

Chicago,  Burlington  &  Quincy  R.  R. — 

Jt.  4s,  1921 

Gen.  4s,  1958 

Den.  Div.  4s,  1922 

111.  Div.  31/28,  1949 

111.  Div.  4s,  1949 

la.  Div.  58,  1919 

la.  Div.  4s,  1919 

Neb.  Div.  4s,  1927 

58,  Deb.  Mar.,  1913 

S.  W.  Div.  4s,  1921 

Oiic.  City  &  Conn.  Coll.  5s,  1927 

Chic.  City  Ry.  1st  5s,  1927 

Chicago  &  Eastern  Illinois  R.  R. — 

Equip.  58,  1922 

«E"  41/2S,  1915 

1st  Cons.  6s,  1934 

Gen.  Cons.  1st  5s,  1937 

P.  M.  1st  5s,  1942 

Ref.   43,   1955 

1st  Extn.  6s,  1931 

Chic.  El.  Ry.  5s  Notes,  1914 

Chic.  &  Erie  1st  5s,  1982 

Chic.  Gas  Lt.  &  Coke  5s,  1937 

Chicago  Great  Western  R.  R. — 

Ist  4s,   1959 

1st  5s,  1960 

Ist  Terra.  5s,  1936 

Chic,  Hammond  &  West.  6s,  1927 ____ 

Chica!?o  &  Ills.  Coal  Ist  5s,  1936_ 

Chic.  &  Ind.  Coal  Ry.  1st  5s,  1936 

Chic,  Ind.  &  So.  4s,  1956 

Chic,  Inpts.  &  Louis.  Equip.  41/3S,  1915 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

lOOS 


Bid    . 

A.sked 

80 

— 

"" 

101 

108% 

109 

101 

— 

101% 

:: 

80 



101 

105 

1051/2 

—     ♦100 

*98i/2  ^ 

*100 

97 

100 

—     ■ 

*100 

85 

92 

991/4 

100 

4%% 



4%% 

♦991/4^ 

*100 

60 

611/2 

68 

70 

98 

100 

♦96     ' 

*101 

90 

94 

97 

99 

94% 

95 

J)4i/2 

95 

99 

991/2 

841/4 

85 

96 

971/3 

1031/4 

104 

981/2 

991/4 

96% 

100 

100 

100% 

981/4 



81% 

851/2 

1011/4 

1011/2 

5% 

4% 

5y4 

4% 

118 

120 

105 

107 



971/2 

751/4 

76 

-_     ^1191/, 

971/4 

97% 



1101/2 

102% 

1031/2 

751/s 

76 

^100 

__ 

1021/2 

__ 

115 

118 

104% 

__ 

104% 

__ 



91 

51/4 

4% 

High    Low        Bid    Asked 

Chic,  Inpls.  &  Louis.  Equip.  4VsS,  1921 

Chic,  Indpls.  &  Louis.  Ref.  4s,  1947 

Chic,  Indpls.  &  Louis.  Ref.  5s,  1947 

Chic,  Indpls.  &  Louis.  Ref.  6s,  1947 

Chic,  Ind.  &  St.  L.  (Short  Line)  1st  4s,  1953_ 

Chicago  Junction  let  4s,  1945 

Chic  June  Ry.  &  Stk.  Yds.  5s,  1915 

Chic.  Jen.  Rys.  &  Stk.  Yds.  Ref.  4s,  1940 

Chic,  Lake  Shore  &  Eastern  1st  41/28,  1969— _ 

Chic,  Mera.  &  Gulf  1st  5s,  1940 

Chicago  &  Mil.  Elec  Ry.  53,  1919 

Chicago  &  Mil.  Elec  R.  R.  1st  5s,  1922 

Chic  &  Mil.  Elec  R.  R.,  Wis.  Div.,  1st  58,  1925 
Chicago,  Milwaulcee  &  St.  Paul  Ry. — 

Terminal  5s,  1914 

Wis.  &  Minn.  5s,  1921 

Wis.  Valley  6s,  1920 

4s,  1925  971/2     971/2 

Deb.  43,  1934 .       90        Sdy^ 

Gen.  A  4s,  1989 

Gen.  B  31/2S,  1989 

Conv.  41/2S,  1932 102^/8  102 

Chic  &  Lake  Sup.  5s,  1921 

Chic  &  Mo.  Riv.  5s,  1921 

Chicago  &  Pacific  West.  58,  1921 IO41/2  IO41/2 

Dubuque  6s,  1920 

La.  Cr.  &  Davenpt.  5s,  1919 

Chic,  Mil.  &  Puget  Sd.  4s,  1949 94        94 

Chicago  &  North  Michigan  1st  5s,  1931 

Chicago  &  North  Western  Ry. — 

Cons.   7s,   1915 

Marshfield  Ex.  1st  5s,  1922 ■— 

Equip.  "A"  41/2S,  1914-22 

Equip.  "B"  41/28,  1913-22 

5s,  1929  

6s,  1929  

Gen.  4s,  1987 

Ext.  4s,   1926 

Gen.  31/2S,  1987 84         84 

Deb.  5s,  1921 

Deb.  53,  1933 

Mil.-Ashland  6s,  1925 

Chic,  Peoria  &  St.  L.  P.  L.  41/28,  1930 

Chic  PneuTn.  Tool  5s,  1921 

Chicago  Railways  Co. — 

1st  5s,  1927  — 

Cons.  "A"  5s,  1927 

Cons.  **B"  5s,  1927 

Cons.  "C"  5s.  1927 

Pur.  M.  4s,  1927 

Adj.  Inc  4s,  1927 

Chic  &  Rock  Island  Elev.  1st  5s,  1912-24 

Chicago,  Rock  Island  &  Pacific  Ry. — 

Deb.  58,  1932 —    *    — 

Gen.  4s.  1988 

Ref.  4s,   1934- 86%     86% 

4s,  2002  

Equip.  41/28,  1917 

Equip.  4y2S,  1919 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1096 


5V4 

4% 

90 

901/8 

105 

108 



126 

90 



90 

92 

991/2 

9978 

87 



103 

*97     ' 

»1033/4 

99 

1021/, 

48 

51 

17 

20 

1001/4 

._ 

1033/4 

104% 

1101/2 

112% 

97 

971/2 

83% 

84 

loi 

1051/2 

1051/2 

~ 

1105/8 

__ 

102% 

— 

90 

— 

105 

105% 

104 

♦45/8% 

__ 

♦4.70 



103 

1031/3 

108 

108% 

961/2 

97% 

96 

~ 

101 

103 

IO6I/3 

1071/2 

1141/4 

__ 

91 

__ 

93 

94ya 

991/2 

99% 

95% 

831/4 

83y2 

94y2 

70% 

73ya 

47 

51 

— 

•99 

86 

87 

92% 

933/8 

63 

631/2 

51/2-5% 

basis 

51/2-5% 

basis 

High    Low        Bid    Asked 

Equip.  41/28,  1925 —        —        51/2-6%  basis 

Is,  1917 ^ —        —  1061/8     — 

Coll.  4&,  1918 --        —  —      51^% 

Coll.  "K,"  1913 -_        —  97 

Coll.   "P,"   1918 __        —  —        95 

Chic.  &  St.  Louis  1st  6s,  1915 —        __  lOSi/g     — 

Chic,  St.  L.  &  N.  O.  Cons.  5s,  1951 __        __  __      112% 

Chgo.,  St.  L.  &  K  0.  Cons.  31/3S,  1951 

Chgo.,  St.  L.  &  N.  0.  Memp.  Div.  4s,  1951 

Chic,  St.  L.  &  Pitts.  Con.  5s,  1932 

Chic,  St.  P.  &  Minn.  1st  6s,  1918 

Chicago,  St.  Paul,  Minn.  &  Omaha  Ry. — 

Cons.  6s,  1930 120       120 

Cons.  SYgS,  1930 

Deb.  5s,  1930 

Chic,  So.  Bend  &  Nor.  Ind.  1st  5s,  1937 

Chic  Telephone  1st  5s,  1923 

Chicago  Term.  C.  &  G.  W.  5s,  1936 

Chic,  Terre  Haute  &  S.  E.  Ist  5s,  1960 

Chic,  Terre  Haute  &  S.  E.  Inc.  5s,  1960 

Chic  Utilities  1st  A.  &  B.  5s,  1942 

Chicago  &  Western  Indiana  R.  B. — 

Cons.  4s,  1952 

Gen'l  6s,  1932 

3-vr.  5%  Notes,  1915 

Chic  &  West  Mich.  By.  5s,  1921 

Chic,  Wilm.  &  Verm.  Coal  1st  6s,  1931 

Chicago,  Wis.  &  Minn.  1st  6s,  1916 

Chino  Copper  6s,  1921 155       155 

Chippewa  Val.  By.,  Lt.  &  P.  1st  5s,  1924 

Choctaw  &  Memphis  5s,  1949  

Choctaw,  Okla.  &  G.  Gen.  5s,  1919 

Choctaw,  Okla.  &  G.  Cons.  58,  1952 

Choctaw  Bv.  &  Ltg.  5s,  1938 

Cicero  Gas  Bef.  5s,  1932 

Cin.,  Daytcn  &  Chic.  1st  4s,  1942 

Cine,  Dayton  &  Ironton  1st  5s,  1941 

Cin..  Day.  &  Tol.  Tr.  5s,  1922 

Cin.  Edison  Elec  58,  1917 

Cine,  Findlay  &  Ft.  W.  1st  4s,  1923 

Cin,  Gas  Transp.  5s,  1933 

Cin.  Gas  Tranap.  5s  (guar.  Cin.  Gas  Co.) 

Cincinnati  &  Ham.  Elec  St.  By.  6s,  1918 

Cincinnati,  Hamilton  &  Dayton  By. — 

2nd  41/oS,  1937 

1st   4s,   1959 

P.  M.  Coll.  Tr.  4s,  1913 

41/38,   1939   

5s,   1942   

4s,  fixed 

Gen.  Gtd.  4s.  1939 

Cin.,  Indpls..  St.  L.  &  Chic  Cons.  6s,  1920 

Cin.,  Ind.,  St.  Louis  &  Chic  1st  4s,  1936 

Cine,  Indpls.  &  West.  1st  4s,  1953 

Cine,  Ind.  &  St.  L.  Short  Line  1st  4g,  1953 

Cine,  Law.  &  Aur.  5s,  1919 

Cin.,  Lebanon  &  Nor.  5s,  1916 

Cin.,  Lebanon  &  Nor.  By.  4s,  1942 

Cine  *  Muskingum  Val.  1st  4s,  1948 

•Quotation  nearest  Maxch  J,  1913.    No  quotation  on  that  date. 

1097 


80 

__ 

89 

—-. 

107 

Ill 

419 

~ 

120 

1211/4 

10114  102l^ 

77 

79 

101 

101 

99 





951/4 

__ 

•66 

— 

61 

87 

881/, 

106% 

•99% 

*99% 

951/2 

99 

i 

»104 

101 

— 

♦94 

■" 

107 

107^4 

1001/2 

97 

100 



♦67 



98 

♦83 

__ 

991/4 



85 

1003/8 

101 



87 

88 

91 



100 

1011/2 

110 

95 

1011/4 

911/8 

♦99% 

♦99% 

65 

67 

98 

105 

7472 

76 

♦691/2 

__ 

1051/4 

__ 

931/s 

__ 

86% 



92 

__ 



90 

101 



921/2 

95 

88 

94 

High  Low  Bid    Asked 

Cine,  N.  O.  &  Texas  Pac.  Equip.  41/28,  1916__  __  >_  48^      514 

Cine,  N.  O.  &  Texas  Pac.  Equip.  41/28,  1921__  __  __  4%      514 

Cin.,  Newp.  &  Gov.  Lt.  &  Tr.  Ist  5s,  1922 __  __  lOlVg  105 

Cin.,  Newp.  &  Gov.  Lt.  &  Tr.  2nd  5s,  1922 __  __  100l^  104 

Ginc.  Northern  1st  4s,  1951 __  __  84        89 

Cine.,  Rich.  &  Ft.  W.  7s,  1921 __  ._  112 

Cine,  Sand.  &  Gleve.  1st  Cons.  5s,  1928 >_  __  'lOS 

Cin.  Trac.  Equip.  "C"  5s,  1912-21 __  __  __     ♦101 

Cin.  Trac.  Equip.  "D"  5s,  1913-22 __  __  ._     'lOl 

Cine,  Wab.  &  Mich.  1st  48,  1991 __  __  88I/2     90 

Citizens  Gas  (Indpls.)  1st  Ref.  5s,  1942 __  ._  __     *101 

Citizens  Gas  (Kankakee)  1st  5s,  1932 __  __  *97 

atizens  Gas  &  El.  Cons.  6s,  1931 __  __  __        96 

Citizens  Gas  &  Fuel  Ist  &  Ref.  5s,  1960 __  __  94        96y, 

Citizens  Gas  Light  1st  5s,  1940 __  _.  __     '104 

Citizens  Gas  &  Wat.  1st  5s,  1926 : __  __  *95       "gs 

Citizens  Ind.  Tel.  (T.  H.)  1st  5s,  1936 __  __  __        87 

Citizens  Lt.,  Ht.  &  Pr.  1st  5s,  1934 __  __  991/2  101 

Citizens  R.  R.  (Ind.)  1st  5s,  1933 _-  __  *100y2*102i/a 

Citiz.  Ry.  &  Lt.  (Muscatine,  la.)  1st  5s,  1917_  __  __  97       100 

Citizens  Ry.,  L.  &  P.  (Newport  News)  5s,  1940  __  __  79 

Citizens  Street  Ry.  Cons.  5s,  1933 101      101% 

Citizens  Street  Ry.  (Memphis)  6s,  1916 __  __  IO21/2  104 

Citizens  Trac.  (Pitts.)  lat  5s,  1927 __  __  1021/2  105 

Citiz.  Tr.  of  Venango  Co.,  Pa.,  1st  S.  F.  5s,  1942  __  __  __      *99 

Citizens  Wat.  Supply  (Newtown)  2nd  4s,  1921  „  __  *78 

City  &  Suburban  6s,  1916 „  __  101       105 

City  &  Suburban  Cons.  4s,  1930 __  __  89        92 

City  &  Suburb.  R.  R.  Bait.  Ist  5s,  1922 —  ._  103%  IO434 

City  &  Suburban  5s,  1948 __  __  103       IO41/4 

City  Electric  1st  5s,  1937 —  _.  86^3     871/4 

City  Gas  (Norfolk)  1st  6s,  1926 __  —  *105 

City  Gas  &  Elec.  1st  5s,  1935 _ 79 

City  Realty  Inv.  Conv.  5s,  1927 __  __  __       ♦971/2 

City  Water  Power  1st  5s,  1939 __  —  >_        98i/a 

Clairton  Steel  5s,  1913 __  __  _,      lOOi/g 

Clearfield  &  Jefferson  6s,  1927 —  —  —       117 

Clearfield  &  Mahoning  1st  5s,  1943 __  _-  105 

Clearf.  Bit.  Coal  Co.  1st  4s,  1940 __  __  75        80 

Cleve.,  Akron  &  Col.  5s,  1927 -_  __  103       108 

Cleve.,  Akron  &  Col.  1st  guar  4s,  1940 __  _.  88 

Cleve.,  Akron  &  Col.  Unguar.  4s,  1940 __  __  88 

Cleve.,  Berea,  Elyria  &  Oberlin  Cons.  5s,  1919-  __  __  ♦lOO 
Cleveland,  Cine,  Chicago  &  St.  Louis  Ry. — 

41/2S,  1931  -_  —  911/8     91% 

Gen.  4s,  1993 90%  90% 

1st  4s,   1939 —  —  90         911/a 

St.  Louis  1st  4s,  1990 90        90% 

Sprgfld.  &  Col.  Div.  1st  4s,  1940 •87 

White  W.  Valley  Div.  4s,  1940 —  —  ^87 

Cleve.,  Col.,  Cine  &  Inpls.  Cons.  7s,  1914 —  __  __      105 

Cleve.,  Col.,  Cine  &  Inpls.  Cons.  S.  F.  78,  1914  —  —  t02 

Clece.,  Col.,  Cine  &  Ind.  63,  1934 __  —  120      124 

Cleve.  Elec.  Ilium.  1st  Ref.  5s,  1939 __  —  101       102 

Cleveland  &  Elyria  6s,  1915 100 

Cleve.,  Elyria  &  West.  Cons.  5s,  1920 ^95 

Cleve.,  Lorain  &  Wheeling  1st  5s,  1933 __  __  100 

Cleve.,  Lorain  &  Wheeling  Cons.  41/2S,  1930 —  __  92 

Cleve.  &  Mahoning  Valley  5s,  1938 —  —  —      109% 

♦Quotation  nearest  Blareh  1,  1913.    No  quotation  on  that  date. 

1098 


High    Low 

Cleveland  &  Marietta  1st  41/28,  1935 

Cleve.,  Painesv.  &  Ash.  os,  1922 *72%     _- 

Cleveland,  Painesv.  &  E.  5s,  1916 

Cleveland,  Painesv.  &  E.  58,  1918 

Cleveland  &  Pitts.  Gen.  41/38,  Ser.  A,  1942 

Cleveland  &  Pitts.  Gen.  41/2S,  Ser.  B,  1942 

Cleve.  &  Pitts.  Gen.  41/28,  Red.  to  31/2S,  1942__ 

Cleveland  &  Pitts.  Gen.  31/38,  Ser.  C,  1948 

Cleveland  &  Pitts.  Gen.  Si/gS,  Ser.  D,  1950 

Cleveland  Ry.  5s,  1931 *101l^*101l^ 

Cleve.  &  Sand.  Brew.  68,  1948 *83       *83 

Cleve.  &  S.  W.  Trac.  Cons.  5s,  1923 *90l^  *90i4 

Cleve.,  S.  W.  &  Col.  5s,  1927 -, *83       *83 

Cleve.  Term.  &  Valley  1st  48,  1995 

Clyde  S.  S.  1st  5s,  1931 , 

Coal  &  Coke  By.  58,  1919 

Coal  &  Iron  By.  5s,  1920 

Coal  Biver  By.  1st  48,  1945 

Coast  Counties  L.  &  P.  5s,  1946 

Coast  Vys.  Gas  &  El.  1st  6s,  1952 

Collegiate  Bealty  1st  5s,  1922 

Colorado  Fuel  Gen.  6s,  1919 

Colo.  Fuel  &  Iron  Gen.  5s,  1943 

Colo.  Indust.  5s,  1934 

Colo.  Midland  By.  1st  4s,  1947 

Colorado  Power  5s,  1953 

Colorado  Power  5s,  1936 

Colorado  Biver  Bridge  1st  7s,  1920 

Colo.  So.,  N.  O.  &  Pac.  Equip.  5s 

Colorado  &  Southern  By. — < 

1st  4s,   1929 92%     92% 

Extd.  41/2S,  1935 

Colo.  Spgs.  &  Cripple  Crk.  Dist.  1st  5s,  1930-_ 
Colo.  Spgs.  &  Crip.  Crk.  Dis.  1st  Cons.  5s,  1942 

Colo.  Spgs.  Elec.  1st  5s,  1920 

Colo.  Spgs.  Lt.  &  Pow.  1st  5s,  1919 

Colo.  I^rgs.  L,  H.  &  P.  1st  &  Bef.  5s,  1920 

Colo.  Yule  Marble  1st  6s,  1915-20 

Columbia  &  Greenville  Ist  68,  1916 

Columbia  &  St.  Louis  Ist  48,  1942 

Columbia  Gas  <te  Elec.  5s,  1927 

Columbia  By.,  Gas  &  Elec.  1st  5s,  1936 

Colum.  By.,  Gas  &  Elec.  Conv.  6%  Notes,  1916 

Columbia  Street  By.  1st  6s,  1914 

Columbia  Street  By.  Ext.  53,  1914 

Columbus,  Buckeye  L.  &  Newark  1st  5s,  1921- 

Columbus  Citizens  Telephone  5s,  1920 

Columbus  Conn.  &  Ter.  1st  5s,  1922 

Columbus  Elec.  6s,  1922 

Columbus  Electric  1st  5s,  1933 

Columbus  Gas  1st  5s,  1932 

Columbus  &  Hock.  Val.  1st  Ext.  4s,  1948 

Columbus  Interurban  Ter.  1st  5s,  1935 

Columbus  Lt.,  Ht.  &  Pr.  Gen.  6s,  1924 

Columbus,  London  &  Spgfd.  5s,  1920 

Coliimbus,  NewTc  &  Zanesv.  5s,  1924 

Columbus,  Newark  &  Z.  5s,  1926 

Columbus  &  9th  Ave.  58,  1993 

Columbus  Pow.  5s,  1936 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1099 


Bid 

Asked 

1001/3 

— 

99 

101 

86 

90 

102 

__ 

102 



90 



90 

__ 

90 

__ 

90 

92 

90 

94 

941/3 

95 

991/3 

lOOi/a 

831/4 

941/2 

95 

101 

^ 

•100 

104 

__ 

99 

100 

81% 

82 

27 

33 



80 

91 

95 

100 

__5%  basis 

92% 

931/4 

101 

103 

91 

97 

971/3 

100 

971/3 

100 

92 

95 

__ 

♦87 

1031/4 

__ 

*85 

73% 

80 

93 

95 

100 

1011/2 

__ 

100 

_ 

98 

100 



92% 



106 

991/3 

101 

87 

90 

94% 

100 

92 

100 

__ 

95 

92 

95 

951/3 

97% 

90 

92 

91 

94 

98 

101% 

__ 

95 

High    Low 
Columbus  Ry.  4s,  1939 

Columbus  Street  Ry.  5s,  1932 

Columbus  &  Toledo  Ry.  1st  4s,  1955 

Commercial  Cable  1st  4s,  2397 

Commonw.  Edison  1st  5s,  1943 

Commonw.  Elec.  1st  5s,  1943 

Commonw.  Pow.  1st  5s,  1924 

Compton  Heights  &  Mer.  Term.  6s,  1913 IOO14  10014 

Comput.-Tab.-Rec.   6s,   1941   

Concord  Elec.  1st  5s,  1931 

Concord,  Maynard  &  Hud.  1st  5s,  1922 

Concord  &  Mont.  Con.  4s,  1920 

Concord  &  Mont.  Deb.  4s,  1920 

Concord  &  Mont.  Deb.  31/38,  1920 

Conestoga  Trac.  1st  4s,  1950 

Conev  Isld.  &  Bklyn.  4s,  1948 

Coney  Isld.  &  Bklyn.  4s,  1955 

Congress  Hotel  1st  5s,  1941 

Congress  Hotel  1st  6s,  1911-41 

Conn.  &  Pass.  R.  4s,  1943 

Connecticut  Power  1st  &  Col.  5s,  1956 

Conn.  Ry.  &  Ltg.  1st  &  Ref.  4y2S,  1951 

Conn.  Ry.  &  Ltg.  1st  &  Ref.  (stpd.)  41/28,  1951 

Conn.  Riv.  Pow.  1st  5s,  1937 

Conn.  River  31/3S,  1923 

Conn.  River  31/3S,  1921 

Connecticut  River  4s,  1943 

Connellsv.  &  Monong.  1st  4s,  1930 

Consol.  Gas  (Bait.)  Gas  41/3S,  1954 

Cons.  Gas  (Bait.)  Cons.  5s,  1939 

Consol.  Gas  (N.  J.)  5s,  1936 

Cons.  Gas  (Pitts.)  1st  5s,  1948 

Cons.  Gas,  El.  Lt.  &  Pr.  5%  Notes,  1913 

Cons.  Gas,  El.  Lt.  &  P.  Gen.  41/38,  1935 

Consol.  Indiana  Coal  5s,  1935 

Consol.  Lighting  1st  5s,  1926 

Consolidated  Ry.  Deb.  48,  1955 

Consolidated  Ry.  Deb.  4s,  1956 

Consolidated  Ry.  Cons.  31/38,  4s,  1930 

Cons.  Ry.  &  Pr.  1st  5s,  1921 

Cons.  Rubber  Tire  4s,  1951 

Cons.  Telep.  of  Pa.  1st  5s,  1931 

Consol.  Tobacco  4s,  1951 

Consol.  Trac.  (N.  J.)  1st  5s,  1933 

Cons.  Trac.   (Pitts.)  Equip.  6s,  1913-18 

Cons.  Water  (Utica)  1st  5s,  1930 

Cons.  Water  (Utica)  Deb.  5a,  1930 

Cons.  Wtr.  Supply  1st  5s,  1929 

Consolidation  Coal  Conv.  6s,  1923 100      100 

Consolidation  Coal  41/38,  1934 —        —  91        92 

Consolidation  Coal  5s,  1950 901/3     901/3 

Constitution  Pub.  1st  58,  1930 

Consumers  Elec.  Lt.  &  Pr.  1st  5s,  1936 ^        „        __  91 

Consumers  Gas  1st  5s,  1936 ._        —  100 

Consum.  Lt.,  Ht.  &  Pr.  5s,  1938 -         —  100 

Consumers  Power,  Minn,,  1st  5s,  1929 —        __  88 

Consumers  Power,  Mich..  1st  &  Ref.  5s,  1936—        __         —  951/2 

Consumers  Pow.  &  Lt.  (S.  D.)  1st  5s,  1929 — 

Continental  Bldg.  1st  68 —        —  -     * 

♦Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1100 


Bid    . 

A,8ked 



85 

10014 

1021/3 

92 

95 

74 

80 

102% 

1023/4 

101% 

102 

98 

100 

79 

81 

^ 

»101i/a 

__ 

100 

96 

978/4 

95% 

97 

•SlVa 

♦93% 



871/3 

80 

85 

78 

83 

90 

95 



»100 

95 

96 

♦80 



981/8 

102% 

991/4 

__ 

91 

96 

92 

931/3 

92 

__ 

93 

_„ 

95 

98 

94% 





107% 

981/2 

991/3 

65 

72 

99% 

100 



89y3 

75 

80 

98 

100 

85 

__ 

85 

__ 

86 



99 

100 

60 

70 

*34 

•371/2 

High    Low 

Continental  Coal  1st  6s,  1941 

Cont'l  Coal  5s,  1952 

Cont'l  Gas  &  Elec.  1st  5s,  1927 ^__ 

Contra  Costa  Water  Co.  5s 

Copper  Range  1st  5s,  1949 

Corn  Products  Refin.  5s,  1931 

Corn  Products  Refin.  5s,  1934 93         93 

Corning  Cas  &  Elec,  1st  5s,  1951 

Corona  City  Water  Co.  Bonds 

Corona  Power  &  Water  6s,  1923 

Corrigan  Cons.  St.  Ry.  5s,  1916 

Council  Bl.  Gas  &  El.  1st  5s,  1928 

Counties  Gas  &  Elec.  Gen.  5s,  1902 

Covington  &  Cine.  Bridge  1st  4s,  1915 

Cramp  (Wm.)  &  Sons  Ship  &  Eng.  Bldg.— 

1st  5s,  1929 

Criterion  Club  4s,  1954 

Grosstown  St.  Ry.  (Buf.)   1st  5s,  1932 

Crosstown  Street  Ry.  (Col.)  5s,  1933 

Crowell  &  Thurlow  S.  S.  1st  6s,  1914-23 

Crucible  Coal  (Pitts.)  5s,  1936 

Cuba  R.  R.  1st  5s,  1952 

Cuban-Amer.  Sugar  6s,  1918 

Cucamonga  Water  6s,  1922 

Cudahy  Packing  1st  58,  1924 

Cumberld  Co.  Pow.  &  Lt.  5s,  1942 

Cumberland  Corp.  5%  Notes,  1915 

Cumb.  &  Penna.  1st  5s,  1921 

Cumberland  Tel.  &  Tel.  5s,  1918 J_ 

Cumberld  Tel.  &  Tel.  Deb.  5s,  1920 

Cumberld  Tel.  &  Tel.  1st  &  Gen.  53,  1937 

Current  River  1st  5s,  1927 

Cuyahoga  Telephone  1st  5s,  1919 

Dakota  &  Gt.  Sou.  1st  5s,  1916 

Dakota  Power  1st  6s,  1930 

Dallas  &  Waco  1st  5s,  1940 

Dallas  Electric  5%  Notes,  1917 

Dallas  Electric  1st  Coll.  5s,  1922 

Dallas  Gas  1st  58,  1925 

Danbury  &  Bethel  Horse  Ry.  1st  5s,  1915 

Danbury  &  Bethel  St.  Ry.  5s,  1914 

Danbury  &  Norwalk  1st  4s,  1955 

Danbury  &  Norwalk  Cons.  5s,  1920 

Danbury  &  Norwalk  Gen'l  5s,  1925 

Danville  &  Grape  Creek  1st  6s,  1920 

Danville  St.  Ry.  &  Lt.  Ref.  58,  1924-25 

Danville,  Urbana  &  Champaign  1st  5s,  1923 

Darby,  Media  &  Chester  St.  Ry.  1st  41/38,  1936 

Dauphin  County  Gas  Cons.  5s,  1925 

Davidson  (Thos.)  Mfg.  1st  6s,  1942 

Davies  (Wm.)   Co.  Ist  6s,  1926 

Davis  Sewing  Mach.  1st  69,  1915-21 

Davison  Chemical  1st  6s,  1932 

Dawson  Ry.  &  Coal  1st  5s,  1951 

Dayton  &  Mich.  1st  Cons.  41/28,  1931 

Dayton  Breweries  6s,  1929 *77%     __ 

Dayton  Citizens  Elec.  5s,  1932 

Dayton,  Covington  &  Piq.  Trac.  5s,  1922 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1101 


Bid 

Asked 

•80 

97% 

__ 

•93 

99 

__ 

95 

100 

95% 

96% 

•22 

99 

102 

99 

102 

*100 



*92 

__ 



100 

95 

100 

100 

101% 



•65 

1031/2 



100 

102  . 



100 



101% 

100 

101 



95% 

99 

100% 

100% 



__ 

*98 



•97% 

*100 

100 

102 

97 

99 



99% 

98 

100 

883/4 

93 

1011/4 

__ 

100 

noii/g 



;.70%  basis 

95 

97% 

80 



100 



•100 

95 

__ 

105 



106 

__ 

104 



98 

100 

•971/2 

__ 

90 

93 

• 

•100 



•100 

101 

102 



•100 



100 

1001/2 

102 

981/2 

~ 

•95 

90 

96 

High    Low 

Dayton  Elec.  Ltg.  1st  5s,  1921 

Dayton  Gas  1st  5s,  1930 

Dayton  Lighting  1st  5s,  1937 

Dayton  Pow.  &  Lt.  53,  1941 

Dayton  Traction  5s,  1916 

Dearborn  Bldg  (Chic.)  6s,  1914-23 

Decatur  Ry.  &  Lt.  1st  &  Cons.  5s,  1933 

Deep  Well  Water  1st  5s,  1950 

Deere  &  Co.  5%  Notes,  1912-16 

Delano  Land  1st  5s,  1932 

Delaware  &  Bound  Brook  Ist  3y2S,  1955 

Delaware  Co.  Elec.  1st  5s,  1939 

Delaware  Co.  &  Phil.  Elec.  4s,  1949 

Delaware  &  Hudson  Co. — 

Deb.  4s,  1916 

Penn.  Div.  7s,  1917 

1st  Lien  Equip.  4y2S,  1922 

1st  &  Ref.  4s,  1943 

Delaware  River  R.  R.  &  Bdge.  1st  4s,  1936 

Delaware  Riv.  Term.  5s,  1942 

Delmarria  Telephone  6s,  1918_— 

Demerara  Elec.  7%  Notes,  1916 

Denver  &  North  West  1st  5s,  1932 

Denver  Realty  514%  Notes,  1913 

Denver  Reservoir  Irrigation  Co.  6s 

Denver  &  Rio  Grande  R.  R. — 

1st  Cons.  4s,  1936-__. 873/3     873/3 

Cons.  41/28,   1936 

Imp.  53,  1928 

1st  &  Ref.  5s,  1955 

Adj.  Inc.  7s,  1932 

1st   4s,   1940 

Denver  City  Tramway  5s,  1919 

Denver  City  Tramway  1st  &  Ref.  5s,  1933 

Denver  Cons.  Tram.  1st  Cons.  5s,  1933 

Denver  Gas  &  Elec.  Con  v.  6s,  1914 

Denver  Gas  &  Elec.  5s,  1949 

Denver,  Laramie  &  N.  W.  5s,  1940 

Denver  Tram.  Pow.  Co.  1st  5s,  1923 

Denver  Tramway  Terras.  1st  5s,  1937 

Denver  Un.  Stk.  Yds.  58,  1926 

Denver  Union  Water  5s,  1914 

Dering  Coal  1st  5s,  1955 

Des  Moines  &  Fort  D'ge  1st  4s,  1935 

Des  Moines  City  Ry.  Ref.  5s,  1921 

Des  Moines  Elec.  1st  5s,  1938 

Des  Moines  Union  5s  1917 

Des  Plaines  Val.  Ry.  41/28,  1947 

Detroit  City  Gas  Co.  Gen.  5s,  1923 

Detroit  Edison  Ist  5s,  1933 

Detroit  Edison  Conv.  6s,  1920 

Detroit  Edison  Conv.  6s,  1921 

Detroit  Elect.  Ry.  58,  1916 

Detroit  &  Flint  5s,  1921 

Det.,  Ft.  W.  &  Belle  Isle  Cons.  5s,  1928 

Detroit  Gas  Co.  Cons.  5s,  1918 

Det.,  Grand  Haven  &  Mil.  1st  Equip.  6s,  1918- 
Det.,  Grand  Haven  &  Mil.  1st  Con.  6s,  1918— 
Det.,  Grand  Rapids  &  Western  1st  4s,  1946— 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1102 


Bid  . 

A.sked 

98V2 

__ 

981/2 

100 

89 

90 

__ 

86 



100 

1 

100 

95 



■* 

100 

*983/4 

993/4 

106 



88 





103 

70 

74 

96 

97 

110% 





100 

983/4 

98% 

95 



107 

__ 



♦98 

* 

»100 

90 

92 

»lool^ 



~ 

*30 

93 

95% 

971/4 

981/a 

8I1/4 

82 

100 

102 



70 

99 

10014 

90 

93 

99 

101 

100 

looy. 

95 

97 

•30 

991/2 

looy. 

5%% 

51/4% 

•92 

92 

93 

__ 

♦45 



78 

93 

95 



983/4 

98 



^4.45% 

basis 

993/4 

lOOi/g 

1011/2 

1021/4 

125 

__ 

122 

__ 

88 

_„ 

90 



*82 

♦90 

100 

_„ 

102 

106 

102 

104 

81 

84 

High  Low  Bid    Asked 

Detroit  &  Lake  St.  Clair  5s,  1920 —  —  __        88 

Det.,  Mack.  &  Marq.,  Inc.,  7s,  1911 , __  _.  25        31 

Detroit  &  Mack.  Gen'l  4s,  1995 —  __  87 

Detroit  «&  Mack.  1st  Lien  4s,  1995 —  __  89        90 

Detroit,  Monroe  &  Toledo  Short  Line  58,  1933  __  —  94l^     95ya 

Detroit  &  Northwestern  41/38,  1921 —  __  __        94 

Detroit  &  Pontiac  5s,  1922 _-  __  __       102 

Detroit  &  Pontiac  41/28,  1926 __  —  87        90 

Detroit  &  Pt.  Huron  S.  L.  58,  1950 —  -_  __        81 

Detroit  Railway  5s,  1924 —  —  —        89 

Det.  Riv.  Tunn.-Det.  T.  &  T.  41/38,  1961 __  __  971/2     98I/2 

Detroit,  Roch.,  Romeo  &  Lake  Orion  58,  1920.  —  —  97        99 

Det.,  Toledo  &  Ironton  Gen.  Lien.  1st  4s,  1955  —  —  20        35 

Det.,  Toledo  &  Ironton- Con.  41/2S,  1980 _«  __  _-          5 

Detroit,  Toledo  &  tronton — 

Ohio  Sou.  Div.  1st  4s,  1941 —  __  __        62ya 

Det.  &  Toledo  Shore  L.  1st  4s,  1953 —  __  81        85 

Detroit  United  1st  Cons.  41/2S,  1932 __  —  73%     75 

Detroit,  Ypsilanti  &  A.  A.  Jackson  5s,  1926__  __  —  85        87 

Detroit,  Ypsilanti  &  A.  A.  6s,  1924 __  __  „      101 

Detroit,  Ypsilanti  &  A.  A.  6s,  1917 __  -_  •1001/2*1011/3 

Diamond  Match  Deb.  6s,  1920 —  __  _-      108 

Diamond  State  Telep.  Ist  5s,  1943 >_  __  *99i/2     — 

Dighton,  Somerset  &  Swansee  St.  Ry.  5s,  1915  „  „  -_      *98% 

Distillers  Secur.  53,  1927 ._  —  68        69l^ 

Dist.  of  Columbia  Paper  Mfg.  5s,  1910-40 —  __  90       100 

Doe  Run  Lead  6s,  1915 *99i/2     — 

Dolese  &  Shepard  Gen.  6s,  1930 —  __  —       *90 

Dominion  Canners  6s,  1940 —  —  *10iy2*103 

Dominion  Coal  1st  5s,  1940 _-  __  99 

Dominion  Cotton  Mills  2nd  6s,  1922 __  —  'lOl     *10iya 

Dominion  Iron  &  Steel  5s,  1929 —  __  91        911/3 

Dominion  Nat.  Gas  6s,  1915 >-  __  —     "lOOi/a 

Dom.  Pow.  &  Trans.  1st  58,  1932 __  __  __        98 

Dominion  Sewer  Pipe  6s,  1927 —  __  —     *100 

Dominion  Steel  Deb.  5s,  1915 —  _-     *5%%  basis 

Dorer  Gas  Lt.  Cons.  5s,  1925 —  —    •4.90%  basis 

Drake  Hotel  1st  5s,  1933 __  __  __      ^95 

Dry  Dock,  East  B'way  &  Battery  1st  5s,  1933  —  _>  100      105 

Dry  Dock,  E.  By.  &  Batt.  Certif.  Ind.  5s,  1914  __  __  32        40 

Du  Bois  Elec.  &  Tr.  5s,  1932 __  __  _»        90 

Duluth  Edison  1st  5s,  1931 __  __  95 

Duluth  &  Iron  Range  1st  5s,  1937 —  __  100      103% 

Dul.  &  Ir.  Range  2nd  6s,  1916 >_  _-  101l^     — 

Duluth,  Missabe  &  Nor.  1st  6s,  1922 __  __  95 

Duluth,  Missabe  &  Nor.  1st  Con.  6s,  1923 „  —  104 

Dul.,  Missabe  &  Nor.  Ry.  Gen.  5s,  1941 __  __  —      105 

Duluth,  Rainey  Lake  &  W.  1st  5s,  1916 —  __  99        99ya 

Duluth  Short  Line  1st  5s,  1916 __  __  991/3     >- 

Duluth,  So.  Shore  &  Atl.  1st  5s,  1937 „  -_  103       107 

Duluth  Street  Ry.  Ist  5s,  1930 __  __  99        99% 

Duluth  Street  Ry.  Gen.  5s,  1930 __  __  ♦991/2     _- 

Duluth  Union  Depot  Deb.  5s,  1930 ._  __  100 

Dunkirk  &  Fredonia  Tr.  1st  5s,  1962 __  —  *96 

Dunlop  Tire  &  Rub.  1st  68,  1927 —  —  —      *98 

DuPont  41/2S,  1936 87  87 

DuPont  Internat.  Pow.  5s,  1922 —  —  *97 

DuPont  Internat.  Pow.  Coll.  5s,  1934 —  —  '97 

Duquesne  Traction  1st  5s,  1930 —  —  102      1021/3 

•Quotation  nearest  March  1,  1913,    No  quotation  on  that  date. 

1103 


High  Low  Bid    Asked 

Durham  Trac.  1st  5s,  1941 —  —  —     *100 

Dutchess  County  4y2S,  1940 100       103 

Eagle  &  Phenix  Mfg.  5s,  1936 ~  —  93        98 

East  Chic.  &  Ind.  Harb.  Water  5s,  1927 —  —  *91i/2     __ 

East  End  El.  Lt.  Ist  6s,  1915 —  —  •lOliA     __ 

East  Liverpl.  Tr.  &  Lt.  1st  5s,  1925 —  —  64        70 

East  McKees.  St.  Ry.  1st  5s,  1929 —  —  —    *100 

East  Ohio  Gas  1st  5s,  1939 —  —  98      100 

East  Penn.  Gas  &  Elec.  1st  5s,  1942 —  —  —        96 

East  St.  Louis  &  Interurban  5s,  1932 —  —  94        96 

East  St.  Louis  &  Suburban  Ss,  1932 —  —  —      *97 

East  St.  Louis  Gas  Lt.  5s,  1922 —  -  99%  lOOi/o 

East  Tenn,  Va.  &  Ga.  5s,  1930 —  —  105 

East  Tenn.,  Va.  &  Ga.  Cons.  5s,  1956 —  —  108      1083^ 

East  Tenn.  &  West  No.  Car.  Ist  5s,  1935 __  —  —    *10iy2 

Eastern  Car  Co.  1st  6s,  1952 —  —  —     *102 

Eastern  Mfg.  1st  5s,  1914-33 —  —  *5.38%    basis 

Eastern  Michigan  Edison  Ist  5s,  1931 —  —  96y2  100 

Eastern  Oregon  Lt.  &  P.  1st  &  Ref.  6s,  1929-_  __  __  —      100 

Eastern  Penna.  Pow.  1st  &  Ref.  5s,  1939__^__  __  —  *93       *96y2 

Eastern  Penna.  Rys.  1st  53,  1936 __  —  7iy2     73y2 

Eastern  Ry.  of  Minn.,  North  Div.,  1st  4s,  1948  __  _.  92        97 

Eastern  S.  S.  1st  58,  1927 __  —  100      102 

Eastern  Steel  1st  5s,  1931 —  __  84        88 

Eastern  Texas  Elec.  1st  Coll.  5s,  1942 —  —  —        94 

Eastern  Wise.  Ry.  &  Lt.  1st  5s,  1923 „  —  95        97 

Easton  &  Amboy  5s,  1920 __  „  104      106 

Easton  Cons.  Elec.  5s,  1949 >_  __  98      100 

Easton,  Palmer  &  Beth.  1st  5s,  1918 __  __  99      100 

Economy  Lt.,  Ht.  &  Pow.  1st  5s,  1930 —  __  *96     *100 

Economy  Lt.  &  Power  1st  5s,  1956 __  —  97y2  100 

Eden  Irrig.  &  Land  Co.  6s __  ._  —      *60 

Edgefield  Street  Ry.  Con.  6s,  1920 __  __  106      lOSy^ 

Edison  El.  (Lancaster,  Pa.)  1st  &  Ref.  5s,  1943  __  __  _.      *97y2 

Edison  Elec.  (Los  Angeles)  1st  Ref.  5s,  1922—  __  —  101      102^} 

Edison  Elec.  (Los  Angeles)  5s,  1929 __  __  100 

Edison  Elec.  (New  Orleans)  5s,  1929 __  __  103 

Edison  Elec.  Dlum.,  B'klyn,  1st  4s,  1939 __  —  SSYs     — 

Edison  Elec.  Ilium,  of  N.  Y.  1st  5s,  1995 ._  __  108       111 

Edison  Elec.  111.  of  Paterson  Cons.  5s,  1925___  __  __  __     *100 

Edison  Elec:  Light  (Phila.)  5s,  1946 __  __  107      108 

Edison  Light  &  Power  6s,  1921 __  __  106%     __ 

Eighth  Avenue  Cert.  Ind.  6s,  1914 __  __  99       101 

Elec.  &  Ppls.  Trac.  Tr.  Ctfs.  4s,  1945 __  __  84y2     85 

Electrical  Development  1st  5s,  1933 __  __  *96       *97 

Electrical  Secur.  Coll.  5s,  1935 __  >_  99       101 

Electro  Metallurgical  6s,  1937 »_  __  *102y2     __ 

Elgin,  Aurora  &  So.  Tr.  1st  5s,  1916 __  _..  *98y2     — 

Elgin,  Joliet  &  East.  5s,  1941 __  _.  106y2  107y2 

Elizabeth,  Plain.  &  Cent.  Jersey  1st  5s,  1950—  __  __  96        97y2 

Elizabethtown  Water,  4s,  191 __  __  __       *96y2 

Elkin  &  Allegheny,  1st  6s,  1941 __  __  98       100 

Ellsworth  Coal,  1st  5s,  1919-25 __  __  *99 

Elmira  Contl.  &  North'n,  1st  6s,  1914 __  __  100 

Elmira  Contl.  &  North'n,  1st  5s,  1914 __  _>  100      100% 

Elmira  Water,  Light  &  R.  R.,  1st  5s,  1949 __  __  97      100 

Elmira  Wtr.,  Lt.  &  R.  R.,  1st  5s,  1956 __  __  93        95 

Elmira  &  Williamspt.,  1st  Ex.  4s,  1950 __  __  97Va     _- 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1104 


Elmira  &  Williamspt.,  Inc.  5s,  2863 

El  Paso  Elec,  Ist  Con.  5s,  1933 

El  Paso  Gas  &  El.  Gen.  6s,  1934 

El  Paso  &  R.  I.,  1st  5s,  1951 

Ely  &  Walker  Dry  Gds.  Bldg.,  5s,  1931 

Elyria  &  Oberlin,  6s,  1917 

Emerson  Steam  Pump,  6s,  1938 *65 

Empire  Dist.  Elec,  1st  5s,  1949 

Empire  G.  &  El.  Jt.,  1st  &  Ref.  5s,  1941 

Empire  Pass.  Ry.,  1st  Si/gS,  1930 

Enid  Elec.  &  Gas,  1st  6s,  1930 

Enterprise  Mfg.,  51/28..  1930 

Equitable  Gas,  1st  5s,  1939 

Equitable  Gas  &  Elec,  5s,  1943 

Equit.  Gas  Lt.,  N.  Y.,  Cons.  5s,  1933 

Equit.  Ilium.  Gas  Lt.  (Phila.),  1st  5s,  1938 

Equitable  Mtge.  &  Tr.,  5s,  1933 

Erie  Elec  Motor,  6s,  1941 

Erie  Lighting,  1st  5s,  1943 

Erie  &  Pittsburgh,  "B"  31/28,  1940 

Erie  &  Pittsburgh,  "C"  31/2S,  1940 

i:rie  R.  R.~ 

1st  Cons.  P.  L.,  4s,  1996 

1st  Cons.  G.  L.,  4s,  1996 

Penn.  Coll.,  4s,  1951 

Conv.  "A,"  4s,   1953 

Conv.   "B,"  4s,   1953 

Equip.,   41/2S,    1931 

Equip.,  "I"   4s,   1916 

Equip.,  "N"  5s,  1917 

Col.,  6s,  1914 

Col.,  5s,  1914 

Col.,  5s,  1915 

Buff.  &  S.  W.  Div.,  3nd  5s,  1918 

Erie  Ry.,  funded  7s,  1930 

Erie  &  Western  Transp.,  1st  4s,  1935 

Escanaba  Traction,  1st  5s,  1934 

Estate  of  Long  Beach,  1st  6s,  1917 

Eureka  Construction  coll.  tr.  6s,  1914-19 

European  &  N.  Am.,  4s,  1933 

Evansville  &  East.  EL,  1st  5s,  1936 

Evansville  Elec,  1st  4s,  1931 

Evansville  Gas  &,  Elec.  Light,  5s,  1933 

Evansville,  Hend.  &  Nash.,  1st  6s,  1919 

Evansville  &  Indpls.,  Ist  Cons.  6s,  1936 

Evans.  &  Indpls.,  1st  6s,  1934 

Evansville  &  Mt.  Vernon  El.  Ry.,  1st  5s,  1935—     __ 

Evansville  &  Princeton  Trac,  1st  5s,  1933 

Evansville  &  Terre  H.,  1st  Cons.  68,  1931 

Evansville  &  Terre  H.,  Ref.  5s,  1941 

Evansville  &  T.  H.,  Ist  Genl.  5s,  1943 

E.  &  T.  H.,  Mt.  Vernon,  1st  6s,  1933 

E.  &  T.  H.  Equip.  "C,"  1916 __ 

Evans.,  T.  H.  &  Chic,  Inc.,  6s,  1930 

Everett  Gas,  1st  5s,  1940 

Everett  Ry.  Lt.  &  W.,  1st  Cons.  5s,  1935 

Excelsior  Spgs.  W.,  G.  &  E.  1st  6s,  1933 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1105 


High    Low 


Bid 

Asked 

110 

113 

97 

100 

*98i/2 





101 

97 

99 

100 

— 

86 

89 

97 

98 

•93 

98 

101 



-1011/2 

98 

99 

103 





107 



1061/, 

i 

noo 

981/2 

— 



•931/2 



901/4 

~ 

901/8 

841/2 

851/a 

73 

75 

891/4 

90 

79 

8OI/2 

731/2 

74 

5-4%%  basis 

5iA-5%basi3 



1001/3 

1003/8 

1003/4 

991/4 

993/4 

981/2 

99 

•95 



♦114 



971/2 

99 

•97 



•76 



*100 

93 

__ 

__ 

•89 

85 

88 

931/2 

96 

♦1101/2- 

•1111/3 

106 

1098/4 

105 



•58 

•78 

97 



111 

•80 



99% 

103 

•107 



4.90%  basis 

104 



__ 

85 



100 

98 

100 

High    Low  Bid    Asked 

Fairmont  &  Clarksburg  Tr.  1st  5s,  1938 -_        ._  *100y2»10iya 

Fairmont  Coal  5s,  1931 __        __  95        96 

Fairmont  Park  Transp.  1st  5s,  1937 _>        __  __        96 

Fargo  &  Moorhead  St.  Ry.  1st  5s,  1925 _>        __  *92 

Fargo  &  Southern  63,  1924 __        _.  1131/2     __ 

Federal  Light  &  Trae.  1st  5s,  1942 __        >_  92        94 

Federal  Publishing  1st  6s,  1920 >_        __  __     *100 

Federal  St.  &  P.  V.  5s,  1942 __        __  lOlVg  102% 

Federal  Sugar  Refin.  5%  Notes,  1914 __        __  98        98% 

Federal  Tel.   (Buffalo)   5s,  1954 ._        __  __       ♦78 

Federated  Min.  &  Mill.  6s __        __  __       *60 

Fellsmere  Farms  Deb.  6s,  1917 __        __  __       *97 

Fellsmere  Farms  1st  6s,  1925 __        __  __       *98 

Ferries  &  Cliff  House  Ry.  6s,  1914 _.        __  1001/4     __ 

First  Fed.  Trust  (S.  F.)  5s,  1943 __        __  IOO1/2    ,__ 

Fitchburg  &  Leominster  St.  Ry.  1st  5s,  1917—        __        __  __       101 

Fitchburg  R.  R.  41/38,  1914 __        „  99       100 

Ref.  41/2S,  1928 __        __  991/2  101% 

41/2S,  1933 1 __         __  __       102 

4s,  1915  __         __  98         993/3 

4s,  1916 __         __  98         99l^ 

4s,  1925  __         __  95         96 

4s,  1927 __         __  _-         96 

48,  1928  >-         -_  95         96 

31/3S,  1920 __         __  931/2     __ 

31/2S,  1921 _  931/2     937/8 

Flatbush  Water  Works  Gen.  6s,  1931 .__        _-  •103 

Flint  &  Pere  Marq.  6s,  1920 _„       104 

1st  Cons.  5s,  1939 __        __  __        98 

Port  Huron  5s,  1939 _  95        98 

4s,  1920 __         _-  92         94 

Toledo  Div.  5s,  1937 90        96 

Fla.  Cent.  &  Renin.  1st  5s,  1918 __        __  10214     __ 

Ist  Ld.  Grt.  5s,  1930 __        —  1031/4     — 

Cons.  5s,  1943 __        __  __       107 

Fla.  East  Coast  Ry.  1st  41/oS,  1959 „        __  __        951^ 

Florida  Lumber  Prod.  68,  1917-22 __        >_  —     'lOO 

Florida  Southern  1st  4s,  1945 91        92 

Florida  West  Shore  1st  5s,  1934 _>        __  90       100 

Fonda,  Johns.  &  Gl.  1st  41/2S,  1947 __        __  91        93 

Gen.  4s,  1950 >_        __  80 

1st  Cons.  41/2S,  1952 89        91 

Ft.  Dearborn,  Saf.  Vlt.  &  Bldg.  6s,  1917 _.        —  _>    •102 

Fort  Pitt  Traction  1st  5s,  1935 __        -_  102%  105 

Fort  Scott  Gas  &  Elec.  1st  5s,  1922 __        __  __       ^90 

Ft.  Smith  Light  &  Trac.  5s,  1936 _ 95 

Fort  Smith  &  West  1st  4s,  1954 45        55 

Fort  St.  Union  Depot  Ist  41/2S,  1941 —        __  ^88 

Ft.  Wayne  &  Wab.  Valley  1st  5s,  1934 __        —  78        80 

Ft.  Wayne  Bl.  &  M.  1st  5s,  1935 ..        _.  91        94 

Ft.  Wayne,  Van  Wert  &  Lima  Ist  5s,  1930__ 86%     89 

Fort  Worth  &  Denver  City  1st  6s,  1921 ._       108 

Ft.  Worth  Pow.  &  Lt.  58,  1931 ^97      ^98 

Ft.  Worth  &  Rio  Grande  1st  4s,  1928 — '       «.  74        75% 

Frankford,  Tacony  &  Hohnes.  1st  5s,  1940_._        __        ._  95        99 

Freeport  Gas  1st  5s,  1932 __        __  __      ♦96 

Freeport  Ry.,  Lt.  &  Pr.  1st  5.^,  1922 —        >_  —      ^90 

Fremont,  Elk  &  Mo.  Valley  Ist  6s,  1933 _»        _>  122 

Frick  (H.  C.)  Coke  (Pit.  Mon.)  1st  5s,  1915-44        —        __  4.65%  Basis 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1106 


High    Low 

Fries  Mfg.  &  Power  1st  5s,  1940 

Frisco  Bldg.  1st  5s,  1928 __ 

Frisco  Construe.  5%  Equip.,  1913-22 

Frontier  Telephone  1st  5s,  1922 

Galesburg  Ry.  &  Lt.  1st  5s,  1934 

Galeton  Eldron  Water  1st  Ss,  1926 

Galveston  Elec.  Co.  1st  5s,  1940 

Gal.,  Harris.  &  S.  An.  M.  &  P.  5s,  1931 

Galveston-Houston  Elec.  1st  5s,  3954 

Gal.,  Houston  &  Hend.  5s,  1933 100       100 

Gary  &  Interurban  Ist  5s,  1930 

Gas  &  Elec.  of  Bergen  Co.  Cons.  5s.  1949 

Gas  &  Electric  of  Bergen  Co.  Gen.  '5s,  1954 

Gas  Securities  6%  Notes,  1914 

Genl.  Baking  1st  6s,  1936 95        95 

5%  Notes,  1915 

General  Elec.  Deb.  5s,  1917 

Deb.  SVgS,  1942 

5s,  1952 103%  103% 

Gen.  Gas  &  Elec.  5s,  1932 

General  Motors  6s,  1915 

General  Rubber  Deb.  41/28,  1915 

Genessee  &  Wyoming  1st  5s,  1929 

Georgetown  Gas  5s,  1961 

Georgetown  &  Lex.  Trac.  1st  5s,  1921 

Georgetown,  Rowley  &  Ip.  5s,  1920 

Ga.  &  Alabama  1st  Cons.  5s,  1945 

Georgia  &  Ala.  Term.  1st  5s,  1948 

Ga.  Car.  &  Northorn  1st  5s,  1929 

Georgia  Coast  &  Piedmont  1st  5s,  1946 

1st  5s,  1962 

Georgia  Elec.  Lt.  1st  5s,  1930 

Georgia  &  Flor.  1st  5s,  1956 

Georgia  &  Fla.  Term.  1st  6s,  1930 

Georgia  Lt.,  P.  &  Rys.  5s,  1941 

Georgia  Mid.  1st  3s',  1946 

Georgia  Pac.  1st  63,  1922 

Georgia  R.  R.  &  Bkg.  68,  1922 

5s,  1922 

4s,  1947  

Georgia  Ry.  &  Elec.  5s,  1932 

58,  1949  

Ga.,  South.  &  Florida  5s,  1945 

German-Amer.  Copper  6s 

Germantown  Pass.  Ry 112% 

Gettysburg  &  Har.  Ry.  Cons.  5s,  1926 

Gila  Valley  G.  &  N.  W.  1st  5s,  1924 

Girard  Point  Storage  1st  3%s,  1940 

Glencoe  Lime  &  Cement 

Glens  Falls  G.  &  El.  Lt.  5s,  1919 

Gordon,  Ironsides  &  Fares  1st  6s,  1927 

Goshen  Coal  1st  6s,  1913-25 

Goshen,  So.  Bend  &  Chic.  Coll.  4s,  1932 

Gottlieb,  Bauerschmidt-Straus  Brew. — 

2nd  Inc.  5s,  1951 

1st  4s,   1951 481/2     48l^ 

Gouverncnr  &  Osgchie.  1st  5s,  1942 __        __  108 

Grand  Rap.  &  Ind.  Ext.  41/38,  1941 ^^ 

Muskegon  Div.  5s,  1926 

♦Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1107 


Bid 

Asked 

*89 





*99 

5.25%  Basis 

7IV2 

73 

__ 

*92 

__ 

♦100 

90 

95 



104% 

95 

97 

93% 

95 

100 



98 

99 

— 

♦100 

" 

♦97% 



141 

_- 

82 

"■" 

♦94 

991/8 

991/2 

96% 

971/2 

85 

88 

103 



*6%  Basis 

99 

1001/2 

104 

104% 

101 

103 

104 

__ 

*80 

__ 



♦64 

100 





75 



♦98 



871/2 

631/3 

64% 

109%  110% 

106 

110 

101 



90 

93 

1011/2 

102 

97 

98 

104 



— 

♦48 

1031/2 

1041/2 

*1011/2- 

•1031/4 

♦84 

991/4 

101 

♦92 





100 



•100 



♦52 

8         10 


1021/a 
85 


High  Low  Bid    Asked 

Grand  Rap.  Belding  &  S.  1st  58,  1924 >_  __  __        92 

Grand  Rapids  Edison  1st  58,  1916 _«  __  —       100 

Grand  Rapids  Gas  Light  53,  1915 __  __  ^-       101 

Grand  Rap.,  Gr.  Haven  &  H.  1st  5s,  1926 „  __  __        90 

Grand  Rap. -Muskegon  Pow.  5s,  1931 __  __  *98 

Grand  Rapids  Ry.  5s,  1916 __  __  991/2  101 

Grand  River  Coal  &  Coke  1st  6s,  1919 __  „  96      102ya 

Grand  River  Valley  4s,  1959 __  __  93 

Grand  Trunk  Ry.  Equip.  "A"  &  "B"  41/38,  1922  __  __  4.70%  Basis 

Grand  Trunk  &*West.  1st  4s,  1950 (  £)__  „  90        92 

Grand  Trunk  &  West.  1st  4s,  1950 ($)._  __  91        93 

Grandin  Lumber  1st  6s,  1914-25 —  >_  __     *100 

Grayling  Lumber  1st  6s,  1913-28 —  __  —       100 

Grays  Pt.  Term.  5s,  1947 —  __  98 

Great  Eastern  Lumber  1st  6s —  —  —     *100 

Great  Eastern  Timber  6s,  1917 __  »  __      *99i/a 

Great  Falls  Power  1st  5s,  1940 __  __  „        99 

Great  North,  of  Can.  Con.  4s,  1934 „  __  83        85 

Gt.  Northern  Pow.  1st  5s,  1935 __  —  —        82 

Gt.  Northern  Ry.  41/48,  1961 ; 100  100 

Great  Shoshone  &  Twin  Falls  Nat.  Pow. — 

6%  Notes,  1920-25 -     '100 

Great  Western  Power  Co.  5s,  1946 —  __  8614     86% 

Green  Bay  &  Western  Deb.  Certs.  A __  __  78        84 

Green  Bay  &  W.  Deb.  Income  Bonds  "B" 15  15 

Green  Bay  Gas  &  El.  Ref.  5s,  1935 _.  __  *96 

Greenbrier  Ry.  1st  4s,  1940 ._  __  88        911/, 

Greenville-Car.  Pow.  1st  58,  1935 __  —  —       '95 

Griswold  Mfg.  1st  6s,  1927 —  -_  —     'lOO 

Guanajuato  Pow.  &  Elec.  1st  68,  1932 >_  —  93        95 

Guilford -Chester  Water  5s,  1939 __  —  5%  Basis 

Gulf  &  Ship  Island  Ist  &  Ref.  58,  1952 __  __  91        94 

Ref.  6s,  1917 —  _-  —     noo 

Gulf,  Beau.  &  Kan.  City  1st  6s,  1913 __  „  99l^     _. 

2nd  5s,  1913 __  __  97 

Gulf  Term,  of  Mobile  1st  4s,  1957 85        90 

Hackensack  Water  48,  1952 __  __  85 

Hamilton  &  Lindenwald  1st  58,  1922 __  __  98I/2  100 

Hamilton  Cataract  Pow.,  Lt.  &  Tr.  1st  5s,  1943  __  „  __     "100 

Hamilton  El.  Lt.  &  Cataract  Pow.  1st  5s,  1929  __  —  —       102 

Hamilton  Gas  &  Elec.  5s,  1935 __  __  62 

Hammond  Ilium.  5s,  1926 __  __  •9514     — 

Hampton  Cotton  Mills  6s,  1916 —  __  —       100 

Hampton  Roads  Trac.  1st  41/28,  1931 —  >_  —      •Ql 

Harb. -Walker  Ref.  58,  1922 —  __  ♦104 

Hardin-Wyandot  Ltg.  Ist  58,  1930 __  __  ._      •92ya 

Harlem  Riv.  &  Porte.  48,  1954 _.  —  951/3     96% 

Harriman  &  N.  E.  1st  6s,  1916 __  __  '96 

Harris  Abbatoir  1st  6s „  —  —    MOO 

Harrisburg  Gas  58,  1928 —  __  —    •103i/a 

Harrisburg  Lt.,  Ht.  &  Pr.  Ist  5s,  1924 __  __  '99%    _. 

Harrisburg  Lt.  &  Pr.  Ist  Ref.  5s,  1952 —  —  93        95 

Harr.  Ports.  Mt.  J.  &  Lan.  1st  4s,  1913 __  >_  99^8     — 

Harrison  Bros.  5s,  1924 __  __  83        85 

Hartford  &  Conn.  West  1st  41/38,  1923 __  __  100 

Hartford,  Man.  &  Roch.  6s,  1924 __  __  106 

Hartford  &  Springfield  58,  1921 __  __  92 

Hartford  Street  Ry.  1st  4s,  1930 „  —  99 

♦Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1108 


High    Low  Bid    Asked 

Harwood  Elec.  1st  5s,  1939 -  -  101      103 

Harwood  Electric  6s,  1943 r-  —  —  lOOVs  ipoi/g 

Hattiesburg  Trac.  6s,  1953 —  —  92        _- 

Havana  Elec.  Ry.  5s,  1953 -  -  --        98 

Havana  Tobacco  5s,  1933 —  --  63        63ya 

Hawaiian  Com'l  &  Sugar  5s,  1919 —  —  lOlVs     — 

Hawkinsville  &  Fla.  Sou.  R.  R.  5s,  1953 —  —  —        94 

Hayes  Wheel  Co.  68,  1913-17 —  —  —    *100 

Hazard  Mfg.  1st  5s,  1913 -  -  --       JOO 

Hecker-Jones-Jewell  6s,  1933 —  ~  lOl^A  1031/2 

Hecker-Jones-Jewell  Deb.  6s,  1916 —  —  —      *98 

Helena  Lt.  &  Ry.  1st  5s,  1935 —  —  89        93 

Henderson  Bridge  1st  6s,  1931 ~  —  105 

Hercules  Powder  6s,  1933 —  —  *97ya  *99 

Hereford  Ry.  Gen.  4s,  1930 —  —  93 

Hest.,  Manch.  &  Fairm.  5s,  1934 —  —  103 

Hilton-Dodge  Lumber  1st  6s,  1914-33 —  —  —     *100 

Hoboken  Ferry  5s,  1946 —  —  103 

Hoboken  Land  &  Imp't  1st  5s,  1930 —  —  103       105 

Hocking  Coal  6s,  1933 —  —  —    *100 

Hocking  Valley  Prod.  5s,  1961 —  —  40        45 

Hocking  Valley  Ry. — 

1st  Con.  41/3S,  1999 —  —  991/2  101 

41/3%  Notes,  1913 —  —  *99%  *99y8 

HoUiston  Water  1st  5s,  1930 —  —  —      100 

Holly  Mfg.  1st  5s,  1933 —  —  —       *89y, 

Holton  Power  1st  &  Ref.  6s,  1943-49 —  —  61/3%  basis 

Home  Telephone  5s,  1933 —  —  85%     86y2 

Home  Telephone  1st  Ref.  5s,  1945 —  —  791/3     791/2 

Home  Telephone  of  Hlinois  5s,  1936 __  —  —       *87 

Home  T.  &  T.  (Los  Ang.)  1st  &  Ref.  5s,  1945  __  __  *78i/2  *80i/8 

Home  Tel.  &  Tel.  of  S.  D.  5s,  1934 __  „  —        631/^ 

Honesdale  Cons.  Lt.,  Ht.  &  Pow.  1st  5s,  1938—  —  __  —      100 

Honolulu  R.  T.  &  L.  Co.  6s,  1937 __  —  106 

Hoopeston  Gas  &  Elec.  Ist  5s,  1936 —  —  —      *83 

Hoosac  Tunnel  &  Wilm.  1st  5s,  1933 __  —  80 

Hoosick  Falls  Elec.  5s,  1930 __  __  —      100 

Hoster-Col.  Brew.  6s,  1940 *66l^  __ 

Hoster-Columbus  Brew.  6s,  1955 __  „  65        6614 

Hot  Springs  Water __  __  __        99 

Houghton  Co.  Elec.  Lt.  1st  5s,  1937 __  __  __        96 

Houghton  Co.  Gas  &  Coke  5s,  1931 __  __  __      *90 

Houghton  Co.  Street  Ry.  5s,  1930 __  __  96        981/, 

Houghton  Co.  Trac.  1st  58,  1937 __  __  93        94 

Housatonic  Power  41/33,  1914 __  __  __        99% 

Housatonic  R.  R.  5s,  1937 _»  __  110 

Houston  Belt  &  Term.  1st  5s,  1937 __  __  991/2  100 

Houston  East  &  West  Texas  1st  5s,  1933 __  __  103 

Houston  Electric  5s,  1935 __  __  99      100 

Houston  Gas  1st  5s,  1930 __  __  __    ♦lOO 

Houston  Lighting  &  Power  5s,  1931 *97i4  __ 

Houston  Oil  6s,  1935 __  __  __       *82 

Houston  &  Texas  Cen.  1st  5s,  1937 __  __  IO914  109% 

Houston  &  Texas  Cen.  Gen'l  4s,  1931 __  __  93        94 

Houston,  T.  C,  Waco  &  N.  W.  6s,  1930 __  __  114      118 

Huasteca  Pipe  Line  6s,  1939 __        75        80 

Hudson  Coal  Co.  4s,  1917 __  __            90 

Hudson  Companies  6s  Notes,  1913 __  __  98l^     _« 

Hudson  County  Gas  5s,  1949 __  __  103^^ 

"Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1109 


High  Low  Bid  Asked 

Hudson  &  Manhattan  41/28,  1957 "64  *65 

Hudson  Navigation  6s,  1938 —  —  90  93 

Hudson  River  Gas  &  Elec.  1st  5s,  1929 —  —  95  100 

Huebuer-Toledo  Brew.  6s,  1930 —  —  69  71 

Hunter  Canal  6s,  1933 *90 

Huntingdon  &  B.  Top.  1st  4s,  1920 —  —  91  93 

Huntingdon  &  B.  Top.  2d  4s,  1925 —  —  85 

Huntingdon  &  B.  Top.  Cons.  6s,  1925 —  —  91  93 

Huntingdon  &  Broad  Top  1st  6s,  1922 —  —  104 

Huntington  &  Big  Sandy  1st  6s,  1922 —  —  *104 

Huron  Light  &  Power  1st  6s,  1932 —  —  ~  *100 

Hutchinson  &  Southern  1st  5s,  1928 —  —  103  106 

Hutchinson  Water,  Light  &  Gas  5s,  1935 __  —  *80 

Hutchinson  Water,  Light  &  Power  1st  48,  1928  _.  —  *74 

Hydraulic  Power  1st  Ref.  5s,  1950 —  —  —  *103i/2 

Hydraulic  Pressed  Brick  5s,  1913-22 —  —  —  *100 

Idaho  Irrigation  Co.  6s,  1912-21 ~  —  —  *60 

Idaho-Oregon  Lt.  &  Pr.  1st  Ref.  6s,  1925-40—  —  —  92  951/2 

Idaho-Oregon  Lt.  &  Pr.  1st  Ref.  6s,  1940 —  —  "70 

Idaho  &  Washington  Northern  1st  5s,  1932—  —  ~  —  96 

Illinois  Athletic  Club  51/38,  1926 —  —  —  *9iy2 

Illinois  Central  R.  R. — 

Cairo  Bridge  4s,  1950 —  —  92  94 

Middle  Div.  5s,  1921 —  —  *102 

St.  Louis  Div.  Sy^s,  1951 —  —  —  85 

Springfield  Div.  31/2S,  1951 —  ~  80 

Deb.  5s,  1913 —  —  100 

West.  Lines  4s,  1951 —  ,—  94  961/2 

St.  Louis  &  Term.  3s,  1951   (Coupon) __  _.  —  77 

St.  Louis  &  Term.  38,  1951  (Regular) __  —  ~  73 

Deb.  41/2S,  1940 —  —  —  88 

41/38,   1914 —  —  99  99% 

Equip.  41/2S,  1922 —  —  4.60%  basis 

Equip.  41/28,  1913-23 —  —  4.62%  basis 

Ist  4s,  1951 —  —  1021A     __ 

1st  31/2S,   1951 -_  —  88I/2     — 

Coll.  4s,  1952 _-  —  —  961/a 

Ref.  4s,  1955 __  „  94l^     96 

Pur.  Lines  31/2S,  1952 __  ._  —  83i/a 

L.  N.  0.  &  T.  4s,  1953 „  __  95  971/2 

Litchfield  Div.  3s,  1951 __  __  __  751/3 

Louis.  Term.  31/2S,  1953 __  __  __  84 

Omaha  Div.  3s,  1951 __  __  __  69% 

niinois  Central  Trac.  Ist  5s,  1933 —  „  *93i/2     — 

Illinois  Northern  Util.  1st  Ref.  5s,  1957 —  —  931/2    95 

Illinois  Steel  Deb.  5s,  1913 __  __  100 

Illinois  Steel  Deb.  41/08,  1940 __  __  __  88 

Illinois  Stone  6%  Notes,  1917 —  __  __  *100 

Illinois  Valley  1st  58,  1935 __  __  96  100 

Independent  Brew.  6s,  1955 __  __  82%     __ 

Independent  Brew.  6s,  1937 __  __  __  *44 

Independent  Elec.  1st  6s,  1932 __        __  *100 

Indian  Refining  1st  6s,  1912-21 __  __  __  *100% 

Indiana,  Bloomington  &  Western  1st  4s,  1940  __  __  *90 

Indiana,  Colo.  &  East.  5s,  1926 __  __  88  90 

Indiana  Co.  1st  5s,  1950 __        97 

Indiana,  Decatur  &  Western  Ry.  5s,  1935 __  __  *102  *105 

Indiana,  Illinois  &  Iowa  1st  4s,  1950 _.  __  91  94% 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1110 


High  Low  Bid    Asked 

Indiana  Lighting  4s,  1958 —  —  68        70 

Indiana  &  Mich.  Elec.  1st  5s,  1957 —  —  *93 

Indiana  Nat.  Gas  &  Oil  5s,  1936 ~  —  —        89^8 

Indiana  Nor.  1st  5s,  1933 —  —  78        80 

Indiana  Rya.  &  Lt.  1st  &  Ref.  5s,  1943 —  —  —        94 

Indiana  Steel  5s,  1952 lOOi/g  lOOi/g 

Indiana  Union  Trac.  1st  5s,  1933 —  —  83        84 

Indiana  Union  Trac.  Ist  4y2S,  1926 —  —  90      100 

Indianapolis  Canal  Club  Prop.  1st  6s,  1917-23  —  —     *5%%  basis 

Indpls.  Dec.  &  West.  5s,  1935 —  —  102      105 

Indpls.  Dec.  &  West.  guar.  5s,  1935 __  —  100      105 

Indianapolis  &  Eastern  5s,  1927 —  —  102      103 

Indpls.  Gas  1st  Cons.  5s,  1952 —  —  87        90 

Indianapolis  &  Green.  Rap.  T.  1st  5s,  1929 —  —  —  101 

Indpls.  Lt.  &  Heat,  Cons.  5s,  1940 __  —  991/2     __ 

Indianapolis  Light  &  Pr.  1st  Os,  1922 —  —  "lOl^     ~ 

Indianapolis  &  Louisville  1st  4s,  1956 —  —  —        84 

Indianapolis  &  Martinsville  R.  T.  1st  5s,  1932  „  __  91        97 

Indianapolis  Northern  Ry.  5s,  1932 __  —  82        84 

Indianapolis  &  Northwest.  Tr.  1st  5s,  1923 __  __  92        94 

Indianapolis  &  St.  Louis  1st  7s,  1919 —  —  110 

Indpls.  Shelbyv.  &  Southeast  5s,  1919 >_  __  __    *100 

Indpls.  Shelbyv.  &  Southeast  1st  5s,  1932 __  __  94      101 

Indianapolis  &  Southeast.  Trac.  1st  5s,  1935.  __  —  82%     87 

Indianapolis  Street  Ry.  4s,  1933 __  __  82%     84 

Indpls.  Trac.  &  Term.  1st  5s,  1933 981/2  100 

Indianapolis  Union  Ry.  41/28,  1926 «_  __  *96     *100 

Indianapolis  Water  5s,  1926 __  __  100      100% 

Indianapolis  Water  1st  Ref.  41/3S,  1940 __  __  9I1/2     931/3 

Indianapolis  Water  Works  Secur.  6s,  1948 __  __  -_    *100y2 

Ingersoll-Rand  5s,  1935 __  __  100 

Inland  Steel  1st  6s,  1911-28 __  __  __     'loe 

Inland  Steel  Ext.  &  Ref.  6s,  1942 _.  __  __     *102i/2 

Inspiration  Cons.  Copper  1st  6«,  1922 100    103 

Inst,  for  Encouragement  of  Irr.  Wks.  &  Dev. 

of  Agric.  41/2S,  1943 ..  __  __        95 

Insurance  Exch.  Bldg.  5s,  1925 *99% 

Insurance  Exch.  Bldg.  2nd  6s,  1915 __  —  __      *95% 

Interborough-Met.  Col.  Trust  41/2S,  1956 79%  791/2 

Interborough  Rap.  Tran.  5s,  1952 __  __  103%  103l^ 

Interborough  Rap.  Tr.  1st  &  Ref.  5s,  1956 __  —  __      IO3V2 

Intermtn.  Ry.,  Lt.  &  P.  1st  6s,  1942 __  -_  _-        97y2 

Int'l.  Agric.  Corp.  Coll.  5s,  1952 __  »  93        95 

Intemt'l.  &  Gt.  Northern  1st  6s,  1919 __  __  106%  107 

Internt'l.  &  Gt.  Northern  6%  Notes,  1914 _-  __  98l^     98% 

Int'l.  Harvester  5%  Notes,  1915 __  _«  100      100% 

Inter.  Merc.  Marine  41/2S,  1922 ._  __  63V2    64 

Inter.  Navigation  58,  1929 __  791^^ 

Int'l.  Paper  6s,  1918 __  __  103%  104 

Int'l.  Paper  Conv.  5s,  1935 ._  >_  88I/2     89 

Internat.  Ry.  ref.  &  imp.  5s,  1962 __  971A 

Int'l.  Salt  5s,  1951 __  __  61        53 

Int'l.  Silver  6s,  1948 __  __  no 

Int'l.  Steam  Pump  5s,  1929 __  __  84l^     89 

Int'l.  Traction  4s,  1949 69        69V2 

Interstate  Indep.  Tel.  &  Tel.  5s,  1927 __  __  >_      ♦57 

Interstate  Rys.  4s,  1943 __  __  59        60 

Interstate  Telep.  1st  5s,  1921 __  _«  *46      •48 

Intenirban  Ry.  (Des  Moines)  1st  5s,  1921 __  «»  _«      •95 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date,  ; 

1111 


High    Low        Bid    Asked 

Intenirban  Ry.  &  Term.  58,  1928 

Intenirban  Ry.  &  Term.  1st  5s,  1943 

Iowa  Central  1st  5s,  1938 

Iowa  Central  1st  &  Ref.  4s,  1951 

Iowa  Falls  &  S.  C.  1st  7s,  1917 

Iowa.,  Minn.  &  N.  W.  1st  SVgS,  1935 

Iowa-Nebraska  Public  Serv.  1st  6s,  1931 

Iowa  Ry.  &  Lt.  1st  &  Ref.  5s,  1933 

Iron  Mtn.  Lt.  &  Fuel  58,  1937 

Iroquois  Iron  deb.  6s,  1917 

Ithaca- Cortland  Trac.  5s 

Jackson  &  Battle  Cr.  5s,  1923 

Jackson  Cons.  Trac.  5s,  1934 

Jackson  Gas  5s,  1937 

Jack.,  Lans.  &  Sag.  1st  31/38,  1951 

Jackson  Lt.  &  Trac.  1st  58,  1922 

Jacksonville  Electric  5s,  1927 

Jacksonville  Ferry  &  Land  1st  6s,  1937 

Jacksonville  Gas  1st  5s,  1942 

Jacksonville  Gas  deb.  68,  1922 

Jacksonville  Ry.  &  Lt.  1st  5s,  1931 

Jacksonville  Term.  1st  5s,  1939 

Jacksonville  Trac.  1st  5s,  1931 

Jamaica  &  B'klyn  1st  5s,  1930 

Jamaica  Water  Supply  Ist  5s,  1928 

Jamaica  Water  Supply  5s,  1954 

Jamestown  Fr.  &  Clearfield  1st  43,  1959 

Jamestown  St.  Ry.  1st  68,  1923 

Jamison  Coal  &  Coke  1st  58,  1930 

Jamison  Coal  &  Coke  1st  5s,  1931 

Jeff.  City  L.,  H.  &  P.  Ist  5s,  1925 

Jeff.  &  Clearf.  Coal  &  Iron  2nd  5s,  1926 

Jeff.  &  Clearf.  Coal  &  Iron  5s,  1926 

Jefferson  R.  R.  5s,  1919 

Jenkintown    &   Cheltenham   Gas    Ist    &   ref. 

5s,   1933 

Jersey  Central  Trac.  1st  5s,  1931 

Jersey  Central  Trac.  Ref.  5s,  1954 

Jersey  City,  Hob.  &  Paterson  4s,  1949 

Jewett  City  Water  1st  5s,  1915 

Johnson  Co.   (Pa.)   1st  6s,  1914 

Johnstown   (Pa.)   Pass.  Ry.  Ref.  4s,  1931 

Joliet,  Economy  Lt.  &  Water  5s,  1956 

Joliet  &  North.  Ind.  1st  4s,  1957 

Jones  &  Laughlin  Steel  5s,  1939 

Joplin  Home  Telep.  Cons.  5s,  1925 

Joplin  «&  Pittsburgh  1st  Ss,  1930 

Joplin  Union  Station  1st  41/28,  1940 

Kal.  Allegan  &  G.  R.  1st  5s,  1938 

Kalamazoo  &  White  Pigeon  5s,  1940 

Kaministiquia  Pow.  1st  58,  1937 

Kanawha  &  Michigan  4s,  1990 

Kanawha  &  Hock.  Coal  &  Coke  5s,  1951 

Kanawha  &  Michigan  2nd  5s,  1927 

Kana.  &  Mich.  Eq.  41/38,  1913 

Kana.  &  Mich.,  St.  Mary's  Div.  4s,  1951 

Kanawha  &  W.  Va.  1st  5s,  1955 

♦Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1112 




100 

100 

97% 

98 

59 

60 

1071/2 

109 

86 



*90 

*99 

951/2 

971/2 

99 



*98%, 

~ 

*75 

98 

100 

96 

100 

97 

100 

85 

87 

94 

97 

97 

99 



*10 

94 

96 

1 

100 



93 

95 



951/2 

971/2 

100 

__ 

*94i/2 



*95 



93 

103 

__ 



♦93 

■• 

*100 

951/4 

99 

95 

__ 

101 

__ 

100 

— 

•991/2 

96 

100 

85 

92 

80 

8O1/2 

5%  basis 

1031/2 



85 

88 

^ 

•^100 

85 

88 

1001/4 

10034 

86 

96 

98 

90 

— 

104 

113     ' 

•1151/2 



104 

911/2 



951/2 

97y4 

971/2 

98y2 

51/4% 

4%% 

87 

90 

— 

87% 

High  Low  Bid    Asked 

Kankakee  Gas  &  Elee.  1st  ref.  os,  1930 —  —  961/2     98ya 

Kankakee  &  S.  W.  5s,  1921 .-  —  —  101 

Kan.  City  Belt  Ut  6s,  1916 —  —  IO31/2  104^4 

Kan.  City  Brew.  6s,  1930 *75 

Kan.  City.  Clin.  &  Springf.  5s,  1925 —  —  92        96 

Kansas  City  Elev.  By.  4s,  1922 —  —  75        80 

Kansas  City  Elev.  By.  6s,  1922 —  —  102 

Kan.  City,  Ft.  S.  &  Memp.  Cons.  6s,  1928 __  —  lHVg  1121/2 

Kan.  City,  Ft.  S.  &  Memp.  Ref.  48,  1936 —  —  76        77 

Kan.  City,  Fort  S.  &  Memp.  Eq.  41/2S,  1915 —  —  —        99^/8 

Kan.  City  Gas  1st  53,  1922 —  —  —        94 

Kansas  City  Home  Teleph.  5s,  1923 —  —  921/2     931/2 

Kansas  City  Home  Teleph.  5s,  1923 —  —  921/2    93i/g 

Kansas  City  Long  Dist.  Tel.  5s,  1925 —  —  90%     92 

Kan.  City,  Mem.  &  Birm.  4s,  1934 —  —  —        93 

Kan.  City,  Mem.  &  Birm.  Inc.  5s,  1934 „  __  —        83 

Kan.  City  &  Mem.  By.  &  Bridge  1st  5s,  1929__  —  _.  —      IOI14 

Kan.  City,  Mex.  &  Orient  1st  4s,  1951 —  —  25        33 

Kan.  City  &  N.  W.  Ist  5s,  1933 —  —  96      100 

Kansas  City  &  Pacific  1st  4s,  1990 —  —  86 

Kansas  City  By.  &  Lt.  5s,  1913 __  —  89        90 

Kansas  City  By.  &  Lt.  6s  Notes,  1912 —  __  831/3     911/2 

Kansas  City,  Southern  By. — 

Bef.  5s,  1950 971/2  971/2 

Equip.  "D"  5s,  1913-24 __  _.  —       100 

1st  3s,  1950 —  -_  —        71% 

1st  3s,  1950 --  —  —        71% 

Kansas  City  Stk.  Yds.  conv.  5s,  1913 __  —  *99i/2*100 

Kan.  City  Terminal  1st  4s,  1960 __  __  93%     94 

K.  C.  Viad.  &  Term.  41/28,1934 .      __  __  44        50 

Kansas  City- Western  1st  5s,  1925 __  __  82        85 

Kansas  City  &  Westport  Belt  5s,  1926 __  __  90        91 

Kansas  &  Colo.  Pac.  Ist  ref.  6s,  1938 __  __  __     *105i4 

Kan.  Gas  &  Elec.  1st  5s,  1922 __  __  95        98 

Kansas  &  Missouri  1st  5s,  1961 __  __  86        93 

Kansas  Natural  Gas  6s,  1916 __  __  93        98 

Kansas  Natural  Gas  2nd  6s,  1918 __  __  65        70 

Karpen  Bldg.    (Chic.)    1st   5s,   1913-25 __  __  __       *99i/2 

Keene  Gas  &  El.  1st  5s,  1935 __  __  __       102 

Kennebunk  El.  Lt.  1st  5s,  1930 __  _.  __       100 

Kentucky  Central  4s,  1987 __  __  90%     91 

Kentucky  Elec.  1st  5s,  1926 __  _«  ._       *98 

Kent.  Pub.  Serv.  1st  &  Bef.  6s,  1922 __  __  __       100 

Kentucky  Solvay  Coke  1st  6s,  1915-20 __  __  __     *100 

Kentucky  Trac.  &  Term.  1st  5s,  1951 __  __  89        94 

Keokee  Consol.  Coke  1st  Bef.  5s,  1959 __  __  *84 

Keokuk  &  Des  Moines  1st  5s,  1923 __  _>  97      100 

Key  West  Elec.  1st  5s,  1956 __  __     *5.60%  basis 

Key  West  Gas  1st  63,  1931 __  __  __        96 

Keystone  Coal  &  Coke  1st  6s,  1912-31 __  __  __     *102% 

Keystone  Telep.  1st  53,  1935 __  __  391/2     90 

Kings  Co.  El.  Lt.  &  P.  1st  5s,  1937 __  __  __       103i/a 

Kings  Co.  E.  L.  &  P.  Pur.  M.  6s,  1997 __  __  1121/4  114% 

Kings  Co.  E.  L.  &  P.  Conv.  6s,  1925 __  __  120      123 

Kings  Co.  E.  L.  &  P.  Deb.  6s,  1922 __  __  120      123 

Kings  Co.  Elevated  1st  4s,  1949 __  __  83l^     __ 

Kings  Co.  Gas  &  Hlum.  1st  58,  1940 __  __  95      100 

Kings  Co.  Ltg.  1st  Ref.  5s,  1954 __  __  98       100 

Kingston  Gas  &  Elec.  1st  58,  1952 __  __  __        96i/J 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1113 


High    Low 

Kinloch  Long  Dist.  Tel.  1st  Ss,  1929 

Kinloch  Telephone  6s,  1928 

Kirby  Lumber  6%  cert.,  1914-16 

Kirby  Lumber  6%  cert.,  1923 

Klots  Throwing  1st  6s,  1939 .__- 

Kneeland-McLurg  Lumber  1st  6s,  1923 

Knickerbocker    Ice  1st  5s,  1941 

Knickerbocker  Ice  1st  5s,  1928 

Knox.  &  Cine,  lat  4s,  1920 

Knoxville  Gas  1st  5s,  1933 

Knoxville  &  Ohio  1st  63,  1925 

Knoxville  Ry.  &  Lt.  5s,  1945 *100%     „ 

Knoxville  Ry.  &  Lt.  5s,  1946 

Knoxville  Trac.  5s,  1938 

Kokomo  Marion  &  W.  Trac.  1st  5s,  1933 

La  Belle  Iron  Works  68,  1923 

Lackawanna  Coal  &  Lumber  cons.  6s,  1961 

Lackawanna  Steel  5s,  1915 

Lackawanna  Steel  5s,  1923 

Lackawanna  Steel  5s,  1950 

Lackawanna  Tel  Ist  5s,  1930 

Lackawanna  &  Wyo.  Val  R  .T.  58,  1951 

Laclede  Gas  Lt.  1st  5s,  1919 

Laclede  Gas  Lt.  Ref.  &  Ex.  53,  1934 

La  Crosse  Gas  &  Elec.  5s,  1921 

La  Crosse  G.  &  E.  ref.  51/28,  1931 

Lafayette  &  Logansport  Ist  5s,  1936 

Lake  Erie  &  Det.  Riv.  1st  41/2S,  1932 

Lake  Erie  &  West'n  1st  5s,  1937 

Lake  Erie  &  West'n  2nd  5s,  1941 

Lake  Gas  (Chic.)  1st  6s,  1915 

Lake  Roland  Elev.  1st  5s,  1942 107      107 

Lake  Shore  Elec.  Cons.  5s,  1923 *9434     __ 

Lake  Shore  Elec.  Gen.  5s,  1933 __        __  83        83% 

Lake  Shore  &  Michigan  Southern  Ry. — 

31/38,   1997 

Deb.  4s,  1928 91        91 

4s,   1931 91         90% 

Coll.  Tr.  31/38,  1998 

Lake  St.  Elevated  1st  5s,  1928 

Lake  Superior  Corp.  5s,  1924 

Lake  Superior  Corp.  Coll.  5s,  1944 

Lake  Tahoe  Ry.  &  T.  Co.  5s,  1931 

Lansing  Fuel  &  Gas  5s,  1921 

La  Porte  &  Mich.  City  Trac.  1st  5s,  1930 

Laramie,  H.  P.  &  Pac.  ref.  6s,  1932 

La  Salle  Hotel  6s,  1915-25 

Latrobe-Connels.  Coal  &  Coke  1st  6s,  1931— 

Latrobe  Water  gen.  5s,  1932 

Laurentide  Paper  1st  68,  1920__ 

Leadville  Lt.  &  Pow.  1st  6s,  1924 

Leavenw.  Lt.  H.  &  P.  1st  5s,  1923 

Leavenw.  Term.  Ry.  &  Edge.  1st  5s,  1923 

Leggett  (F.  H.)  Co.  1st  6s,  1922 

Lehigh  Coal  &  Navig.  41/3S,  1921 

Lehigh  Coal  &  Navig.  41/2S,  1914 

Lehigh  Coal  &  Navig.  R.  R.  4s,  1914 

Lehigh  Coal  &  Navig.  Ext.  4s,  1914 

*Quotatlon  nearest  March  1,  1913.    No  quotation  on  that  date. 

1114 


Bid 

Asked 

911/4 

913/4 

1041/2 

1051/2 

•991/4 





981/2 

98 

100 

__ 

♦100 

85 

87 

•843/4 



94 



90 

95 

113 

1131/2 

911/2 

104 

105% 

97 

100 

1021/2 

1031/2 

__ 

•66 

94 

95 

93 

97 

75 

781/2 

70 

80 

85 

90 

102 

10234 

100 

1011/2 



100 



•971/2 

•84 



85 

92 



104 



1031/2 

—     '' 

*102i/2 

~ 

88I/2 

771/4 

773/4 
88 

741/4 
90 

741/2 
95 



97 

96 

97 

•86I/2 

•70 

•991/2 
100 

101 

971/2 

100 
107 

__ 

•80 

92 

96 

80 



•99 

__ 

102 



100 



971/2 
97 

~ 

High  LfOW  Bid    Asked 

Lehigh  Coal  &  Navig.  Gen.  41/28, 1924 —  —  103        :.- 

Lehigh  Coal  &  Navig.  4s,  1948 ^ -  -  96        .- 

LehiSh  Coal  &  Navig.  Coll.  Tr.  41/33,  1930 —  -  -  103      102% 

Lehigh  &  Hud.  River  2nd  5s,  1917 —  —  100 

Lehigh  &  Hud.  Riv.  Gen.  5s,  1920 —  —  102 

Lehigh  &  Lake  Erie  1st  41/28,  1957 —  —  100      105 

Lehigh  &  New  Eng.  1st  5s,  1945 —  —  IO41/2  IO6I/2 

Lehigh  &  N.  Y.  1st  4s,  1945 ~  —  —        94 

Leh.  Val.  Coal  5s,  1933 IO51/2  IO51/2 

Leh.  Val.  Coal  4s,  1933 —  —  94        96 

Lehigh  Valley  of  N.  Y.  1st  41/2S,  1940 —  —  101  i/a  1033/^ 

Lehigh  Valley  R.  R.— 

1st   Ex.    4s,    1948 -  -  101       103 

Col.  T.  4s,  1926 —  ~  4.50%  4.30% 

Irredeemable  41/2S, —  —  *111    *lliy3 

Irredeemable  6s —  —  —     *144 

Cox  Bros,   serial  4s,  1926 —  —  *4i/2%  basis 

Cons.  6s,  1923 —  —  114 

41/2S,   1923 —  —  —      103% 

4s,   2003 -  -  951/2     95% 

Term.  Ry.  5s,  1941 —  —  HOVs     — 

Lehigh  Valley  Term.  1st  5s,  1941 —  —  •I10i/8*112 

Lehigh  Valley  Transit  1st  5s,  1935 —  —  102^/8  1031/3 

Lehigh  Valley  Transit  1st  4s,  1935 —  —  871/2     88 

Lehigh  Valley  Transit  Cons.  4s,  1935 __  —  76        79 

Lehigh  Valley  Transit  Ref.  5s,  1960 _-  —  901/2    93 

Lehigh  &  Wilkesb.  Coal  Con.  4s,  1915-35 —  __  4.40%  414% 

Lenawee  Co.,  Gas  &  Elee.  51/2S,  1927 —  —  —    *100 

Leominster,    Shirley    &    Ayer    St.    Ry.    1st 

5s,   1921 —  —  —       102 

LeRoy  &  Caney  Valley  A.  L.  1st  5s,  1926 —  —  *98 

Lewiston  &  Auburn  Elec.  1st  5s,  1939 __  -_  *97 

Lewiston,  Augusta  &  Waterville  St.  Ry.  5% 

Notes,  1913 _-  —  —     *100 

Lexington  &  Boston  St.  Ry.  1st  41/2S,  1920 —  —  —        96 

Lewiston,  Bruns.  &  Bath  1st  5s,  1918 __  __  95       100 

Lex.  Ave.  &  Pav.  Ferry  5s,  1993 —  —  100 

Lewiston  &  Clarkston  Imp't.  6s,  1925 __  „  __       *93% 

Lexing.  Hydr.  &  Mfg.  1st  5s,  1936 __  __  —        96 

Lexington  Ry.  1st  5s,  1949 __  __  94        95 

Liggett  &  Myers  Tob.  7s,  1944 __  __  121       121% 

Liggett  &  Myers  Tob.  5s,  1951 __  ._  981/2     99 

Lima  Electric  1st  5s,  1916 __  __  98      100 

Lima  Electric  2nd  Cons.  5s,  1925 __  __  96        97l^ 

Lima  Locomotive  1st  63,  1932 __  98      101 

Lincoln  Gas  &  El.  Lt.  1st  5s,  1941 __  __  85        90 

Lincoln  Telephone  6s,  1923 ,-  __  __  *95i/2*100 

Lindell  Ry.  1st  41/2S,  1921 __  _.  97%     _- 

Lindsay  Water  1st  5s,  1919 __  __  *80 

Litchfield  &  Mad.  1st  5s,  1934 __  __  87        95 

Little  Miami  5s,  1962 __  __  96%     97 

Little  Rock  Bridge  Ist  6s,  1919 __  ._  __    *105 

Little  Rock  Gas  &  Elec.  Ref.  6s,  1937 —  „  »_    *100 

Little  Rock  &  Hot  Spgs.  West.  1st  4s,  1939__  __  __  82%     ~ 

Little  Rock,  June.  1st  6s,  1916 __  __  99 

Little  Rock  Ry.  &  Elec.  5s,  1933 __  __  __      105l^ 

Little  Rock  Ry.  &  Elec.  6s,  1938 *107i/4     — 

Lockport  &  Olcott  Ist  5s,  1920 __  __  __        97 

Lockport  Gas  &  Elec.  1st  5s,  1920 -.  >_  96      100 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1115 


High  Low  Bid    Asked 

Lockport  Lt.,  H.  &  P.  Ist  6s,  1938 -  -  91        95 

Locomobile  Co.  of  Amer.  1st  6s,  1922 —  —  —       *99 

Locomotive  Machine  Co.  1st  4s,  1924 __  __  *86 

London  &  Jefferson  Bridge  gtd.  4s,  1945 —  —  SS^^     — 

Lone  Star  Gas  1st  6s,  1919 —  —  —        97 

Long  Beach  Co.  1st  68,  1935 —  —  •1221/2     _- 

Long  Beach  Cons.  Gas.  6s,  1935 —  —  10054     __ 

Long  Beach  (Estates  of)  6s,  1917 —  —  —      *76 

Long  Bell  Lumber  Ist  ref.  6s,  1911-22 —  —  *99 

Long  Dock  Co.  Cons.  6s,  1935 —  —  122%     ~ 

Long  Island  C.  &  F.  Con.  5s,  1937 —  —  101 

Long  Isld.  Ltg.  Ist  5s,  1936 —  —  931/2     95 

Long  Island  R.  R. — 

Unified  4s,   1949 —  —  89        90 

2nd  7s,  1918 —  —  108 

Deb.  5s,  1934 —  —  —       103 

Montauk  Ex.  5s,  1945 —  —  101 

North  Shore  Br.  1st  5s,  1932 __  —  103 

1st  Con.  5s,  1931 —  —  —       110 

1st  Con.  4s,  1931 _>  __  90 

Gen'l.  4s,  1938 - _-  —  91%     — 

Ferry  41/38,  1922 —  —  __       100 

R.  R.  4s,  1932 89        90 

Ref.  4s,  1949 „  __  94%     951/2 

Lorain  &  Cleve.  Ry.  5s,  1927 "99%  __ 

Lorain  St.  Ry.  cons.  5s,  1949 __  __  __       *95  ' 

Lorillard  Co.  (P.)  7s,  1944 __  -_  120%  1211/, 

Lorillard  Co.  (P.)  5s,  1951 __  __  981/2     99 

Los  Angeles  Elec.  5s,  1928 .._  __  100 

Los  Angeles  Gas  &  Elec.  5s,  1934 _.  __  99%     __ 

Los  Ang.  Gas  &  El.  1st  &  ReL  58,  1939 __  __  971/2     981/, 

Los  Angeles  Light'g  G'd.  5s,  1924 __  __  100 

L.  A.  Pac.  R.  R.  1st  Con.  Mtg.  5s,  1931 __  __  IO31/2  104 

Los  Angeles  Pacific  1st  4s,  1950 __  __  84        86% 

Los  Ang.  Pac.  R.  R.  of  Cal.  5s,  1943 __  __  99        

L.  A.  Pac.  R.  R.  of  Cal.  5s,  1946 __  __  99 

Los  Angeles  &  Pasadena  Elec.  Ry.  1st  5s,  1928  __  __  *102    *104 

Los  Angeles  Ry.  5s,  1938 __  __  105 

Los  Angeles  Ry.  5s,  1940 __  __  96l^     __ 

Los  Angeles  Traction  5s,  1938 106 

Louisiana  &  Arkansas  1st  Ss,  1927 __  __  93        941/3 

Louisiana  Western  1st  6s,  1921 __  106 

Louisville  Lighting  1st  5s,  1953 __  __  *92% 

Louis.,  Cine.  &  Lex.  41/38,  1931 __  __  102      104 

Louisv.,  Henderson  &  St.  L.  1st  58,  1946 __  __  106      107 

Louisville  Home  Teleph.  1st  5s,  1922 __  __        89Vi 

Louisville  &  Jeff.  Bridge  4s,  1945 __  __  85% 

Louisville  &  Nashville  R.  R, — 

Atl.,  Knox  &  Cine.  4s,  1955 92  92 

Mob.  &  Montg'y.  41/2S,  1945 __  __  102%  103% 

South  Mon.  Jt.  4s,  1952 __  89% 

Pens.  &  Atl.  1st  6s,  1921 __  __  loo 

St.  Louis  Prop.  1st  5s,  1916 *98 

St.  L.  S.  E.  6s,  1921 ._  „  •log     •112% 

Genl.  6s,  1930 112 

Genl.  5s,  1937 __  __  m        ~~ 

Unified  4s,  1940 96%     971/, 

Col.  Tr.  5s,  1931 .  loes/I 

E.  H.  &  Nash.  1st  6s,  1919 110%  1111/ 

N.  O.  &  Mobile  Ist  6s,  1930 II7      120U 

N.  0.  &  Mobile  2nd  6i,  1930 _      114^ 

1116 


High  Low  Bid    Asked 

Pad.  &  Memp.  Div.  6s,  1920 —  —  105%     __ 

Pad.  &  Memp.  Div.  4s,  1946 —  —  *90 

St.  Louis  1st  6s,  1921 —  —  ~       H^Vg 

St.  Louis  2nd  3s,  1980 —  —  —        WVa 

Louisv.  &  Nor.  Ry.  &  Ltg.  1st  5s,  1925 —  —  —        75 

Louisville  Ry.  Cons.  6s,  1930 —  —  .104%  IO51/3 

Louisville  Ry.  2nd  4y3S,  1940 —  —  95%     96% 

Louisville  Ry.  Genl.  5s,  1950 —  —  IOO3/4  101 

Louisville  &  South  Ind.  Trac.  1st  5s,  1923——  —  —  —      *65 

Louisville  Water  4s,  1946 —  —  100      102 

Louisville  Water  4s,  1950 —  ~  100      102 

Lowell  Elec.  Light.  1st  5s,  1914 —  —  100 

Lowell  Law.  &  Hav.  1st  5s,  1923 —  —  102       105 

Luzerne  Co.  Gas  &  El.  1st  Ref.  &  Imp.  5s,  1948  —  __  971/2     99 

Lynch.  Trac.  &  Lt.  Cons.  5s,  1931 —  —  —        95 

Lynch.  Trac.  &  Lt.  1st  5s,  1931 —  —  —        97 

Lynn  &  Boston  1st  5s,  1924 —  —  102      104 

Lynn  &  Boston  6%  Notes,  1917 —  —  —     *104% 

Macon,  Dublin  &  Sav.  1st  58,  1947 —  —  98        991/3 

Macon  Ry.  &  Lt.  1st  Cons.  5s,  1953 __  —  —        99 

Madison  Gas  &  El.  1st  6s,  1926 —  —  103      109 

Madison  Interurban  Trac.  1st  5s,  1931 —  —  —      *97 

Madison  River  Pr.  1st  5s,  1935 —  —  95        97i/a 

Mahoning  &  Shenaugo  Ry.  &  L.  1st  5s,  1916—  __  —  971/2     98 

Mahoning  Coal  R.  R.  l»t  5t,  1934 __  —  109      lioy, 

Maine  Central  R.  R. 

Col.    5s,   1923 —  —  103 

"A"   41/2S,   1916 ~  —  —       *99i/s 

«B"   41/2S,   1917 —  —  —     *100 

4%  Notes,  1914 —  —  —        99 

Maine  &  New  Brims.  El.  Pow.  6%  perp.  deb—  __  —  —      104 

Mallory  S.  S.  1st  5s,  1932 „  __  84        88 

Manchester  &  Law.  4s,  1922 —  —  —        98% 

Manchester  (N.  H.)  Tr.  L.  &  P.  1st,  5s,  1921  —  —  100 

Mangum  Elec.  1st  5s,  1946 __  —  —       *93 

Manhattan  Ry.  Cons.  4s,  1990 —  __  93%     95 

Manila  Elec.  5s,  1953 __  __  96        971/2 

Manilla  R.  R.  (South  Lines)  1st  4s,  1936 —  ._  __       *86 

Manilla  Suburban  Rys.  1st  5s,  1946 —  —  85        871/2 

Manistee  &  N.  E.  1st  5s,  1912-39 __  __  *85i/3     „ 

Manitoba  &  Southeastern,  lat  4s,  1929  (  £)—  __  __  981/2  100 

Manitoba  S.  W.  Colonization  5s,  1934 __  __  101 

Manitowoc,  Gr.  Bay  &  West  1st  SVgS,  1941 __  __  841/2     __ 

Mankato  Gas  &  Elec.  Lt.  1st  5s,  1920 __  __  96      IO21/2 

Mankato  Gas  &  Elec.  Lt.  Cons.  &  Ref.  5s,  1935  __  __  __       100 

Manufacturers  Co.   5%   Notes,  1916 __  __  __       *98% 

Manufacturers  Lt.  &  Ht.  1st  6s,  1915 __  __  *102 

Manufacturers  Water  1st  5s,  1939 __  __       102% 

Marietta   Elec.    6s,    1917 __  —  __     ♦103 

Marin  Water  &  Power  5s 99% 

Market  St.  El.  Pass.  Ry.  4s,  1955 __  __  96%     96% 

Mkt.  St.  Ry.  1st  Con.  Mtg.  5s,  1924 __  __  _.        93 

Marquette  Co.  G.  &  E.  1st  6s,  1930 __  __  __     *100 

Marq.  Houghton  &  Ont.  6s,  1925 __  __  111      113% 

Marshfield  &  So.  East.  1st  4s,  1951 __  _>  87        90 

Maryland  Coal  &  Coke  6%  Notes,  1915 __  __  __       *98% 

Maryland,  Del.  &  Va.  5s,  1955 __  __  95        98 

Maryland  Electric  Rys.  1st  5s,  1931 97%  97% 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1117 


High    Low 
Maryland  &  Pa.  1st  4s,  1951 

Income,  4s,  1951 

Maryland  Steel  1st  5s,  1922 

Mason  City  &  Clear  Lake  Trae.  Ref.  68,  1932 

Mason  City  &  Ft.  Dodge  1st  4s,  1955 

Masonic  Hall   &   Asylum  Fund  Trustees  of 

N.  Y 

Mass.  Co.  Coll.  5s,  1937 

Mass.  Elec.  41/2%  Notes,  1913 

Mass.  Gas  41/2S,  1929 

Mass.  Gas  41/28,  1931 

McGregor  &  Mclntyre,  Ltd.,  6s,  1927 

McKeesp.  &  Belle  V.  1st  6s,  1918 

McM.,  M.,  W.  &  Al.  1st  6s,  1917 

Meadow  Brook  Water  1st  5s,  1947 

Mechanical  Rubber  6s,   1918 

Memphis  Lt.  &  Pr.  Ref.  5s,  1931 

Memphis  St.  Ry.  5s,  1945 

Memphis  Union  Station  Col.  Notes  5s,  1913 — 

Merchants   Bridge   6s,   1919 

Merch.  Despatch  Transp.  Equip.  41/285  1913-26 

Merch.  Elec.  Lt.  &  Pw.  5s,  1929 *97y3     — 

Merchants  Heat  &  Lt.  Ref.  5s,  1922 

Merchants  Power  (Mem.)  1st  5s,  1940 

Merchants  Refrigerating  1st  6s,  1917-31 

Meriden  Horse  R.  R.  Genl.  5s,  1924 

Meriden  Terminal  1st  4s,  1955 

Meridian  Lt.  &  Ry.  58,  1944 

Merion  &  Radnor  Gas  &  Elec.  1st  5s,  1954 

Metropolitan  Corrigan  5s,  1916 

Metropolitan  Elec.  Ist  5s,  1939 

Metropolitan  Elevated  1st  4s,  1938 

Metropolitan  Gas  1st  5s,  1941 

Metropolitan  R.  R.  5s,  1925 

Metropolitan  St.  Ry.  Ref.  4s,  2002 

Metropolitan  Street  Ry.  5s,  1913 

Metrop'n  Tel.  &  Tel.  5s,  1918 

Met.  West  Side  Eler.  1st  4s,  1938 

Met.  West  Side     'ev.  Ext.  4s,  1938 

Mexican  Cent.  Eq.  &  Col.  5s,  1917 

Mexican  Cent.  2nd  Ser.  5s,  1919 

Mexican  Coal  &  Coke  5s,  1926 

Mexican  Elec.  Lt.  1st  5s,  1935 

Mexican  International  P.  L.  ^V^s,  1947 

Mexican  International  1st  4s,  1977 

Mexican  Lt.  &  Pow.  1st  53,  1933 

Mexican  Mahogony  &  Rubber  6s,  1931 

Mexican  Nat.  Gas  bonds 

Mexican  Nat'l  Packing  1st  6s,  1931 

Mexican  Northern  1st  6s,  1930 

Mexican  Petrol.  6s,  1921 

Miamisburg  &  Germantown   5s„  1922 

Mich.  Air  Line  Ist  4s,  1940 

Michigan  Central  R.  R. — 

5s,  1931   (Coup.) 

1st  3ypS,  1952 

5s,  1931    (Reg.) 

(Det.  &  Bay  City)  1st  5s,  1931 

41/3%  Notes,  1914 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1118 


Bid    . 

Asked 

871/3 



68 

68I/3 

99 

100 

♦101     * 

^105 

65 

70 

♦102     *104 

91 

96 

1 

'100 

931/2 

95 



95 

__     *100 

105 



1051/2 

IO6I/4 

103 

105 

♦100 

__ 

100 

102 

971/3 

98 

100 

1001/2 

110 

iiiya 

6-5% 

basis 

96 

98 

♦82 



*5%% 

basis 

104 

__ 

78 

83 

Qiy^ 



♦103 



100 

__ 

•991/3 





♦79% 



981/3 

104 

1051/a 

36 

__ 

93 

96 

101 

i02y. 

80 

soy. 

8OI/2 

81 

96 



96 





30 

79 

81 



98 

70 

75 

891/2 

__ 

1 

*100 

55 

70 



♦94 

85 



971/0 

100 

981/3 

100 

98 

IO6I/2 

84y3 



104 

_^ 

•loeva 



— 

•99y3 

High  Low  Bid    Asked 

Coll.  Tr.  31/38,  1998 —  —  —        78 

Deb.  4s,  1929 —  —  —        91 

Michigan  City  &  North.  Indiana  1st  5s,  1933.  —  —  *95       *97i/3 

Michigan  City  Gas  &  Electric  5s,  1937 —  __  941/3    961/2 

Michigan-Lake  Sup.  Pow.  1st  5s,  1945 —  —  *21 

Michigan  Power  1st  5s,  1911-16 —  —  —        98 

Michigan  State  Tel.  5s,  1924 __  __  991/2  lOQi/g 

Michigan  Traction  Co.  5s,  1921 —  —  *99     *102 

Michigan  Traction  Extension  Co.  5s,  1923 __  __  *93       *97 

Michigan  United  Ry.  Ref.  5s,  1936 „  —  *90      *93 

Middlesex  &  Boston  St.  Ry.  Ref.  41/28,  1932—  —  —  —      *94 

Middlesex  &  Somerset  Trac.  1st  5s,  1950 —  __  __      *97 

Middlesex  Valley  1st  5s,  1942 —  __  __     *105 

Middletown  Horse  R.  R.  1st  5s,  1914 __  __  *4.40%  basis 

Midland  Cont'l  R.  R.  6%  Notes,  1913-15 __  „  5%%  basis 

Midland  Counties  Gas  &  Elec.  68,  1932 __  __  991/2     — 

Midland  R.  R.  of  N.  J.  1st  53  Ex.  to  1940 __  __  105       lOTi/g 

Midland  Terminal  1st  5s,  1925 —  __  97 

Milford  &  Uxbridge  St.  Ry.  1st  5s,  1918 __  __  100 

Milford,  Attleb.  &  W'nsocket  St.  Ry.  5s,  1919  >_  __  __    *100 

Milford,  Holliston  &  Fram.  St.  Ry.  5s,  1918___  __  __  __      100 

Millbury  Water  Ist  58,  1915 __  —  __      100 

Millen  &  Southw.  5s,  1955 __  __  90 

Milliken  Bros.  Conv.  68,  1921 __  >_  *50i/3  *60 

Mill  Valley  &  Mt.  Tamal's  St.  Ry.  5s,  1929—  __  __  100 

Millville,  Etna  &  Sharpsb.  1st  5s,  1923 __  __  100      101 

Milo  Water  Co.  1st  5s,  1929 __  __  *5%  basis 

Milwaukee  &  Nor.  Ex.  41/3S,  1913 __  __  99%     __ 

Milwaukee  &  Nor.  Ex.  1st  Cons.  6s,  1913 __  __  __        99% 

Milwaukee  &  Nor.  Ex.  1st  5a,  1931 __  __  ._      *98 

Milwaukee  &  State  Line  1st  31/2S,  1941 __  __  84l^     __ 

Milwaukee  El.  Ry.  &  Lt.  5s,  1926 __  __  103       IO41/3 

Milwaukee  El.  Ry.  &  Lt.  41/28,  1931 __  __  94        941/3 

Milwaukee  El.  Ry.  &  Lt.  Gen.  &  Ref.  5s,  1951  __  __  951/3     96I/3 

Milwaukee  Gas  Light  let  4s,  1927 __  __  891/3     91 

Milwaukee,  Lake  Shore  &  Western. — 

Ext.  5s,  1929 __  __  1071/3     — 

(Ashland  Div.)   6s,  1925 __  __  ♦11414     __ 

(Marsh.  Div.)  1st  5s,  1922 __  __  __     *104 

(Mich.  Div.  1st  6s,  1924 __  __  11414     — 

1st  6s,  1921 1111/2  1111/2 

Milwaukee  Light,  Heat  &  Trac.  1st  5s,  1929—  __  __  100      102 

Milwaukee,  Sparta  &  Northw'n  Ist  4s,  1947—  931/3  931/3 

Minneapolis  Brew.  7s,  1913 __  __  101 

Minneapolis  Chamber  of  Com'ce  41/2S,  1913-22  __  —  *100 

Minneapolis  Gas  Light  Gen.  58,  1930 __  __  991/2  IOO1/2 

Minneapolis  General  Elec.  1st  5s,  1934 __  __  991/2  IOO1/2 

Minn.  &  Pac.  1st  4s,  1936 —  __  95 

Minneapolis  &  St.  Louis  R.  R. — 

1st  7s,  1927 _.  —  105 

Pac.  Ex.  1st  6s,  1921 __  —  —       109 

Ist  Con.  58,  1934 __  __  __       110 

1st  &  Ref.  4s,  1949 —  __  —        78 

6%  Notes,  1914 __  __  98i4     98y^ 

Minneapolis,  St.  Paul  &  S.  S.  Marie  Ry. — 

2d  48,  1949 —  __  90 

Equip.  «E"  41/2S,  1923 —  —  —     "100 

1st  Cons.  48,  1938 __  „  95        97 

Minneapolis,  S.  Ste.  Marie  &  Atl.  1st  4s,  1926  —  —  961/3     __ 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1119 


High  Low  Bid    Asked 

Minneapols  St.  Ry.  2d  6s,  1913 __  __  100 

Minneap.  St.  Ry.  (M.  L.  &  M.)  Cons.  5s,  1919  __  __  101 

Minneap.  St.  &.  St.  Paul  City  Cons.  5s,  1928__  _.  _..  1023^  lOSy^ 

Minneapolis  Term.  SMjS,  1950 __  __  80 

Minneapolis  Union  Ry.  1st  6s,  1922 „  __  110%     __ 

Minneapolis  Union  1st  5s,  1922 __  __  100 

Minneapolis  Union  Ry.  1st  6s,  1922 __  —  100%     __ 

Minnesota  &  Iowa  1st  Zy^s,  1924 __  __  91 

Minnesota  &  Ontario  Power  1st  6s,  1928 __  __  __       *99 

Minnesota  Transfer  1st  5s  &  4s,  1916 __  __  __     *10iy^ 

Mission  Trans.  &  R.  Co.  5s,  1921 __  __  95      100 

Mississippi  Central  1st  5s,  1949 __  __  94        95 

Mississippi  Glass  1st  6s,  1924 __  __  __     *102 

Mississippi  River  &  Bonne  T.  1st  5s,  1931 __  __  99       lOOVg 

Mississippi  River  Power  1st  5s,  1951 __  __       *84 

Mississippi  Val.  Gas  &  Elec.  Coll.  5s,  1922 __  —  85        88 

Missouri  Edison  Elec.  5s,  1927 —  __  lOOVa  101 

Missouri  Elec.  Lt.  6s,  1921 __  __  __       1081/3 

Missouri,  Kan.  &  Eastern  1st  5s,  1942 __  __  106 

Missouri,  Kan.  &  Okla.  1st  5s,  1942 __  __  IO31/2  1041/2 

Missouri,  Kansas  &  Texas  Ry. — 

Cons.  5s,  1940 ._  __  95 

5s  Notes,  1913 __  __  99%  lOOVg 

Ist  4s,  1990 __  __  „        92% 

2nd  4s,  1990 79  78I/2 

1st  Ex.  5s,  1944 __  __  971/2     98% 

1st  &  Ref.  4s,  2004 __  __  __        76% 

Gen'l  41/2S,   1936 __  __  84 

St.  L.  Div.,  2001 __  _«  __        771/2 

Missouri,  Kan.  &  Tex.  of  Texas  1st  5s,  1942—  __  __  —       100% 

Missouri,  Okla.  &  Gulf.  1st  5s,  1951 »_  __  75 

Missouri  Pacific  R.  R. — 

1st  Con.  6s,  1920 __  _.  104%  105 

Trust  5s,  1917 —  —  99        991/2 

Ist  Col.  Tr.  5s,  1920 98%  98% 

Col.   4s,   1945 69%  69% 

1st  Conv.  5s,  "A,"  1959 __  __  86        87% 

3rd  78  Ex.  at  4s,  1938 __  __  __        96I/2 

-  Equip.  5s,  1921 __  _.  5%%  5%% 

Equip.  5%  Notes,  1914 __  __  97        971/2 

(Lex.  Div.)    5s,  1920 __  „  97 

Missouri  River  Power  1st  6s,  1920 __  __  *102     *104 

Mobile  &  Birm.  P.  L.  5s,  1945 _.  „  104 

Gen'l    4s,   1945 __  __  77 

Mobile  Elec.  5s,  1946 __  „  90        92 

Mobile  Gas  Deb.  6s,  1921 __  „  —     "100 

Mobile  Gas  1st  5s,  1924 __  ._  '94       ^g? 

Mobile  Light  &  R.  R.  1st  5s,  1937 —  —  95        97 

Mobile  Light  &  R.  R.  Cons.  5s,  1941 —  __  85        87 

Mobile  &  Ohio  R.  R.— 

New  6s,  1927 ._  __  116%  117% 

Ist  Ex.  6s,  1927 __  __  _-       112% 

Gen'l  4s,  1938 .  __  ._  84%     __ 

Montgomery  Div.  1st  5s,  1947 __  „  IO81/2  110 

St.  Louis  &  Cairo  Col.  48,  1930 ._  __  88%     — 

St.  Louis  &  Cairo  Gtd.  4s,  1931 >_  __  91        92% 

Coll.  48,  1938 __  __  85%     88% 

Equip.  5s  to  1919 __  „  5%       4%% 

Equip.  41/2S,  1916-22 __  —  5      4%% 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1120 


High    Low 

Mobile  Street  R.  R.  1st  6s,  1923 

Mobile  Term.  &  Ry.  6s,  1935 

Mogul  Mining  6s 

Mohawk  Hydro  Elec.  1st  6s,  1940 

Mohawk  &  Mai.  4s,  1991 

Mohawk  &  Mai.  Cons.  Zy^s,  2002 

Monon  Coal  5s,  1936 

Monongahela  Lt.  &  Pr.  5s,  1949 

Monon.  River  Con.  Coal  &  Coke  6s,  1949 

Monongahela  River  R.  R.  1st  5s,  1919 

Monongahela  St.  Ry.  5s,  1928 

Monongahela  Valley  Trac.  Ist  5s,  1942 

Montana  Central  Ist  6s,  1937 

1st  45s,  1937 

Montana  Indep.  Tel.  1st  6s,  1926 

Montana  Power  Transm.  1st  5s,  1933 

Montana  Water  1st  6s,  1933 

Monterey  Lt.  &  Pow.  1st  6s,  1929 

Montg.  Lt.  &  Trae.  1st  &  Ref.  5s,  1942 

Montg.  Lt.  &  Trae.  6%  Notes,  1914 

Montg.  Lt.  &  Water  Pow.  1st  Cons.  5s,  1943_ 
Montreal  L.,  H.  &  P.  1st  &  Coll.  41/28,  1932— 

Montreal  Lt.  Ht.  &  Pr.  5s,  1933 

Montreal  Power  Trans.  1st  5s,  1933 

Montreal  Street  Ry.  41/38,  1922 

Montreal  Tramways  1st  5s,  1941 

Montreal  Tram.  &  Pow.  6%  Notes,  April,  1915 
Montreal  Tram.  &  Pow.  6%  Notes,  Jan.,  1915 

Montreal  Water  &  Power,  P.  L.  41/2  s,  1932 

Montville  Street  Ry.  5s,  1920 

Morgan's  La.  &  Tex.  1st  7s,  1918 

Morgan's  La.  &  Tex.  Gtd.  6s,  1920 

Morningside  Elec.  Street  Ry.  1st  5s,  1935 

Morris  &  Co.  1st  41/2S,  1939 

Morris  County  (N.  J.)  Trac.  1st  5s,  1935 

Morris  &  Essex  1st  7s,  1914 

Morris  &  Essex  1st  7s,  1915 

Morris  &  Essex  1st  Ref.  3i/3»,  2000 

Morris  &  Somerset  Elec.  5s,~  1940 

Mortgage  Bond  Co.  5s,  1932 

Mt.  Vernon  Woodb.  Cott.  D'ck  1st  5s,  1949 

Mt.  Washington  Street  Ry.  1st  5s,  1933 

Mt.  Whitney  Power  &  Elec.  1st  6s,  1939 

Muncie  &  Union  City  5s,  1936 

Muncie  Elec.  Lt.  5s,  1932 

Muncie,  Hartford  &  Ft.  W.  1st  5s,  1935 

Municipal  Gas  &  Elec.  1st  41/38,  1942 

Municipal  Serv.  Coll.  5s,  1932 

Muskegon  Gas  &  Elec.  1st  &  Ref.  5s,  1926 

Muskogee  Gas  &  Elec.  Ref.  5s,  1912-26 

Muskegon,  Gr.  Rpds.  &  Ind.  R.  R.  5s,  1926 

Muskegon  Trac.  &  Lighting  1st  5s,  19^1 

Muskogee  Elec.  &  Gas  58,  1924 

Muskogee  Elec.  Trac.  1st  5s,  1934 

Mutual  Fuel  Gas  5s,  1947 

Mutual  Term,  of  Buffalo  1st  4s,  1924 

Mutual  Union  Tel.  1st  5s,  1941 

*Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1121 


Bid 

Asked 

99 

100 

95 

100 



*42i/2 

*99 

__ 

95 



80 



921/2 

95 

961/2 

991/2 

1153/4 

1021/2 

— 

100 

101 



96 

124 



IO8I/2 

110 

*54 

*57i/2 



*98 

100 

106 

103 

981/2 



*98i/2 



82 

86 

98 

99 

101 





971/2 

100 



_ 

1001/2 

991/2 

1001/2 

'IOOI/2 

__ 

95 

102 





111% 



1071/s 

■" 

*101 

88I/2 

891/2 

60 

70 

io2ys 



1051/2 

*86i/2 



_-     *100 

991/2 



751/2 

76 

1001/4 

101 

102 

1021/2 

81 

86 

951/2 

98 

89 

92 

95 

961/2 

90 

95 

95 

971/2 



*98 

*96 



79 





*98 



*93i/2 

100 

1011/2 

*95 

101 

103 

High    Low 
Nashua  St.  Ry.  4s,  1931 

Nash.,  Chat.  &  S.  L.  (Tracy  City  Br.)  68,  1917 

Nash.,  Chat.  &  St.  L.  1st  7s,  1913 

1st  Cons.  5s,  1928 

Jasper  Br.  1st  68,  1923 

Centerville  Br.  6s,  1923 

Lebanon  Br.  6s,  1917 

Nashv.,  Flor.  &  Sheffield  1st  5s,  1937 

Nashv.  Gas  &  Htg.  1st  5s,  1937 

Nashv.  Ry.  &  Lt.  5s,  1953 

Nashv.  Ry.  &  Lt.  Ref.  &  Ex.  5s,  1958 

Nashville  Street  Ry.  5s,  1925 

Nashville  Water  4s,  1928 

Nassau  El.  R.  R.  1st  5s,  1944 

Nassau  Elec.  R.  R.  Cons.  4s,  1951 

Nassau  Lt.  &  Pow.  1st  5s,  1927 

Nassau  &  Suffolk  Light  5s,  1935— 

Nat'l  Breweries  6s,  1939 

Nat'l  Enam.  &  Stamp.  5s,  1929 

Nat'l  Gas,  E.  L.  &  P.  Coll.  6s,  1931 

Nat'l  Lt.,  Ht.  &  P.  Coll.  "B"  5s,  1919 

Nat'l  Lt.,  Ht.  &  P.  Coll.  "C"  5s,  1920 

National  Rys.  of  Mexico. — 

Prior  L.  41/38,  1957 

Gtd.  4s,  1977 1. 

Prior  L.  41/38,  1926 

1st  Cons.  4s,  1951 

Coll.  Tr.  41/2S,  1913 

Nat'l  Starch  Deb.  5s,  1930 

Nat'l  Sugar  Mfg.  1st  6s,  1933 

National  Tube  1st  5s,  1952 

Natomas  Cons.  Co.  of  Calif.  (Am.)  6s,  1930— 

Nebraska  Land  &  Feeding  1st  6s,  1914-15 

Nev.-Cal.-Ore.  Ry.  5s,  1919 

Nevada-Calif.  Pow.  1st  6s,  1927 

New  Amsterdam  Gas  58,  1948 

New  Bedford  Extractor  1st  Ref.  5s,  1933 

New  Bedford,  Middleb.  &  Brock.  1st  58,  1920— 

New  Bedford  &  Onset  1st  5s,  1922 

New  Brit.  Gas  Lt.  1st  5s,  1926 

New  Castle  &  Slien.  Val.  6s,  1917 

New  Castle  Lt.,  Ht.  &  Pr.  1st  5s,  1929 

New  Castle  Water  1st  5s,  1932 

New  Departure  Mfg  1st  6s,  1921 

New  England  Brewing  Ref.  5s,  1931 

New  Eng.  Cotton  Yarn  5s,  1929 

New  Engld.  Pow.  1st  5s,  1951 

New  England  R.  R.  5s,  1945 

48,  1945 

(Boston  Term'l)  48,  1939 

New  Engl.  Tel.  &  Tel.  5s,  1915 

58,  1916 

Deb.  5s,  1919 

4s,  1930 , 

Deb.  5s,  1932 

New  Gas  Light  5s,  1934 

New  Haven  &  Centreville  Ist  5s,  1933 

New  Haven  &  Derby  Cons.  5s,  1918 

New  Haven  &  Northamp.  Ref.  4s,  1956 

^Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1122 


Bid 

Asked 

__ 

921/4 

104% 

__ 

1001/2 

1003/4 

1071/3 

108ya 

iiiy^ 

110 

__ 

105 

__ 



108 

98 

1031/, 

1001/2 

101 

97 

98 

1011/2 

102 

97 

98 

102 

1031/4 



77% 

1001/2 

1021/2 

*95 

__ 

■5%%  Basis 

91 

951/8 



101 

98 

100 

98 

100 

86 

__ 

80 



99 



767a 

97% 

98% 

95 



•85 

98 

983/4 

9434 

*100 

__ 

95 



100 

102 

1011/4 

101% 

^102% 

97 

100 

94 





107 

98 

__ 

•77 

_ 

♦99 

•99 

__ 

♦85 

91% 

92 

92 

110 

__ 

961/2 

__ 



1031/2 

991/2 

100% 

991/2 

lOOS/a 

991/2 

lOOS/s 

88 

90 

101% 

__ 

i 

»103% 

105 

__ 

100 

__ 

94 

_„ 

High  Low  Bid    Asked 

New  Haven  Street  Ry.  1st  5s,  1913 —  ._  100 

Edgew.  Div.  5s,  1914 —  —  100 

New  Haven  Water,  Deb.  4s,  1915 —  —  155 

N.  J.  &  Hud.  Riv.  Ry.  &  Ferry  1st  4s,  1950—  „  __  82        83 

New  Jersey  Gas  1st  5s,  1940 —  —  —        95ya 

N.  J.  Junction  1st  4s,  1986 —  —  94 

N.  J.  &  N.  Y.  Ry.  1st  6s,  1950 —  —  101 

New  Jersey  Steamboat  5s,  1921 —  —  *87 

New  Jersey  Zinc  1st  4s,  1926 —  —  *95       *98 

New  London  Gas  &  Elec.  5s,  1927 —  —  103 

2nd  5s,  1929 —  —  100 

Cons.  &  Ref.  5s,  1933 —  —  100 

New  London  Northern  1st  4s,  1940 —  —  92i4     — 

New  Long  Dist.  Tel.  1st  5s,  1923 —  —  791/4     SOi/g 

New  Mexico  Ry.  &  Coal  1st  5s,  1947 —  —  98       101 

1st  Cons.  5s,  1951 —  —  97       100 

New  Milford  Pow.  1st  5s,  1932 —  —  1021/2  IO41/2 

New  Orl.  &  CarroUton  58,  1933 —  —  107%  108 

New  Orl.  City  &  L.  R.  R.  1st  5s,  1943 —  _.  IO71/2  IO8I/2 

New  Orleans  City  &  Lake  Pow.  House  6s,  1917  ._  —  102 

New  Orleans  City  R.  R.  5s,  1943 __  >_  1051/2     — 

New  Orl.  Cold  Stge.  &  WTise.  6s,  1922 —  —  100       110 

6s,  1924 —  —  100 

New  Orl.,  Gt.  North.  1st  53,  1955 __  _-  67i/a     69 

N.  O.,  Mobile  &  Chic.  1st  5s,  1960 —  —  —        84% 

New  Orl.  &  Northeast.  Equip.  41/2S,  Apr.,  1913  —  __  6%     _- 

N.  0.  &  Nor.  Eastern  Prior  Lien  6s,  1915 __  —  -_      104 

New  Orleans  Power  5s,  1943 *100 

New  Orleans  Ry.  &  Lt.  41/2S,  1935 ._  —  85%     85% 

"A"   5s,   1949 —  —  86         871/2 

N.  0.  R.  E.  Mtge.  &  Sec.  5s,  1926 *101i/2  — 

New  Orl.  Stk.  Ex.  5s,  1924 *97i/2  — 

New  Orl.  Terminal  1st  4s,  1953 —  —  —        88 

New  Orl.,  Tex.  &  Mex.  5s,  1940 —  —  92        95 

New  River  Co.  1st  5s,  1934 —  —  60        70 

New  River  R.  R.  1st  6s,  1932 —  —  120      123 

New  Telephone  Co.  Cons.  53,  1920 __  —  *84 

New  W'msburg  &  Flatb.  R.  R.  1st  41/2S,  1941_  „  __  _-      *92 

N.  Y.  Air  Brake  6s,  1928 —  —  991/2  101 

New  York  Bay  Ex.  R.  1st  5s,  1943 —  —  101 

N.  Y.,  Bklyn.  &  Man.  Beach  1st  Con.  5s,  1935.  _.  _-  *102 
New  York  Central  Lines — 

41/2  Notes,  1914 '_ —  __  993/g     99% 

Equip.  41/2S,  1922 —  —     4.85-60%  Basis 

Equip.  41/2S,  1925 __  _-    4.85-65%  Basis 

Equip.  41/2S,  1927 —  —     4.85-65%  Basis 

Equip.  41/2S,  1928 —  —  4.65%  Basis 

Equip.  41/3S,  1917 —  —  —       101% 

New  York  Central  &  Hudson  River  R.  R. — 

1st  31/2S,  1997 —  —  8414     841/2 

Deb.  4s,  1934 89  89 

Lake  Shore  31/2S,  1998 —  —  —        7778 

Mich.  Cent.  31/2S,  1998 771/2  771/2 

41/2%  Notes,  1915 —  —  *99i4  *99i/3 

N.  Y.,  Chicago  &  St.  Louis  1st  4s,  1937 __  __  —        98% 

Deb.  4s,  1931 —  —  —        87^8 

N.  Y.  &  Cuba  Mail  S.  S.  1st  5s,  1932 —  —  *71iA  ♦73 

N.  Y.  Dock  4s,  1951 —  —  83 

N.  Y.  &  East  River  Ferry  5s,  1922 —  —  50        60 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1123 


High    Low 

New  York  &  East  River  Gas  1st  5s,  1944 

Cons.  58,  1945 

N.  Y.  &  Erie  1st  4s,  1947 

2n(i  Ex.  OS,  1919 

3rd  Ex.  41/38,  1933 

4th   Ex.   5s,   1920 

5th  Ex.  4s,  1928 

1st  Ex.  7s,  1920 

N.  Y.  Gas,  E.  L.,  H.  &  P.  1st  5s,  1948 

P.  M.  4s,  1949 

N.  Y.  &  Greenwood  Lake  5s,  1946 

N.  Y.  &  Harlem  SVgS,  2000 

N.  Y.  &  Hoboken  Ferry  5s,  1946 

N.  Y.  &  Interurban  Water  5s,  1931 

N.  Y.  &  Jersey  E.  R.  1st  5s,  1932 

New  York,  Lackawanna  &  Western  R.  R. — 

1st  6s,  1921 

Construction  5s,  1923 

Term.  &  Imp.  4s,  1923 

N.  Y.,  L.  E.  &  Western  1st  Cons.  7s,  1920 

N.  Y.,  L.  E.  &  W.  Coal  &  R.  R.  Co.  1st  6s,  1922 
New  Y.,  L.  E.  &  W.  D.  &  L  Co.  1st  6s,  1913-_ 

N.  Y.  &  Long  Branch  Gen.  4s,  1941 

Gen.  5s,  1941 

N.  Y.  &  New  England  (Bost.  Term.)  4s,  1939_ 
New  York,  New  Haven  &  Hartford  R.  R.— 

Deb.  4s,  1914 

4s,  1947 

5%  Notes,  1913 

Deb.  31/28,  1947 

1st  4s,   1954 

Non-Conv.  sy^s,  1954 

Non-Conv.  4s,  1955 

Non-Conv.  4s,  1956 

Conv.  31/23,  1956 

Conv.  68,  1948 122       122 

N.  Y.  &  N.  J.  Ferry  5s,  1946 

N.  Y.  &  N.  J.  Telep.  Gen.  5s,  1920 

N.  Y.  &  N.  J.  Water  Ist  5a,  1920 

N.  Y.  &  Northern  1st  5s,  1927 

New  York,  Ontario  &  Western  Ry. — 

Ist  4s,  1992 

Genl.  4s,  1955 90%     9078 

Ref.  43,  1992 

5%  Notes,  1915 

Equip.  41/28,  1916 

N.  Y.,  Penna.  &  Ohio  1st  41/oS,  1935 

N.  Y.  &  Pa.  Tel.  &  Tel.  1st  5s,  1926 

Gen.  4s,  1929 

N.  Y.,  Phila.  &  Norf.  1st  4s,  1939 

Inc.  4s,  1939 

4%  Stk.  Tr.  Ctfs.,  1948 

N.  Y.  &  Porto  Rico  S.  S.  58,  1932 

N.  Y.,  Prov.  &  Boston  4s,  1942 

New  York  &  Putnam  1st  4s,  1993 

New  York  &  Queens  Co.  4s,  1946^ 

N.  Y.  &  Q.  E.  L.  &  P.  1st  C.  G.  5s,  1930 

N.  Y.  &  Queens  Gas  1st  &  Gen.  5s.  1934 

N.  Y.  Rys.  Adj.  5s,  1942 59         58% 

^Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1124 


Bid 

Asked 

104 

106 

101 

103 

99 



1021/2 

104 

100 

■ 

103 

104 

92% 

101 

113 

115 

loiya 

103% 

84% 

__ 

1031/2 

109 

86I/2 



991/4 

100 

*74 

*78 

— 

1021/, 

1108/4 

111 

103 

105% 

961/4 

971/4 

113 

1171/4 



1071/4 

lOOi/a 

101 

98 



100 

_ 

~     ' 

»105 

983/s 

991/4 

88 

91% 

100 

100% 



81% 

__ 

98 



82 

_- 

88% 



8874 

83 

86 

97 

" 

100 

100 

*78 

106 

107% 

~ 

90% 

*91i/2 

"" 

991/2 

100 

5% 

4%% 

94 

__ 

100 

101 

85 

971/2 

98% 

90 

92 

__ 

•97% 



•95 

95 

96 

93 

96 

65 

75 

100 

101 

98 

100 

High  Low  Bid    Asked 

N.  Y.  Rys.  1st  R.  E.  &  Ref.  4s,  1942 . __  __  761/2     77 

N.  Y.  &  Rich.  Gas  1st  5s,  1921 __  __  961/2     _- 

N.  Y.  &  Rockaway  Beach  1st  5s,  1927 __  __  1031/2  105% 

N.  Y.  State  Rys.  1st  Cons.  A  41/28,  1962 __  __  921/2     941/2 

New  York  &  Stamford  1st  6s,  1931 __  >_  IO21/2  IO41/3 

1st  &  Ref.  4s,  1958 _.  __  87         90 

N.  Y.,  Suburban  Gas  1st  5s,  1949 ._  __  102       105 

New  York,  Susquehanna  &  Western  R.  R. — 

1st  5s,  1937 __  __  991/2  101% 

2nd    41/3S,    1937 __  __  821/2     90 

Genl.   5s,  1940 __  __  ._         87 

Term.  1st  5s,  1943 __  __  __       IO71/2 

N.  Y.  Telep.  1st  &  Gen.  41/2S,  1939 __  __  97        97l^ 

N.  Y.,  Westchester  &  Bost.  41/2S,  1946 97  97 

N.  Y.  &  Westch.  Ltg.  4s,  2004 __  __  821/3     85 

Deb.  5s,  1954 __  __  100       102 

Newark  Cons.  Gas  Cons.  5s,  1948 __  __  103l^     __ 

Newark  Gas  6s,  1944 __  __  I251/3  127 

Newark  Pass.  Ry.  Cons.  53,  1930 _>  __  105       106 

Newburg  &  N.  Y.  1st  5s,  1929 __  __  100 

Newburg  Lt.,  Htg.  &  Pow.  1st  6s,  1921 __  >_  *98i/2*101 

Newport  &  Cine.  Bridge  41/2S.  1945 __  __  100%     __ 

Newport  &  Davton  1st  6s.  1917 __  __  101       105 

Newport  &  Fall  Riv.  St.  Ry.  1st  5s,  1918 __  __  __       101 

Newport  &  Richford  1st  5s,  1941 __  __  __      110 

Newport  News  &  0.  P.  Ry.  &  E.  C.  1st  5s,  1938  __  __  98      IOOI/3 

Genl.   5s,   1941 »  __  76I/2     771/2 

Newpt.  News  Shipb.  &  Dry  Dk.  5s,  1990 __  __  95 

Newtown  Ry.  1st  5s,  1924 «,  >.  __       ♦9814 

Niagara  &  Erie  Pow.  1st  5s,  1941 __  _>  87        921/3 

Niagara  Falls  G.  &  E.  L.  1st  5s,  1921 __  >_  _.        97 

Niagara  Falls  Pow.  Ist  5s,  1932 __  __  1021/3  102l^ 

Niagara  Falls  Pow.  Ref.  &  Gen.  68,  1932 __  __  105l^  106 

Niagara  Lt.,  Ht.  &  Pr.  1st  5s,  1922 „  __  __      100 

Niagara  L.,  H.  &  P.  Cons.  &  Ref.  5s,  1925 __  __  __        95 

Niagara,  Lockport  &  Ont.  Pow.  1st  5s,  1954-_  __  __  89l^     921^ 

Niagara,  St.  Catharine  &  Tor.  Ry.  1st  5s,  1929  __  __  _„        99 

Nipe  Bay  Co.  1st  6s,  1914 ._  _.  _.      100% 

Deb.  6s.  1917 __  __  _.     *100 

Nodaway  Valley  78,  1920 __  ._  1031/3     _, 

Norfolk  &  Carolina  1st  5s,  1939 __  __  108       112 

Norfolk  &  Portsm.  Trac.  5s,  1936 __  __  9I1/3     92 

Norfolk  Ry.  &  Light  1st  5s,  1949 _>  __  99        991/3 

Norfolk  &' Southern  R.  R.— 

1st  5s,  1941 __  __  102%     >_ 

1st  "A"  58,  1961 ._  __  98%     98% 

1st  5s,  1954 __  _-  95         991/2 

Norfolk  Street  Ry.  1st  5s,  1944 ._  _-  104 

Norfolk  Term.  1st  4s,  1961 __  ._  91 

Norfolk  Term.  &  Transp.  5s,  1948 __  __  ♦98 

Norfolk  &  Washington  Steamboat  5s,  1931___  __  __  104%  105 

Norfolk  &  Western  Ry.— 

Equip.   4s  "D,"   1916 __  __  4% -1/2%  Basis 

Equip.  4s  «G,"  1916 „  ..  434.1/2%  Basis 

Equip.  4s  "M-0,"  1917 „  __  4.60-45%  Basis 

Pocohontas  Coal  Jt.  4s,  1941 __  __  891/2     QOV^ 

New  River  Div.  6s,  1932 __  __  120       123 

1st  Cons.  4s,  1996 —  —  96I/2     96% 

1st  Lien  &  Genl.  4s,  1944 ._  __  91%     923^ 

^Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1125 


High    Low 

10-25-Y.  Conv.  4s,  1932 

10-20-Y.  Conv.  48,  1932 105%  105% 

Conv.  41/28,  1938 

Imp.  &  Ext.  6s,  1934 , 

Gen.  68,  1931 

Norristown  Transit  1st  5s,  1942 

North  Caro.  Elec.  Pow.  1st  Ref.  1940 

North.  Caro.  Pub.  Serv.  1st  Ref.  5s,  1934 

North  End  Ry.  5s,  1915 

North  Hudson  County  Ry.  1st  6s,  1914 

Cons.  5s,  1928 

2nd  Ext.  5s,  1924 

North  Hudson  Lt.,  Ht.  &  Pr.  5s,  1938 

North  Jersey  &  Poc.  Mtn.  Ice  5s,  1919 

North  Jersey  St.  Ry.  4s,  1928 

North  Mtn.  Water  Sup.  5s,  1933 

North  Penna.  Ist  4s,  1936 

Genl.  3  3/lOs,  1953 

North  Platte  Val.  Irrig.  Co.  6s,  1919 

North  Sh.  Elec.  1st  5s,  1922 

Ref.  5s    1940     _ 

North  Shore  Gas  1st  5s,  1937 

North  Spgld.  Water  5s,  1928 

North  Sterling  Irrig.  Co.  6s 

North  Wisconsin  1st  6s,  1930 

Northampton,  Easton  &  Wash.  Trac.  5s,  1950 

Northampton  Traction  5s,  1933 

Northeast  Penna.  1st  5s,  1920 

Northeastern  R.  R.  of  S.  C.  6s,  1933 

Nor.  Cal.  Power.  Cons.,  Ref.  &  Cons.  5s,  1948_ 

Northern  Calif.  Power  5s,  1932 

Northern  Calif.  Ry.  5s,  1929 

Northern  Central  Gas  58,  1962 

Northern  Central  Ry.  Cons.  41/38  "E,"  1925 — 

5s  "A,"  1926 

5s  "B,"  1926 

Northern  Colorado  Power  5s,  1928 

North.  Conn.  Lt.  &  P.  1st  5s,  1946 

Northern  Electric  Co.  5s,  1955 

Northern  Elec.  St.  Ry.  58,  1957 

North.  Id.  &  Mont.  Pow.  1st  6s,  1949 

North,  m.  Lt.  &  Tr.  1st  5s,  1923 

North.  Ind.  Gas  &  El.  1st  Ref.  5s,  1929 

Ry.  Cons.  58,  1936 

Northern  Lake  S.  S.  Co.  5s,  1912-21 

Northern  Maine  Seaport  &  Term.  5s,  1935 

Northern  Ohio  Rv.  1st  5s,  1945 

North.  Ohio  Ry.  Con.  5s,  1919 

Nor.  Ohio  Trac.  5s,  1919 

Nor.  Ohio  Tr.  &  Lt.  5s,  1933 

Nor.  Ohio  Tr.  &  Lt.  4s,  1933 

North.  Ont.  Lt.  &  Pow.  Ist  6s,  1931 

Northern  Pacific  Ry. — 

Prior   Lien    4s,    1997 

Genl.  Lien  3s,  2047 

St.  Paul,  Duluth  Div.  1st  5s,  1916 

Gt.  Nor.,  C.  B.  &  Q.  Jt.  4s,  1921 100      100 

Northern  Pacific  Term.  1st  6s,  1933 

North.  Ry.  of  Cal.  53,  1938 

^Quotation  nearest  Mard)  1,  1918.    No  quotation  on  that  date. 

1186 


Bid 

Asked 

~ 

107% 

104 

104% 

1211/4 

119 

122% 



•94% 

92 

97 

921/2 

96 

98 

__ 

101 

102 

1031/4 



98 



100 



621/2 

70 

80 

81 

103 

1038/4 

1001/2 

102% 

821/2 

84% 

•30 

102% 

__ 

993/4 

100% 

951/2 

97 

*90 

•95% 

221/2 

__ 

119 

•94 



*98i/2 



101 

103 

121 

__ 

903/4 

__ 

1003/4 

102 

1061/2 

__ 



•95 

102 

104% 

105 

105 



•74 

♦78 

97% 

98 

95% 

711/2 

73% 



60% 

95 

97 

89 

93 

•901/4 



5.20%  Basis 

95 

100 



102 



100 

100 

103 



90 



80 

— 

•95 

97 

97% 

663/4 

67% 

99% 

110% 

""" 

108% 

— 

High  Low  Bid    Asked 

North.  Ry.  of  Costa  Rica  5s,  1915 —  „  __      100 

Northern  Spgfd.  Wtr.  5s,  1928 __  ..  *95i/8     __ 

Northern  States  Power  Coll.  6%  Notes,  1917_  __  __  991/2  lOOi/g 

North.  States  Trac.  5s,  1933 __  __  *10iy2     __ 

North.  Tex.  Elee.  Coll.  5s,  1940 __  ._  96        97i/a 

Northern  Texas  Trac.  1st  5s,  1933 __  __  98       100 

Northern  Union  Gas  5s,  1927 _.  __  100       102 

Northeni  Westch.  Ltg.  lat  5s,  1955 __  __  98        99 

Northumberld.  Go.  Gas  &  El.  1st,  58,  1946 __  __  931/2     95 

Northwestern  Coal  5s,  1923 __  __  _«       *98 

Northwestern  Elev.  (Union  Loop)  5s,  1945 __  75        90 

Northwestern  Gas  Lt.  &  Coke  5%  Notes,  1917  __  __  96%     96^8 

Northwestern  Gas  Lt.  &  C.  Cons.  5s,  1928 __  __  100 

Northwestern  Penna.  Ry.  5s,  1941 __  __  *98V2     __ 

Northwestern  Telephone  4l^s,  1934 94 

Northwest.  Term.  (D.  W.  W.  &  P.)  5s,  1926—  —  —  80        87 

N.  W.  Union  7s,  1917 __  __  109 

Norwich  Gas  &  Elec.  5s,  1927 __  __  101       105 

Norwich  Street  1st  5s,  1923 __  _-  102 

Norwich  &  Wor.  4s,  1927 ._  ._  97 

Norwood  &  Mont.  1st  5s,  1916 __  __  101 

Nova  Scotia  Stl.  &  Coal  5s,  1959 __  _.  __      •941/2 

Oakland  Gas  Lt.  &  Ht.  2nd  5s,  1916 __  __  100       IOII/2 

Oakland  Rys.  6%  Notes,  1913 __  __  __     *100 

Oakland  Traction  Co.  5s,  1935 __  __  >_        91% 

Oakland  Traction  Con.  5s,  1933 __  __  __        98 

Oakland  Transit  Co.  6s,  1918 __  ._  107 

Oakland  Transit  Co.  5s,  1931 __  __  103 

Oakland  Transit  Con.  5s,  1932 __  __  lOli/g  IO214 

Oakland  Water  5s,  1915 __  __  97        98iA 

Oakland  Water  Co.  Gtd.  5s,  1937 __  __  97 

Ocean  Freight  Line  5s,  1913-22 __  __     *5.20%  Basis 

Ocean  Steamship  Co.  5s,  1920 __  __  99       101 

O'Gara  Coal  5s,  1955 __  __  75        77 

Ogden.  Gas  1st  5s,  1945 __  __  96l^     97 

Ogdensb.  &  Lake  Champ.  1st  4s,  1948 __  __  81        85 

Ogilvie  Flour  Mills  1st  6s,  1932 __  ._  __       105 

Ohio  &  Little  Kanawha  R.  R.  1st  5s,  1950 __  __  *100i/2     _- 

Ohio  Cent.  Cons.  Tr.  5s,  1923 __  __  _.       *90 

Ohio  Cent.  Trac.  5s,  1919 90 

Ohio  Connecting  Ry.  Ist  4s,  1943 __  __  97 

Ohio  Copper  1st  6s,  1917 __  __  _,       *60 

Ohio,  Indiana  &  West.  1st  Pfd.  5s,  1938 __  __  90 

Ohio  River  Railroad  1st  Gtd.  5s,  1936 __  _.  108 

Ohio  River  Railroad  Genl.  5s,  1937 __  __  101       llOi/g 

Ohio  Traction  5s,  1936 __  __  __       101 

Oil  Belt  Co.  1st  5s,  1943 _.  ._  _.       *90 

Okla.  Cent.  Ry.  5s,  1945 __  __  *28 

Okla.  Gas  &  Elec.  1st  5s,  1929 __  __  92l^     96 

Okla.  Nat'l  Gas  1st  Serial  6s __  __  100 

Oklahoma  Ry.  Ist  58,  1941 __  __  92l^     94l^ 

1st  &  Ref.  5s,  1938 __  __  *93       *94i/3 

Old  Colony  R.  R.  48,  1924 —  __  95         97l^ 

48,  1925 __  __  95         971^ 

4s,  1938 __  ._  95         961/8 

31/2S,   1932 ._  __  88         891/2 

Old  Colony  St.  Ry.  4s,  1954 __  __  _^       *87 

Old  Dom.  S.  S.  1st  5s,  1913 >.  .,  *99l^     _. 


'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1127 


High 
Olean  Elec.  Lt.  &  P.  1st  5s,  1951 

Om.  &  Coun.  Bl.  Ry.  &  Edge.  Ist  Cons.  5s,  1928 

Omaha  &  Council  Bl.  St.  Ry.  1st  5s,  1928 

Omaha  Elec.  Lt.  &  P.  1st  5s,  1933 

Omaha  Gas  1st  Con.  5s,  1917 

Omaha  Gas  Mfg.  1st  6s,  1914 

Omaha  St.  Ry.  Cons.  5s,  1914 *99% 

Omnibus  Cable  Ry.  6s,  1918 

Oneonta  Light  &  Pow.  1st  5s,  1922 

Ontario  Power  1st  5s,  1943 

Deb.  69,  1921 

Ontario  Pulp  &  Paper  6s,  1931 

Ontario  &  Quebec  5s  Deb.  Perp 

Ontario  Transm.  1st  5s,  1945 

Orange  &  Passaic  Valley  Ry.  1st  5s,  1938 

Oregon  &  Calif.  1st  5s,  1927 ' 

Oregon  Electric  Ry.  1st  5s,  1933 

Oregon  R.  R.  &  Navig.  4s,  1946 

Oregon  Short  Line  6s,  1922 

5s,  1946 107 

4s,  1929 

Oregon  Short  Line  Ry.  4s,  1961 89% 

Oregon-Washington  R.  R.  &  Nav.  1st  4s,  1961 

Oro  Electric  1st  6s,  1951 

Oswego  &  Rome  1st  7s,  1915 

Oswego  and  Rome  2nd  Gtd.  5s,  1915 

Oswego  &  Syracuse  5s,  1923 

Otis  Elevator  Deb.  5s,  1920 

Otis  Steel  1st  5s 

Ottawa  Elec.  Ref.  &  1st  5s,  1933 

Otto  Electric  Ss,  1933 

Ottumwa  Ry.  &  Lt.  1st  &  Ref.  5s,  1924 

Ousatonia  Water  Pr.  4s,  1921 

Ozark  &  Cherokee  Cent.  Ry.  1st  5s,  1913 

Pacific  Coast  Co.  1st  5s,  1946 

Pacific  Coast  Pr.  1st  5s,  1940 

Pacific  &  Eastern  Ry.  6s,  1937 

Pacific  Electric  Ry.  Co.  5s,  1942 

Pac.  Gas  &  Elec.  (Ariz.)  1st  6s,  1931 

Pac.  Gas  &  El.  (Cal.)  Gen.  &  Ref.  5s,  1942 

Pacific  Gas  &  Elec.  Ref.  5s,  1937 

Pacific  Gas  Imp.  4s,  1930 

Pac.  Lt.  &  Pow.  1st  5s,  1942 

1st  &  Ref.  5s,  1951 

Pac.  Pow.  &  Lt.  1st  &  Ref.  5s,  1930 

Pacific  Ry.  of  Mo.  1st  Ex.  4s,  1938 

2nd  Ex.  5s,  1938 

St.  L.  R.  E.  5s,  1938 

Carondelet  41/28,  1938 

Pac.  Telep.  &  Teleg.  1st  Coll.  5s,  1937 

Packard  Motor  Car  5%  Notes,  1916 

Paducah  Trac.  &  Lt.  Coll.  5s,  1935 

Page  Wov.  Wire  Fence  5s,  1922 

Paint  Creek  Collieries  5s,  1956 *  — 

Pan  America  R.  R.  5s,  1934 

Pardee  Works  5s,  1931 

Park  &  Ocean  R.  R.  6s 

Park  &  Tilford  Deb.  68,  1936 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1128 


Low 

Bid    Asked 

__ 

96 

__ 

*97     'gg 

__ 

*97       '99 

— 

93V4     _. 

__ 

97         99 



-   noiVa 

*99% 



— 

-       102% 



95 



951/2     97 



971/2     99 



-_       •94 



122       124 



91         921/2 



94         96 



102 

__ 

931/2  101 



931/2     95 



111       112% 

107 





89%     _- 

89% 





901/2     90% 



97         981/3 



-       1011/2 



_.       1051/a 



100 



_-     'lOOi/a 



-       ♦931/2 



—       100 



—     •lOO 



85         881/a 



4%%  Basis 

~ 

991/2     .. 

__ 

-       1031/8 

__ 

991/2  1001/3 



_-     'gs 



1041/4  1041/3 



101     102 



88         89 



951/2     95% 



89%     -. 



971/2  100 



93 



g3      gs 



g2i/2    - 



103 



•102 

__ 

•95     *100 

__ 

99%  lOOi/s 



971/3    g8i/2 

__ 

70         75 



•68       ^72 



39         41 



-       •911/3 



•92 



100 



♦95      •g6i/3 

Parker  Cott.  Mills  6%  Notes,  1917 

Passaic  Gas  Lt.  6s,  1922 

Lighting  58,  1925 - 

Water  Gen.  5s,  1937 

Water  2n(i  5s,  1937 

Paterson  &  Pass.  G.  &  E.  1st  Cons.  5s,  1949 

Paterson  Ry.  Cons.  6s,  1931 

2nd  6s,  1914 

Pawtucket  Gas  4s,  1932 

Pearsons-Taft  "BBB"  4.40s 

"C"  4.40s 

«E"  4.60s 

"F"  4.80s 

Peekskill  Ltg.  &  R.  R.  1st  5s,  1930 

Peerless  Motor  Car  1st  6s,  1913-24 

Penmans,  Ltd,  1st  5s,  1926 

Penna  Cen.  L.  &  P.  1st  &  Ref.  5s,  1950 

1st  &  Cons.  6s,  1963 ^ 

Penn-Mary  Coal  5s,  1939 ' 

Penna.  Cent.  Brewing  6s,  1927 

Penna.  Coal  &  Coke  1st  5s,  1932 

Pennsylvania  Co. — 

1st  41/28,  1921 

Coll.  "A"  81/2S,  1937 

Coll.  «B"  31/28,  1941 

Coll.  «C"  31/38,  1942 

Coll.  "D"  31/2S,  1944 

Coll.  "E"  4s,  1952 

Coll.    4s,    1931 

31/2S,   1937 

Trust  31/2S,  1916 

Penna.  Lighting  1st  5s,  1940 

Pennsylvania  &  Mah.  Val.  5s,  1922 

Penna.  &  Maryland  Steel  Cons.  6s,  1925 

Pa.  &  N.  Y.  Canal  Cons.  41/38,  1939 

Cons.  4s,  1939 

Penna.  &  N.  Y.  Canal  Cons.  5s,  1939 

Penna.  &  Northw.  58,  1930 

Penn.  Pub.  Serv.  1st  5s,  1962 

Pennsylvania  R.  R. — 

Col.  T.  41/38,  1913 

R.  E.  P.  M.  48,  1923 

Steel  Rolling  Stock,  31/3S,  1915 

"A"  Equip.  4s,  1914 

Gen.  Fr't.  Equip.  4S,  1920 

Equip.  4s,  1913-22 

1st  R.  E.  4s,  1923 

Cons.  5s,  1919 

Cons.    31/2S,    1915 

Cons.  4s,  1948 

R.  R.  Cons.  4s,  1943 

R.  R.  Cons.  31/3S,  1945 

Penna.  Steel  1st  5s,  1917 

Penna.  Steel  Coll.  5s,  1932 

Penna.  Street  Pass.  Ry.  5s,  1922 _. 

Penna.  Water  Co.  2d  5s,  1929 

Penna.  Wtr.  &  Pow.  1st  5s,  1940 

Penobscot  'Short  Line  1st  48,  1920 

Pensacola  &  Atlantic  Ry.  1st  6s,  1921 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that 

1129 


High 

Low 

Bid    Asked 



__ 

—   noo 

__ 

__ 

*105 





*102 

__ 

__ 

*97 



__ 

*90 

_^ 

__ 

1001/2  1021/2 



__ 

112       1131/3 

__ 



100       103 





89         921/3 

__ 



94 

__ 

_„ 

94 





95 

_« 

__ 

961/4     -. 

__ 



*95       *99 

__ 

__ 

_-     *100 





901/4     941/4 





971/3     981/3 

__ 



—       100 

__ 

__ 

-       *983/4 





64 

~ 

— 

91         931/3 

__ 

102       103 





*85 





85%     __ 





85%     -- 





-         95% 





__       *96 





--         95% 

__ 



851/3     .. 





961/2     __ 





95         98 

__ 



101       1021/a 

__ 

__ 

103       105 





103 

__ 



98 





-.       112 

^_ 

__ 

1051/g  107 

— 

— 

95 

._ 

__ 

991/3     - 





1011/4     - 





5-41/3%  basis 





98 





5-41/2%  basis 





5-41/2%  basis 



__ 

1011/4     -- 





106      107 





96%     97% 

__ 

__ 

„       102 

__ 



—       101 



*90 

__ 

__ 

998/4  100% 

__ 

__ 

•98%     - 



__ 

•101%     _- 

__       •99 

__ 

__ 

-         92% 

__ 

__ 

•97%     - 



__ 

•109 

High    Low 

Pensacola  Elec.  Co.  1st  5s,  1931 

Peoples  Gas  L.  &  C.  1st  Cons.  68,  1943 

Peoples  Gas  L.  &  C.  Ref.  5s,  1947 

Peoples  Pass.  Ry.  4s,  1943 

Peoples  St.  Ry.  (Scranton)  1st  6s,  1918 

Peoples  Telephone  1st  5s,  1929 

Peoples  Water  5s,  1937 

Peoria  Gas  &  Elec.  5s,  1923 

Peoria  Light,  Coll.  5s,  1936 

Peoria  &  Eastern  1st  Cons.  4  s,  1940 

Peoria  &  Eastern  Income  4s,  1990 

Peoria,  Bloom.  &  Champ.  Tr.  1st  58,  1936 

Peoria  &  Northw.  sy^s,  1926 

Peoria  &  Pekin  Union  1st  6s,  1921 

Peoria  &  Pekin  Un.  2d  41/38,  1921 

Peoria  Ry.  1st  5s,  1910-26 

Peoria  Ry.  Term.  4s,  1937 

Pere  Marquette  R.  R. — 

Cons.  4's,  1951 

Deb.  6s,  1912 

(Lake  E.  &  Det.  R.)  1st  41/28,  1932 

41/2%  Rec.  Ctfs.,  1914 

Ref.   4s,  1955 

Ref.   4s,  1955,  gtd 

Pere  Marquette  R.  R.  of  Ind.  1st  4s,  1943 

Perkiomen  R.  R.  1st  5s,  1918 

Perkomen  R.  R.  2nd  5s,  1918 

Petersburg  R.  R.  Class  A  5s,  1926 

Petersburg  R.  R.  Class  B  6s,  1926 

Phila.  &  Bait.  Cent.  1st  4s,  1951 

Phila.  &  Chester  Valley  R.  R.  48,  1938 

Phila.  &  Erie  Ist  6s,  1920 

Genl.   5s,   1920 

Phila.  &  Erie,  Gen.  4s,  1920 

Phila.  &  Garretsford  St.  Ry.  1st  5s,  1955 

Phila.  &  Reading  2nd  5s,  1933 

Phila.  &  Reading  Imp.  Ex.  4s,  1947 

Phila.  &  Reading  Cons.  4s,  1937 

Phila.  &  Reading  Term.  5s,  1941 

Phila.  &  Reading  Coal  &  L  4s,  1932 

Phila.  &  West  Chester  Trac.  1st  58,  1918 

Phila.  &  West  Chester  Trac.  4s,  1954 

Phila.,  Balto.  &  Wash.  1st  4s,  1943 

Phila.  Bourse  Ist  58,  1913 

Phila.  Co.  1st  Coll.  5s,  1949 

Phila.  Co.  Cons.  5s,  1961 

Phila.  Co.  Conv.  Deb.  5s,  1919 

Phila.  Co.  Conv.  Deb.  53,  1922 

Phila.  Elec.  Coll.  5s,  1948 

Phila.  Elec.  Coll.  4s,  1949 

Phila.  Elec.  4s,  1950 

Phil.,  Germ.  &  Chest.  Hill  1st  41/38,  1913 

Phila.  Harris.  &  Pitts.  1st  5s,  1925 

Phila.  Hydro.  El.  1st  5a,  1939 

Pittsb.,  McKeesp't.  &  Greensb.  Ry.  1st  5s,  1931 

Phila.,  Newtown  &  N.  Y.  1st  3s,  1942 

Phila.  Rap.  Tr.  Coll.  58,  1957 

Phila.  Rap.  Tr.  58,  1962 

Phila.  Suburban  Gas  5s,  1931 


Bid 

Asked 

90 

93 

1151/2 

117 

101% 

101% 

90 

91 

104 

1071/3 

57 

60 

813/4 

81% 

100 

1003/4 

96 

99 

90 

431/4 

48 

99 

1003/4 

90 



102 



95 

__ 

*97 

85 

~ 

70 

731/3 

20 

40 

85 

92 

5%  basis 



591/3 

51 

54% 

70 

76 

1021/4 

1031/, 

102 

1031/, 

106 

114 



971/2 

981/4 

*92 

110 

111 

1041/2 

1051/2 

99 

991/3 

*89 

1121/2 

1131/3 

981/2 

991/4 

981/3 

991/4 

1133/4 

1141/4 

971/2 

99 

99 

100 

80 

82 

99% 



99 

100 

1001/2 

1011/4 



921/3 



104 



981/3 

1031/2 

104 

801/3 

8I1/4 

8II/4 

8iy, 

98 

106 

107 



100 

76 

82 

76 

79 

991/3 

100 

98y, 

99 

104 

_„ 

^Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1130 


High    Low 

Phila.  Sub.  G.  &  E.  1st  &  Ref.  5s,  1960 

Phila.  Trac.  Coll.  4s,  1915,  1917 

Phila.,  Wil.  &  Bait.  Deb.  4s,  1917 

Phila.,  Wil.  &  Bait.  Deb.  4s,  1922 

Phila.,  Wil.  &  Bait.  Deb.  4s,  1926 

Phila.,  Wil.  &  Bait.  Deb.  4s,  1932 

Phila.  Wil.  &  Bait.  Col.  7.40  1,921 

Philippine  Ry.  1st  4s,  1937 

Pierce  Bldg.  5s,  1936 

Pillsbury-Washburn  Fl.  Mills  5s,  1928 

Pine  Bluff  &  West.  Ist  5s,  1923 

Pine  Creek  Ry.  1st  68,  1932 

Pine  Hill  Coal  6s,   1914 

Pitcairn  &  Wilmerding  St.  Ry.  1st  5s,  1931 

Pittsburgh  Alleg.  &  M.,  5s,  1930 

Pittsburgh  &  Bifniingham  Tr.  5s,  1929 

Pitts.,  Bess.  &  L.  E.  Con.  5a,  1947 

Pitts.,  Bess.  &  L.  E.  Deb.  5s,  1919 

Pittsb.  Brew'g.  6s,  1949 

Pitts.-Buff.  5s,  1929 

Pitts.-Cannonsburg  &  Wash.  Ry.  5s,  1917 

Pittsb.  &  Charleroi  5s,  1932 

Pittsb.,  Chartiers  &  Yonghiogheny  Ry.  4s,  1932 
f*ittsburgh,  Cine,  Chic.  &  St.  Louis  R.  R. — 

"B"   41/2S,   1942 

"D"   4s,   1945 

"G"    4s,   1957 

"H"  4s,   1960 

Cons.  "A"  41/28,  1940 

Cons.  "C"  41/2S,  1942 

Cons.  "E"  31/28,  1949 

Cons.  "F"  4s,  1953 

Pitts.,  Cleve.  &  Toledo  1st  68,  1922 

Pittsburgh  Coal  1st  5s,  1954 

Pitts.  Coal  Deb.  5s *91i/2     89% 

Pittsburgh  Coal  Equip,  41/2S,  1914 

Pitts.  Crucible  Steel  1st  5s,  1916-45 

Pittsb.  Gas  5s,  1956 

Pitts.  &  Jamestown  R.  R.  Ist  6s,  1922 

Pittsburgh  June.  2nd  5s,  1922 

Pittsburgh  June.  1st  6s,  1922 

Pitts.  &  Lake  Erie  1st  6s,  1928 

Pitts.  &  L.  E.  2d  A  &  B  5s,  1928 

Pitts.,  McKeesp.  &  Connells.  R.  R.  1st  Cons  5s, 

1931 

Pitts.,  McKeesp't.  &  Greensburg  Ry.  1st  5s, 

1931 

Pitts.,  McK.  &  Y.  1st  6s,  1932 

Pitts,  McK.  &  Y.  2nd  6s,  1934 

Pittsburgh  &  Shawmut  1st  58,  1959 

Pittsburgh  &  Shawmut  Notes  6s,  1913 

Pitts.,  Shawmut  &  N.  Ist  5s,  1949 

4s,   1952 

Receiver's  Cfs.  5s,  1914 

Receiver's  Cfs.  5s,  1915 

Receiver's  Cfs.  5s,  1916 

Pitts.,  Shenango  &  Lake  E.  1st  5s,  1940 

Pitts.,  Shenango  &  Lake  E.,  Cons.  58,  1943— 
Pitts.  Term.  R.  R.  &  Coal  1st  5s,  1942 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1131 


Bid 

Asked 

93 

931/2 

93 

96 

981/2 

100 

99 

100 

99 

100 

98 

100 

981/2 



*84 



95 

*72 

961/2 

100 

*120i/2 





■^10014 

' 

"1921/2 

1021/2 

1031/2 

102 

102% 

109 

110 

98 

101 

923/4 

95 

1001/2 

1011/2 

*98i/4 

101 

1011/2 

— 

*90 

103 

1033/« 

98 

951/2 

96% 



*98 



105 

102 



90 



951/4 



1121/4 

_. 

109 

~ 

*4%%  basis 

1 

*100 



*74 

*109i/2 



90 



*109i/8 



114 



106 

~ 

102 

— 

*76 

•82 

116 



116 



85 

94 

991/2 

100 

36 



25 

32 

97 

100 



98 

98 

100 

IO8I/4 



109 

110 

93 

97 

High  Low  Bid    Asked 
Pittsb.  Term.  Wareh.  &  Trans.  1st  Ref.  5s, 

1936    -  -            991/4  1011/2 

Pittsb.  Trac.  1st  5s,  1927 —  —  103      103 

Pitts.,  Va.  &  Charleston  Ry.  1st  4s,  1943 __  —            9514     __ 

Pittsburgh  &  West.  1st  4s,  1917 —  —            971/3     — 

Pittsb.-Westmoreland  Coal  1st  5s,  1947 —  __            84        86 

Pittsb.-Westmoreland  Coal  5s,  1925 __  __            94        96 

Pitts.,  Wheel.  &  Lake  E.  Coal  4s,  1931 __  __            34        45 

Pitts.,  Youngs.  &  Asht.  4s,  Ser.  A.,  1948 __  __            __        99% 

Pitts.,  Ygston  &  Ash.  1st  Con.  5s,  1927 __  —  1061/2  IO81/2 

Plainfield  Union  Water  1st  5s,  1931 *101  *101 

Piatt  Iron  Works  5s,  1944 „  —            __      *65 

Plattsb.  Gas  &  El.  1st  5s,  1939 __  __            —        96 

Pleasant  Valley  Coal  5s,  1928 —  —            88        95 

Pneumatic  Scale  Corp.  1st  7s,  1917 —  —  *97 

Pocahontas  Coal  &  Coke— N.  W.  jt.  4s,  1941_  __  __            891/2    901/2 

Pocahontas  Collieries  1st  5s,  1937 —  —            —      *98 

Pocahontas  Cons.  Coll.  5s,  1957 —  —            87iA     88 

Pomona  Cons.   Water  bonds __  __            99 

Pontiac  Light  &  Water  5s,  1927 __  __  *90 

Pontiac  Realty  5s,  1922 __  __            —        87 

Pope  Mfg.  6%  Notes,  1914 „  „            —     *100 

Port  Huron  Ltg.  &  Pr.  5s,  1921 —  —  *101 

Portland  &  Cape  Eliz.  5s,  1915 __  __            __      100     , 

Portland   (Me.)   Elec.  5s,  1926 __  —            99      101 

Portland   (Me.)   Gas  Light  1st  4s,  1936- __  __            „     *100 

Portland  (Me.)  Lighting  &  Pr.  1st  41/2S,  1921  __  —            —       *99i/2 

Portd.  (Ore.)  Gas  &  Coke  1st  &  Ref.  5s,  1940  __  __  101       103 

Portland   (Ore.)   Gas  1st  5s,  1951 __  __  103 

Portland  (Ore.)  Gen.  Elec.  1st  5s,  1935 „  __            __     *101i/o 

Portland,   Nehalem   &    Seacoast   Ry.    1st   5s, 

1942 *90  *90 

Portland  &  Ogdens,  1st  41/2S,  1928 __  __  100      101 

Portland  R.  R.  1st  41/3S,  1913 __  __  100 

Portland  R.  R.  1st  Cons.  31/2S,  1951 __  __            75        80 

Portland  Ry.  1st  &  Ref.  5s,  1930 __  „  lOliA  IO21/2 

Portland  Ry.  Lt.  &  Pr.  5%  Notes,  1914 __  __            981/2    991/3 

Portland  Ry.,  L.  &  P.  1st  &  Ref.  A  5s,  1942-_  __  __            __        96 

Portland  &  Rumford  F.  1st  4s,  1926 __  __            94        96 

Deb.  4s,  1927 __  __            93 

Portland  Terminal  1st  4s,  1961 __  __            91        91% 

Portland  Water  4s,  1927 __  __            971/2     98 

Porto  Rico  Brew.  1st  Serial  6s *100  *100 

Porto  Rico  Rys.  1st  5s,  1936 __  __            __        89% 

Porto  Rico  Rys.  5s,  1962 __  __  '91 

Porto  Rico  Telephone  1st  7s,  1937 __  __            __     *100 

Port  Reading  R.  R.  1st  5s,  1941 __  __  *106 

Portsmouth,  Berkley  &  Suffolk  Water  5s,  1944  __  __            __     *100 

Portsmouth  Gas  1st  Ref.  6s,  1931 __  ._            __       *99i/a 

Portsm.,  Gt.  Falls  &  Conway  41/2S,  1937 __  „            98      100 

Portsmouth  St.  Ry.  &  Lt.  58,  1916 __  __  *98i/2     — 

Postal-Teleg.-Cable  1st  58,  1928 'lOO  'lOO 

Potomac  El.  Pow.  1st  5s,  1929 __  __  104%  10514 

Potomac  El.  Pow.  Cons.  5s,  1936 __  __  100%  102 

Potomac  Valley  1st  58,  1941 1_  __  105 

Potts.  Run  Land  1st  5s,  1953 «_  __            __      *80     . 

Powell  River  Co.,  Ltd.,  1st  6s,  1915-27 *100  *100 

Prescott  Gas  &  EI.  1st  6s,  1940 >_  __            85        89 

Price  Bros.  &  Co.,  Ltd.  1st  58,  1940 __  __            __        86 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1132 


High  Low  Bid    Asked 

Princeton  &  Northwestern  SVgS,  1926 —  __  *90 

Princeton  Lt.,  Ht.  &  P.  1st  &  Ref.  5s,  1939—  __  —  —        98 

Producers  Oil  Deb.  6s,  1913 —  —  *96     *102 

Prod.  Transportation  5s,  1921 _ —  —  92%     __ 

Providence  Securities  Deb.  4s,  1957 —  —  —        84 

Providence  Terminal  1st  4s,  1956 —  —  95 

Prov.  &  Wore.  4s,  1947 —  —  96        971/3 

Provident  Loan  Soc.  of  N.  Y.  41/2S,  1921 —  —  95        97 

Provincial  Lt.,  Ht.  &  P.  1st  5s,  1946 —  —  103       1031/2 

Pub.  Serv.  Co.  of  Nor.  111.  1st  &  Ref.  5s,  1956  —  —  96%     9714 

Public  Serv.  Co.  (St.  Cloud,  Minn.)  5s,  1911-30  —  —  5.40%  basis 

Pub.  Serv.  Corp.  of  N.  J.  Perp.  6s,  Ctfs —  —  106       107 

Pub.  Serv.  Corp.  of  N.  J.  Gen.  5s,  1959 __  —  9II/2     92 

Public  Utilities  Corp.  6%  Notes,  1914-16 __  __  —     *101 

Pueblo  &  Subur.  Tr.  &  L'tg.  1st  5s,  1922 __  —  921/2     — 

Pueblo  Trac.  &  Ltg.  1st  5s,  1921 —  —  971/2  100 

Puget  Sd.  Elec.  Ry.  Cons.  5s,  1932 __  —  85        92 

Puget  Sd.  Mills  &  Timber  6s,  1926 *100     *100 

Puget  Sd.  Power  1st  5s,  1933 —  —  99       IOII/3 

Puget  Sd.  Trac,  Lt.  &  Pr.  5s,  1914 —  —  991/3  100 

Quannah,  Acme  &  Pac.  1st  6s,  1939 __  __  —     *101 

Quapaw  Gas  1st  6s,  1912-21 —  —  *85 

Quebec,   Jacques,   Cartier   Elec.    1st   Ref.    5s, 

1931 —  —  —       *87 

Quebec  Ry.,  Lt.,  Ht.  &  P.  Cons.  5s,  1939 __  __  571/3     58 

Quebec  Ry.,  Lt.,  Ht.  &  P.  5s,  1942 __  __  56        57 

Queensboro  Corp.   (N.  Y.)   1st  6s *100     *100 

Queensboro  Gas  &  El.  1st  5s,  1952 —  —  97      100 

Quincy  Gas  &  Elec.  5s,  1929 —  __  93 

Quincy  Gas,  Elec.  &  Ht.  1st  Cons.  5s,  1935___  __  —  851/2    90 

Racine  Water  5s,  1931 —  —  96        971/3 

Rail  &  River  Coal  1st  5s,  1938 __  __  *90%     __ 

Railroad  Secur.  1st  4s,  1952 —  —  *82      *85 

Railway  &  Lt.  Secur.  2nd  5s,  1939 —  —  —     *100 

Railway  &  Lt.  Secur.  4th  5s,  1932 __  —  *5%  basis 

Railway  Steel  Spr.  5s,  1921  (Latrobe  PI.) —  —  —        98i/8 

Railway  Steel  Spring  1st  5s,  1931 __  „  94        97 

Raleigh  &  Augusta  1st  6s,  1926 __  —  —       II31/2 

Raleigh  &  Cape  F.  1st  5s,  1943 —  —  98      103 

Raleigh  &  Charleston  R.  R.  1st  4s,  1956 —  __  —      *85 

Raleigh  &  Charleston  R.  R.  Cons.  4s,  1956 —  —  —       *72i/3 

Raleigh  &  Gaston  Ist  5s,  1947 —  —  IO71/3     — 

Raleigh  &  Southp.  Con.  5s,  1965 __  —  97      102 

Raleigh  &  S.  W.  1st  4s,  1936 __  __  80 

Rapid  City  Ry.  1st  Cons.  5s,  1916 __  —  90 

Rapid  Ry.  1st  5s,  1915 —  —  —     *100 

Rapid  Transit  St.  Ry.  1st  5s,  1921 —  __  103 

Raritan  River  1st  5s,  1939 __  —  108      II21/3 

Rav.,  Spenc.  &  Glen.  1st  6s,  1920 —  —  105 

Ray  Cons.  Copper  6s,  1921 IIII/2  IIII/3 

Reading  Belt  R.  R.  1st  4s,  1950 —  —  *96i/2     — 

Reading  Co, — 

Gen.  4s,  1997 96I/2     96I/3 

Jer.  Cent.  4s,  1951 —  —  —    96I/2 

Ext.  4s,  1937 __  _-  —   *99i/2 

Phil.  &  Read.  Coal  &  Ir.  4s,  1997 —  —  —       *97% 

Reading  Traction  1st  6s,  1933 __  __  112      117 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1133 


High  Low  Bid    Asked 

Reading  &  Womelsdorf  Elec.  Ry.  1st  5s,  1925  —  ._  100      102 

Real  Estate  Title  Insur.  &  Trust  4s,  1918 ^931/4  *93y4 

Red  River,  A.  &  B.  B.  Dist.    (La.)   "Ser.  B" 

6s,   1950 *107 

Red  River,  A.  &  B.  B.  Dist.   (La.)   "Ser.  C" 

5s,   1953 *109 

Red  River  Power  1st  5s,  1915 —  —            —       *93 

Reeves  Timber  Ist  5s,  1923 *100    *100 

Reno  Pw.,  Lt.  &  Wtr.  6s,  1944 —  —            95 

Rensselaer  &  Saratoga  1st  7s,  1921 —  —  117 

Repub.  Iron  &  Steel  5s,  1934 —  —  10278     — 

Repub.  Iron  &  Steel  5s,  1940 911/2     911/2 

Republic  Ry.  &  Lt.  5s,  1916 —  —            96        971/3 

Republican  Valley  1st  6s,  1919 __  __  102 

Retsof  Mining  Ist  5s,  1925 —  __            56        60 

Rhode  Island  Suburban  1st  4s,  1950 —  —            85        87 

Rich.  &  Alleghany  1st  4s,  1989 __  —            91%     94 

Rich.  &  Alleghany  2nd  4s,  1989 —  —  *88      *89 

Richmond  &  Danville  6s,  1915 —  —            —      103 

Richmond  &  Danville  5s,  1927 —  —            —       103 

Rich.  Fredkbg.  &  Potomac  41/2S,  1940 __  —  IO31/2     — 

Richmond,  Light  &  R.  R.  4s,  1952_ —  —  *65       "70 

Richmond  &  Mecklinburg  1st  4s,  1948 __  —            72 

Richmond  &  Peters.  6s,  1915 —  —  106 

Cons.  7s,  1915 —  —  109 

Cons.  41/2S,  1940 —  —  101 

Richmond- Washington  Co.  4s,  1943 „  ._            90        97% 

Riggs  Realty   5s,   1923-40 —  —  IO21/2  103 

Riggs  Realty  5s,  1913-23—^ —  —  101      103 

Rio  de  Jan.  Tram.,  Lt.  &  Pr.  1st  5s,  1935 „  —            98 

Rio  Grande  June.  1st  5s,  1939 ._  __            83%    841/3 

Rio  Grande  Southern  1st  (gtd.)  4s,  1940 __  __            —        771/2 

Rio  Grande  Southern  1st  4s,  1940 __  __  *40      *50 

Rio  Grande  Western  1st  4s,  1939 841/3     841/3 

Rio  Grande  Western  Col.  A  4s,  1969 __  „            —        80 

Riordon  Pulp  &  Paper  Ist  6s,  1942 *100    'lOO            __      '  __ 

Ritz-Carlton  Hotel  (Mont.)  1st  5s,  1942 —  —            —       *95 

River  Coal  6s, *116i/4  *115% 

Riverside  Home  Tel.  &  Tel.  bonds —  —            50 

Riverside  Traction  1st  5s,  1960 __  —            —      *97i/8 

Roanoke  Gas  Lt.  1st  5s,  1927 —  —            —        961/2 

Roanoke  Ry.  &  Elec.  1st  5s,  1949 __  __            95 

Roanoke  Ry.  &  Elec.  1st  Cons.  5s,  1953 __  -_            —        98 

Roanoke  Trac.  &  Light  1st  &  Coll.  5s,  1958—  __  __            921/2     95 

Roch.  &  Pitts.  Coal  &  Iron  1st  41/2S,  1932 —  —            93%     __ 

Roch.  &  Pitts.  Coal  &  Tr.  5s,  1946 _-  —  100 

Roch.  &  Pitts.  1st  6s,  1921 __  —  110%     — 

Roch  &  Pitts.  Cons.  63,  1922 —  —  112 

Roch.  Elec,  Lt.,  Heat  &  P.  1st  Ref.  6s,  1943—  __  —            —       100 

Roch.  Gas  &  Elec.  2nd  4i/oS,  1920 —  —            96i/a     — 

Rochester  Ry.  Cons.  5s,  1930 —  —  102 

Rochester  Ry.  2nd  5s,  1933 —  —  102      104 

Roch.  Ry.  &  Light  Cons.  5s,  1954 __  __  100%     __ 

Roch.,  Syracuse  &  Eastern  Ist  5s,  1945 __  —            83%     841/3 

Rochester  Telephone  1st  5s,  1920 -_  —  95       100 

Rochester  Telephone  Gen.  5s,  1933 _-  —            75        90 

Rock  I.  &  Peoria  6s,  1925 —  —  101 

Rock  Id.,  Ark.  &  Louis'a.  r.st  41/28,  1934 __  —            —        87% 

Rock  Id.-Frisco  Term.  Ist  6s,  1927 —  —            99      100 

*Quot&tloD  nearest  March  1,  1913.    No  quotation  on  that  date. 

1134 


High  Low  Bid    Asked 

Rock  Island  Imp't.  Co.  41/28,  1915 __  _-  —      *99 

Rock  Island    Southern  1st  5s,  1947 —  —  —        95 

Rockford  &  Freeport  Elec.  Ry.  1st  5s,  1923_-  —  —  92        96 

Rockford  &  Inter-Urban  Ry.  1st  5s,  1923 —  —  93        96 

Rockford,  Beloit  &  Janesv.  1st  5s,  1930 __  _-  92        96 

Rockford  Elec.  1st  &  Ref.  5s,  1939 -_  —  961/2     98 

Rockford  Home  Telephone  1st  6s,  1922 —  —  *95 

Rockland  Light  &  P.  1st  53,  1938 —  —  —       100 

Rockland  Rockport  Lime  5s,  1920 __  —  51/2%  basis 

Rockville  Gas  &  Elec.  5s,  1936 —  —  5%  basis 

Rogers-Brown  Iron  1st  &  Ref.  5s,  1914-40 —  —  90        96 

Rogue  River  Water  5s,  1926 —  —  —      *88 

Roland  Park  Water  1st  5s,  1937 —  —  *97      *99 

RoUand  Paper  1st  6s,  1937 —  —  —      100 

Rome  Gas,  El.,  Lt.  &  P.  lat  5s,  1931 —  —  90 

Rome  Ry.  &  Lt.  1st  5s,  1937 —  —  —  90 

Rome,  Watertn.  &  Ogden.  31/2S,  1922 __  —  90 

Rome,  Watertn.  &  Ogden.  Cons.  5s,  1922 __  __  IO61/2  .  — 

Rome,  Watertn.  &  Ogden.  Term.  5s,  1918 —  —  ^Vi%  basis 

Rumford  Falls  Pow.  1st  4s,  1945 __  —  —        921/, 

Rumford  Falls  Pow.  Gen.  41/2S,  1929 —  —  —        99 

Rumley  Co.  6%  Notes  1915 —  —  —      100 

Rutland  Canadian  4s,  1949 —  —  85        87 

Rutland  R.  R.— 

1st  Cons.  41/28,  1941 —  —  92l^     97% 

Equip.  41/28,  1913-27 —  —  6-51/2%  basis 

Car.  Tr.  41/2S,  1917 —  —  5-6%  basis 

Rutland  Ry.,  Lt.  &  P.  1st  5s,  1946 —  —  94        97 

Sacramento  &  Woodland  R.  R.  5s,  1941 —  —  951/2     — 

Sacramento  Elec,  Gas  &  Ry.  5s,  1927 —  —  102%  103 

Sacramento  Val.  Irrig.  1st  6s,  1920 —  —  *100 

Sacramento  Valley  P'r.  6s,  1941 __  —  —     *100 

Safety  Insulated  Wire  &  Cable  6s,  1942 —  —  *78 

Sagman-Bay  City  Ry.  1st  &  Ref.  5s,  1935 ._  —  86        91 

Sagman  City  Gas   5s,   1916 —  —  97        99 

Saginaw,  Tusc.  &  Hur.  1st  4s,  1931 —  —  —        90 

Saginaw  Valley  Trac.  5s,  1920 >-  —  98      100 

St.  Charles  Street  R.  R.  4s,  1952 —  —  90 

St.  Clair  County  Gas  &  Elec.  1st  Cons.  5s,  1959  __  __  90        95 

St.  Clair  Furnace  1st  5s,  1913-39 —  __  4.90-70%  basis 

St.  Clair,  Mad.  St.  L.  Belt  (A.  B.)  1st  4s,  1951  _-  —  —        781/2 

St.  Clair  Term.  1st  s5,  1932 __  __  99       102 

St.  Clair  Steel  1st  5s,  1912-25 —  —  4.60%  basis 

St.  Cloud  Water  Power  68,  1916-39___ —  „  —     *100 

St.  Croix  Paper  5s,  1913-27 —  —  51/4%  basis 

St.  Croix  Power  1st  5s,  1929 —  —  *94i/2     __ 

St.  Francois  Co.  Ry.  5s,  1914 —  —  *100 

St    Joe  Bay  Co.  1st  6s,  1918 —  —  —       *90 

St.  John  Ry.  Cons.  5s,  1927 —  —  *5%  basis 

St.  Johnsb.  &  Lake  Champ.  1st  5s,  1944 ._  —  102 

St.  Joseph  Gas  1st  5s,  1937 —  —  92        96 

St.  Jos.  &  Grd.  Isld.  4s,  1947 —  —  —        87 

St.  Jos.  Ry.,  Lt.,  Ht.  &  P.  1st  5s,  1937 —  —  98I/2     99% 

St.  Joseph  Stock  Yds.  41/2S,  1930 —  —  87 

St.  Joseph  Water  58,  1941 —  —  —  5.20%  basis 

St.  Law.  &  Adir.  1st  58,  1996 __  —  106      110% 

2nd    6s,    1996 —  —  119 

St.  Lawrence  Pulp  &  Tbr.  6s,  1916-33 __  —  *100 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1135 


High  Low  Bid    Asked 

St.  Lawrence  Segar  Refin.  6s,  1933 __  «_  __    *102 

St.  Louis  &  Cairo  1st  4s,  1931 __  __  *91       *923^ 

St.  Louis  &  Meramec  6s,  1916 _..  __  102      103 

St.  Louis  &  San  Francisco  Ry. — 

(Miss.  &  West.)  6s,  1919 __  __  __    ♦1053^ 

6s,    1920 __  __  101 

Eq.  "I"  5s,  1917 __  __  5l^%  5%  basis 

Col.  Trust  5s,  1987 __  __  98      100 

6%   Notes,   1913 __  ,  __  995/8  100 

6%   Notes,    1914 __  __  99%     >_ 

N.  O.  T.  &  M.  5s,  1940 __  __  92        95 

Gen.  6s,  1931 >_  __  113%  lUi/g 

Gen.    5s,    1931 __  __  1021/2  1043^ 

Gen.  4s,  1996 ._  __  __        87 

15-20  yr.  5s,  1927 __  __     793/8  79% 

Southn.  Div.  5s,  1947 —  __     991/2  __ 

Ref.  4s,  1951 76  76 

Eq.  "G"  41/2S,  1916 •993^     __ 

Eq.  "L"  5s,  1908-17 __  __  __     'lOOi/g 

Eq.  «S"  5s,  1912-23 __  __  __       *99 

St.  Louis  &  Southw.  1st  Term  5s,  1952 __  __  89        901/2 

St.  Louis  &  Suburban  1st  5s,  1921— __  __  101        102 

St.  Louis  &  Suburban  Gen.  5s,  1923 __  >_  85        85% 

St.  L.  Brew.  Ass'n.  6s,  1914 —  __  998^  lOOyg 

St.  Louis  Bridge  1st  7s,  1929 ._  >_  >_       129 

St.  Louis  County  Gas  1st  5s,  1951 __  __  __        99 

St.  Louis  Iron  Mt.  &  Sou.  Equip.  5s,  1921 __  __  991/2  100% 

St.  L.  Iron  Mt.  &  Sou.  Equip.  "I"  5s,  1914-15  __  __  __    *100% 

St.  L.  Iron  Mt.  &  Sou.  Genl.  5s,  1931 104%  104% 

St.  L.  Mt.  &  Sou.  Unif.  &  Ref.  4s,  1929 „  „  8I1/2     82 

St.  L.  Iron  Mt.  &  Sou.  Riv.  &  Gulf  Div.  1st 

4s,    1933 __  __  83         83% 

St.  L.  Merch.  Bridge  Term.- Co.  5s,  1930 __  __  104%     __ 

St.  L.  Merch.  Bridge  Co.  6s,  1929 ._  __  110      111% 

St.  Louis  Nat.  Stockyards  1st  4s,  1930 __  __  *84 

St.  Louis   Portland  Cement __  __  99%     99 

St.  Louis  Ry.   (B'way)   41/2S,  1920 __  __  96%     97% 

St.  Louis  Real  Est.  1st  5s,  1938 __  __  101 

St.  L.  ,Rky.  Mtn.  &  Pac.  5s,  1955 >_  __  76%     77% 

St.  Louis,  Southern  1st  4s,  1931 __  __  __        95% 

St.  Louis  Southw'n,  1st  4s  ctfs.,  1989 __  __  __        88% 

2nd  4s  Inc.  Ctfs.,  1989 __  __  78        79 

Cons.    4s,    1932 __  >_  79        80% 

St.  Louis,  Spring.  &  Peoria  Ist  Ref.  5s,  1939—  —  —  —       100 

St.  Louig  Sugar  Refineries  6s,  1932 —  —  578%  basis 

St.  L.  Transit  5s,  1924 __  __  70        76 

St.  Louis  Union  Depot  Cons.  5s,  1944 __  —  __      102% 

St.  L.,  Wichita  &  West.  6s,  1919 __  __  100 

St.  Maurice  Val.  Cotton  Mills  1st  6s,  1952 —  —  —      *96 

St.  Paul  &  Duluth  1st  5s,  1931 __  __  109 

St.  Paul  &  Duluth  2nd  5s,  1917 —  —  101 

St.  Paul  &  Duluth  1st  Con.  4s,  1968 —  __  —        93 

St.  Paul  &  Kan.  City  Short  Line  1st  4%s,  1941  __  —  —        89 

St.  Paul  &  North.  Pac.  Genl.  6s,  1923 —  —  113 

St.  P.  &  Nor.  Pac.  (Reg.)  Genl.  6s,  1923 —  —  11134     __ 

St.  Paul  &  Sioux  City  1st  6s,  1919 —  —  108s/8  110 

St.  Paul  City  Ry.  5s,  1937 —  —  104       106 

St.  Paul  City  Ry.  1st  6s,  1932 >_  __  111 

St.  Paul  City  Ry.  1st  Cons.  6s,  1934 —  __  112 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1136 


St.  Paul  City  Ry.  Cable  5s,  1937 

St.  Paul,  Eastern  Grd.  Trk.  Ry.  41/2S,  1947 — 

St.  Paul  Gas  Light  Con.  ext.  6s,  1918 

St.  Paul  Gas  Light  Con.  1st  6s,  1915 

St.  Paul  Gas  Light  Gen.  5s,  1944 

St.  Paul,  Minn.  &  Manitoba  4y2S,  1933 

St.  P.,  M.  &  M.  Cons.  4s,  1933 

St.  P.,  M.  &  M.  1st  Cons.  6s,  1933 

St.  P.,  M.  &  M.  Mont.  Ext.  48,  1937 

St.  P.,  M.  &  M.  Pac.  Ext.  4s,  1940 

St.  Paul  Union  Depot  Cons.  5s,  1944 

St.  Paul  Union  Stk.  Yds.  5s,  1916 

Salisbury  &  Spencer  1st  5s,  1945 

Salmon  Riv.  Power  5s,  1952 

Salt  Lake  &  Ogdensbg.  5s,  1934 

Salt  L.  City  Un.  Dep.  &  R.  R.  1st  5s,  1938 

San  Ant.  &  Aransas  Pass.  1st  4s,  1943 

San  Ant.  Water  Supply  1st  &  ref.  5s,  1933 

San  Cristobal  Sugar  7s,  1932 

San  Diego  Cons.  G.  &  E.  5s,  1939 

S.  F.  &  Nor.  Pac.  1st  5s,  1919 

San  Fran.  &  San  Joa.  Valley  1st  5s,  1940 

S.  F.  Elec.  Rys.  5s,  1932 

San  Fran.  Gas  &  Elec.  41/2S,  1933 

S.  F.   Napa  &  Calistoga  Ry.  6s,  1936 

S.  F.,  Oak.  &  San  Jose  Ry.  5s,  1933 

S.  F.,  Oak.  &  San  Jose  Ry.  2nd  Mtg.  5s,  1933_- 

S.  F.,  Oak.  &  San  Jose  Con.  Ry.  5s,  1938 

San  Joaquin  Lt.  &  P.  1st  &  Ref.  6s,  1950 

San  Joaquin  Lt.  &  P.  1st  &  Ref.  53,  1950 

San  Joaquin  Lt.  &  P.  1st  5s,  1945 

S.  J.  &  S.  Clara.  R.  R.  41/33,  1946 

Sanford  &  St.  Petersburg  4s,  1924 

Santa  Barbara  G.  &  E.  Ist  6s,  1941 

Santa  Fe,  Prescott  &  Phoenix  5s,  1942 

Santiago  Elec.  Lt.  &  Trac.  1st  6s,  1959 

San  Paulo  Tram.,  L.  &  Pr.  1st  5s,  1929 

Sault  Ste  Marie  &  So.  W.  5s,  1915 

Sault  Ste  Marie  Edge.  1st  5s,  1937 

Savannah,  Fla.  &  West.  5s,  1934 

Savannah,  Fla.  &  West.  6s,  1934 

Savannah  &  Statesboro  1st  5s,  1953 . 

Savannah  Elec.  1st  Cons.  5s,  1952 

Savannah  Gas  1st  5s^  1923 

Sawyer,  Massey  Co.  1st  6s,  1927 

Sayre  Electric  1st  6s,   1947 

Schenectady  &  Duanes.  1st  6s,  1924 

Schenectady  Ry.  1st  41/38,  1941 

Schenectady  Ry.  Cons.  41/38,  1953 

Schuylkill  River,  East  Eide  4s,  1925 

Schuylkill  Trac.  1st  5s,  1943 

Schwarz.  &  Sulzb.  Co.  Deb.  6s,  1916 

Scioto  Valley  &  N.  E.  1st  4s,  1989 

Scioto  Valley  Traction  5s,  1923 

Scranton  &  Carb.  Trac.  1st  68,  1923 

Scranton  &  Pittston  6s,  1923 

Scranton  Elec.  1st  &  Ref.  5s,  1937 

Scranton  Gas  &  Water  Deb.  58,  1935 

Scranton  Gas  &  Water  1st  5s,  1923 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1137 


High    Low 


Bid 

Asked 

104 

106 

4.45%  basis 

1051/3 



1031/4 



971/3 

981/3 

102 

104 

971/2 

981/4 

1221/8 

95% 

97 

91 



*102i/3 



80 

82 

*5i/2%  basis 

*91 





98 

94 

95 

83 

843/8 

88 

91 

*95 

921/3 

96 

95 



108 

111% 



90 

92 

931/3 

102 

1041/8 



94% 

951/4 

85 



1011/3  1021/3 

93 

94 

1001/3 





90 

*90 



101 



IO6I/3 



.  981/4 

981/3 



100 

*100i/3 



971/3 

101 

1061/8 

1121/3 

118% 

1231/4 

90 

74 

76 

103 

105 

1 

101 

*93i/ 

5  95 

1131/3 

114% 

103 

103% 

105 

__ 

99% 

87 

9878 

991/4 

*93 

99 

1001/3 

105 

1071/3 

105 

1071/3 

1011/3 

1031/, 

102 

1031/3 

103 

104 

High  Low        Bid    Asked 

Scranton  Gas  &  Water  Deb.  5s,  1939 _  _-  1021/2  103 

Scranton  Ry.  1st  5s,  1932 __  —  991/2  101 

Scranton  Ry.  Gen.  5s,  1920 »_  —  961/2    98 

Scranton  Ry.  5s,  1935 __  —  93        95 

Scranton  Traction  1st  6s,  1932 -_  >_  110      112 

Scullin,  Gallagher  Ir.  &  Steel  58,  1913-25 __  __  __       100 

Sea  Beach  Ry.  1st  48,  1916 —  —  92        95 

Seaboard  &  Roanoke  1st  5s,  1926 —  -  —  —      106% 

Seaboard  &  Roanoke  Deb.  6s,  1916 >_  __  102%  105 

Seaboard  Air  Line  Ry. — 

4s,   1950 _-  —  85        861/8 

"Stpd."  1950 —  —  __        85 

Adj.  5s,  1949 711/a  7IV2 

Ref.  48,  1959 __  _.  77        771/3 

«C"  41/2S,  1913 -_  __     5-4%%  basis 

*T)"  5s,  1914 —  >_  51/8-47/8%  basis 

«E"  5s,  1914 -_  __  51/8-47/8%  basis 

«F"  58,  1915 —  —     5-4%%  basis 

«G"  5s,  1916 —  ._  51/8-4%%  basis 

**H"  5s,  1916 _-  __  51/8-4%%  basis 

*T'  5s,  1917 —  -_  51/8-4%%  basis 

"J"  5s,   1917 —  __  51/8-47/8%  basis 

**K"  5s,  1917 —  __  51/8-4%%  basis 

**N"  41/28,  1921 -_  __  51/8-47/8%  basis 

41/2S,  1923 >-  __  51/8-47/8%  basis 

5%  Notes,  1916 —  —  98I/2    98% 

Equip.  41/2S,  1922 —  —     6-4%%  basis 

Equip.  5s,  1919 __  __      5-4%%  basis 

Seacoast  R.  R.  of  N.  J.  5s,  1948 —  __  105      108 

Seattle  Electric  1st  5s,  1930 —  —  103 

Seattle  Electric  Cons.  &  Ref.  5s,  1929 >_  -_  98      100 

Seattle,  Everett  Trac.  1st  5s,  1939 __  —  97        99 

Seattle  Lighting  1st  5s,  1944 —  __  102 

Seattle  Lighting  Ref.  58,  1949 __  —  95        96i/a 

Seattle  Lighting  deb.  6s,  1920 __  —  —    '100 

Seattle  Ry.  58,  1921 —  —  100      102 

Second  Ave.  R.  R.  (N.  Y.)  5s,  1948 __  „  25        36 

Second  Ave.  R.  R.  (N.  Y.)  Rec.  ctfs.  5s,  1913  __  __  991/2  100 

Second  Ave.  Trac.  5s,  1934 —  —  100%  lOlVa 

Second  Ave.  Trac.  5s,  1933 __  -_  103      103% 

Securities  Co.,  N.  Y.  Cns.  4s >_  __  59        61 

Shamokin,  Sun.  &  LewVg.  2nd  6s,  1925 __  —  110 

Shamon  Arizona  Ry.  1st  68,  1919 —  __  93        95 

Sharon  &  New  Castle  1st  5s,  1931 —  —  97%    — 

Shawinigan  Wtr.  Pr.  1st  Cons.  5s,  1934 __  __  —      103% 

Sheboyan  Ry.  &  Elec.  Ref.  &  Imp.  5s,  1926 __  —  —        99 

Sheldon  Axle  Ist  5s,  1930 —  __  94        97% 

Sheldon  Axle  1st  6s,  1921 —  —  99      101 

Sherbrooke  Ry.  &  Pow.  Cons.  1st  5s,  1940 __        —  —        95 

Sher.,  Shreveport  &  So.  1st  58,  1943 —  —  —      102 

Sherwin-Williams  6s,  1949 —  —  — "   •100 

Shreveport  Bridge  &  Term.  5s,  1955 —  —  93        96 

Shreveport  Gas  &  Elec.  58,  1922 __        —  '95 

Sibley  Mfg.  1st  5s,  1922 __  —  90        95 

Sierra  &  S.  F.  Pow.  1st  5a,  1949 ^-  —  93        94% 

Sierra  &  S.  F.  Pow.  2d  "A"  68,  1949 __  —  84        86 

Sierra  &  S.  F.  Pow.  2d  "B"  5s,  1949 —  —  45        50 

Sierra  Ry.  of  Cal.  6s,  1937 —  —  100 

Silver  Spgs.,  Ocala  &  Gulf  4s,  1918 __  —  97%  100 

'Quotation  nearest  March  1,  1913.    No  Quotation  ou  that  date. 

1138 


High  Low  Bid    Asked 

Simpson  Realty  6s,  1932 —  —  97      100 

Simpson  Secnr.  63,  1929 —     '  —  95 

Sioux  City  &  Pac.  31/28,  1936 -  —  85%     __ 

Sioux  City  Service  1st  Ref.  5s,  1928 —  —  96        99 

Sioux  City  Stk.  Yds.  1st  5s,  1930 —  —  —       100 

Sioux  City  Trac.  1st  5s,  1919 —  _-  —      100 

Sioux  Falls  Lt.  &  Pow.  Ist  6s,  1914-26 __  __  *90 

Slate  Belt  &  Elee.  Ry.  2nd  4s,  1942 —  —  —      *55 

Sloss  Iron  &  Steel  1st  6s,  1920 . —  —  104%  lOSVa 

Slo^s  Iron  &  Steel  Cons.  41/28,  1918 —  __  94        95 

Smith  (C.  A.)  Timber  1st  68,  1927 —  —  6%  basis 

Sortus  Bay  &  Southern  1st  5s,  1924 __  —  95 

Somerset  Coal  5s,  1913-18 —  —  —    *100iA 

Somerset  Hotel  Tr.  4s,  1921 —  —  —      100 

Somerset  Lighting  1st  5s,  1939 —  —  —    *101 

Somerset  Ry.  1st  4s,  1955—1 _ —  —  —        95 

Somerset  Union  &  Middlesex  Ltg.  4s,  1943__  „  —  79 

South  &  North  Alabama  Cons.  5s,  1936 —  —  -*      IIO14 

South  Bend  &  Mishawaka  Gas  Cons.  5s,  1926_  _-  „  9414    98 

So.  Bound  &  So.  Mich.  5s,  1927 —  —  —        97 

South  Bend  Fuel  &  Gas  6s,  1920 „  —  —      *99% 

South  Bound  1st  5s,  1941 -_  __  107      IO814 

So.  Caro.  &  Ga.  1st  5s,  1919 —  ._  100      1021/4 

South  Caro.  Lt.,  Pr.  &  Ry.  Ist  5s,  1937 —  —  —        92i/a 

So.  Cov.  &  Cin.  cons.  6s,  1932 __  —  115      125 

South  Dakota  Cent.  Ry.  5s,  1927 —  —  —      *97 

South  Ferry  1st  5s,  1919 —  —  971/2     — 

South  Iron  &  Steel  4-5s,  1929 —  —  —        15 

South  Jersey  Gas,  Elec.  &  Trac.  5s,  1953 __  __  99        99% 

South  Pac.  Coast  Ist  4s,  1937 —  —  91 

South  Platte  Canal  &  Res.  5s,  1923 __  —  89l^     90 

South  Shore  &  Boston  5s,  1919 —  —  99      IOI1/3 

South  Shore  Gas  &  El.  Gen.  5s,  1933 „  __  *91i/2     — 

South  "Side  Elevated  Ry.  41/2S,  1924 „  —  92        931/2 

So.  Bell  T.  &  T.  5s,  1941 lOOi/g  lOOi/g 

Southern  Boulevard  5s,  1945 __  __  88        93 

Southern  Cal.  Ed.  Gen.  5s,  1939 „  >-  96        98 

Southern  Cal.  Gas  1st  58,  1950 __  __  —    *101 

Southern  Counties  Gas  1st  6s,  1941 —  —  '  —    •lOO 

Southern  Elec.  5s,  1916 —  ..  IOO1/2  101 

South.  Heat,  Lt.  &  P.  of  Pitts.  5s,  1949 —  —  *98 

South.  Improvement  5s,  1941 *85 

Southern  Ind.  Pow.  1st  6s,  1931 __  __  __      101 

Southern  Indiana  1st  4s,  1951 __  __  76I/2     79 

Southern  Light  &  Trac.  5s,  1949 __  „  93        97 

Southern  N.  E.  Teleph.  1st  5s,  1948 —  —  112 

Southern  Ohio  Trac.  5s,  1920 *93%  *93% 

Southern  Pacific  Co. — 

Ref.  48,  1955 93  93  ._       ,— 

Conv.  4s,  1929 90%  991/3 

Brch.  Ry.  of  Cal.  6s,  1937 —  —  124      126 

R.  R.  of  Cal.  53,  1937 —  —  —      112% 

Cen.  Pac.  4s,  1949 __  —  94%     951/2 

S.  F.  Term.  4s,  1950 __  —  —        881/2 

Southern  Power  1st  5s,  1930 >_  __  99      IOOI/2 

Southern  Railway — 

5%  Notes,  1916 __  —  99%     99% 

Equip.  41/28,  1913 —  —  5.4%%  basis 

*T."  Equip.  41/2S,  1921 —  —  5.4%%  basis 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1139 


High  Low  Bid    Asked 

«N"  Equip.  41/28,  1920 __  __  5.43/4%  basis 

Aiken  Br.  1st  4s,  1998 _.  __  5.4%%  basis 

"K"  Equip.  4s,  1915 __  ._  5.43/4%  basis 

1st  Con.  5s,  1994 105i/g  IO51/2 

Genl.   "A"   48,   1956 —  __  TTS/g     773^ 

Memp.  Div.  1st  5s,  1996 __  __  107      107% 

St.  Louis  Div.  Ist  4s,  1951 __  __  __        S6% 

Cons.  5s,  1944 ^ __  __  *103 

East  Tenn.  Div.  5s,  1938 __  __  *103%     __ 

M.  &  O.  5s,  1938 —  —  *843^     __ 

6s,   1915 —  —  —  1011/2  1031/2 

Southern  Sierra  Pow.  1st  68,  1936 —  __  98      100 

Southern  Timber  1st  6s,  1913-15 —  —  __     *100 

Southern  Traction  1st  &  Coll.  Tr.  5s,  1950—  „  —  86        86I/2 

Southern  Wise.  Pow.  1st  5s,  1938 __  __  __        961/2 

Southwest  Missouri  El.  Ry.  Ref.  5s,  1923 __  __  96      100 

Southwest  Missouri  R.  R.  Gen.  5s,  1931 __  __  91        93 

Southw.  Coal  &  Imp.  1st  6s,  1929 __  __  102 

Southw.  Gas  &  El.  1st  &  Ref.  5s,  1932 —  —  93        931/2 

Span.-Amer.  Iron   6s,  1927 —  —  IOI14  IOII/2 

Spanish  Riv.  Pulp  &  Pap.  Mills  6s,  1931 __  __  9i%     95 

Spartansburg  Un.  &  Columbia  4s,  1995 __  __  *83 

Spokane  &  Inland  Empire  1st  Ref.  5s,  1926—  —  —  97        99 

Spokane  Falls  &  North.  1st  6s,  1939 „  __  107 

Spokane  Intern'l.   1st   5s,   1955 __  __  100      103 

Spokane  Trac.  1st  5s,  1925 __  __  *98i/3     __ 

Spring  Brook  Water  5s,  1926 __  __  102      105 

Spring  Riv.  Pow.  1st  5s,  1930 __  __  92 

Spring  Riv.  Pow.  1st  5s,  1937 __  „  *92 

Spring  Valley  Water  Co.  Genl.  Mtg.  4s,  1923.  __  __  931/2     — 

Springfield  &  Duanesburg  R.  R.  1st  6s.  1924__  __  __  __     *115i/2 

Springfield  Lt.,  Ht.  &  Pr.  1st  58,  1929 __  __  94        97 

Springfield  (111.)  Ry.  &  Lt.  Coll.  Tr.  5s,  1933__  __  __  91        95 

Springfield  (Mo.)  Ry.  &  Lt.  1st  5s,  1926 __  __  94        96 

Springfield  (Mo.)  Water  1st  58,  1936 __  __  *88 

Springfield  (Pa.)  Water  Cons.  58,  1926 __  __  —       •96 

Springfield  (Vt.)  Water  Works  3s,  1930 —  —  *87i4     __ 

Standard  Chain  1st  6s,  1920 __  __  *92 

Standard  Cordage  1st  5s,  1931 __  __  10        I21/2 

Standard  Cordage  Adj.  58,  1931 __  __  12 

Stand.  Gas  &  Elec.  Conv.  6s,  1926 __  __  99      100 

Stand.  Gas  Lt.  1st  5s,  1930 __  —  IO51/4  IO53/4 

Standard  Ideal,  Ltd.  1st  6s,  1941 __  __  __      *95 

Standard  Milling  5s,  1930 __  __  88I/2     89 

Standard  Oilcloth  6%  Notes,  1913-18 100  100 

Standard  Sanitary  Mfg.  Deb.  6s,  1920 „  —  *98 

Standard  Steels  Works  58,  1928 __  __  IO21/2     — 

Stanfields,  Ltd.  Ist  6s,  1931 __  —  *5%%  basis 

Stark  Elec.  Ry.  5s,  1928 *97 

Stark-Tus.   Brew.   68,  1930 75 

State  &  Lake  Bldg.  6s,  1916-22 _.  __  *98 

State  Line  &  Sullivan  41/28,  1929 __  —  98 

Staten  Island  Ry.  1st  41/2S,  1943 __  —  91 

Statlcr  Co.  1st  6s,  1931 __  __  __     *100 

Bteel  Co.  of  Canada  Ist  &  Coll.  6s,  1940 —  —  —       *99i/2 

Steel  Co.  of  Canada  5%  Notes,  1915-17 —  —  *6i/2%  basis 

Steelton  Home  Gas  5s,  1925 —  —  *100    *103 

Steinway  Ry.  1st  6s,  1922 —  —  100      102 

Stephenville,  N.  &  S.  Texas  5s,  1940 —  —  —        971/2 

•Quotation  nearest  March  1,  1913.    No  (iiiotatlon  on  that  date. 

1140 


High  Low        Bid    Asked 

Steub.  &  East  Liv.  R.  &  L.  1st  5s,  1927 —  __  40 

Steubenv.  &  Ind.  1st  5s,  1914 __  __  100 

Steubenv.  &  Wheel.  Trac.  1st  68,  1935 —  —  —       *94y2 

Steubenv.  Trac  &  Lt.  5s,  1926 ^ —  —  „  *88 

Stone,  Ltd.  1st  6s,  1931 —  —  *103 

Strathmore  Paper  1st  5s,  1926 —  —  —     ^lOSi/g 

Strathmore   Paper  ^  1st   5s,   1928 —  —  —     *105% 

Strathmore  Paper  1st  5s,  1930 —  —  —     *106y8 

Strathmore  Paper  1st  5s,  1932 —  —  —     *106y2 

Streator  Tel.  &  Tel.  5s —  —  *87y3     __ 

Streets  Western   Stable-Car  Line   1st  Equip. 

5s,    1913-27 —  —  5.30-5.25%  basis 

Struthers  Furnace  6s,  1912-26 *100  *100 

Studebaker  Corp.  5%  Notes,  1912-22 —  —  5%%  basis 

Sturgis,  Goshen  &  St.  L.  R.  R.  3s,  1989 —  _.  —        73y3 

Suburban  Gas  Co.  1st  5s,  1952 —  —  100      101 

Suburb.  Rap.  Tran.  6s,  1913 —  __  100 

Suffolk  &  Car.  Con.  5s,  1952 —  —  100      105 

Sullivan  &  Slauson  Co.  1st  6s —  —  *101 

Sulzberger  Sons  &  Co.  Deb.  6s,  1916 —  —  98%     99^4 

Summer  Street  Ry.  1st  6s,  1926 -_  —  113       116 

2nd  Series  6s,  1937 —  —  116       119 

Sumter  &  Wat.  Riv.  5s,  1919 __  —  93 

Suubury  &  Lewiston  1st  4s,  1936 __  —  96y3     -_ 

Sunbury,  Hazel.  &  Wilkes-Barre  1st  5s,  1928—  __  __  101 

Suubury,  Hazel.  &  Wilkes-Barre  2nd  6s,  1938  _-  —  —       lisya 

Sunbury  &  Lewiston  1st  4s,  1936 __  —  96y2     — 

Sunday  Creek  Co.  Coll.  5s,  1944 __  __  62        75 

Superior  Short  Line  1st  5s,  1930 __  „  109%     __ 

Superior  Wtr.,  Lt.  &  Pow.  1st  4s,  1931 __  —  81        84 

Superior  Wtr.,  Lt.  &  Pow.  Ref.  5s,  1929 __  —  —        90 

Susq.,  Blooms.  &  Ber.  1st  5s,  1952 —  —  *100 

Swift  &  Co.  1st  5s,  1944 __  „  99%  100 

Symington  (T.  H.)  &  Co.  Conv.  6s,  1920 —  —  —       100 

Syracuse  Gas  5s,  1946 —  —  lOiyg  102% 

Syracuse,  Lake  Shore  &  Northern  1st  5s,  1947  __  —  *96       *97y3 

Syracuse  Lt.  &  Pow.  Coll.  5s,  1954 __  __  82y2     85 

Syracuse  Lighting  1st  5s,  1951 —  —  —       101 

Syracuse  Rap.  Transit  1st  5s,  1946 —  —  101       102y2 

Syracuse  Rap.   Transit  2nd  5s,   1930 __  —  97        99 

Tacoma  Eastern  1st  5s,  1923 __  __  *10iy2     — 

Tacoma  Gas  &  Elec.  5s,  1915 __  __  92        97 

Tacoma  Gas  Lt.  Ref.  5s,  1926 __  __  80        82y2 

Tacoma  Ry.  &  Pow.  1st  5s,  1929 __ .  __  98      100 

Tacoma  Water  Supply  1st  5s,  1925 __  __  __        92 

Tampa  &  Jacksonv.  1st  5s,  1949 __  —  85        95 

Tampa  Elec.  1st  5s,  1933 __  __  99      101 

Tampa  Gas  1st  5s,  1937 —  __  92        96y, 

Tampa  North.  1st  5s,  1936 __  —  81        86 

Tarkio  Valley  7s,  1920 __  __  103y8     — 

Tarrytown  W.  P.  Mam.  5s,  1928 __  —  75        80 

Taunton  &  Brockton  St.  Ry.  1st  5s,  1917 —  —  —     *100 

Taylor  Ave.  Ry.  6s,  1913 —  —  100      lOOy, 

Taylor-Wharton  Ir.  &  Steel  1st  6s,  1942 —  —  *99    *101 

Taylor's  Falls  &  L.  Sup.  6s,  1914 __  „  102 

Telluride  Power  Co.  1st  6Sj  1923 __  __  *98 

Temescal  Water  6s,  1921 __  __  100 

Temple  Iron  1st  &  Coll.  Tr.  4s,  1952 __  —  104y2  105 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1141 


High  Low  Bid  Asked 

Tern.  Coal,  Iron  &  R.  R.  5s,  1951 —  ._  100  lOOy, 

Tern.  Coal.  Iron  &  R.  R.  (Birm.  Div.)  6s,  1917  —  —  101  103% 

Tern.  Coal,  Iron  &  R.  R.  (Tenn.  Div.)  6s,  1917  —    -  -_  101  103% 

Tennessee  Copper  1st  6s,  1913-17 —  —  991/2  101 

Tennessee  Pow.  1st  5s,  1963 —  —  81%  821/3 

Tenth  &  23rd  St.  Ferry  1st  5s,  1919 —  —  55  65 

Term.  R.  A.  Ass'n  of  St.  L.  Cons.  5s,  1944 __  __  —  1091/^ 

Term.  R.  R.  Ass'n  of  St.  L.  Ref.  4s,  1953 __  >_  —  91 

Term.  R.  R.  Ass'n  of  St.  L.  1st  41/2S,  1939 -_  ._  IO214  104 

Term.  Wharf  &  R.  R.  Warehouse  5s,  1928 —  __  *97ya  — 

Terre  Haute  &  Ind.  5s,  1925 —  —  103  106 

Terre  Haute  &  Peoria  1st  5s,  1942 —  —  100 

Terre  Haute  Elec.  5s,  1929 __  —  99  102 

Terre  Haute  Indpls.  &  East  Ref.  5s,  1945 —  —  971/2  98i/, 

Terre  Haute  Trac.  &  Lt.  1st  Cons.  6s,  1944 —  —  —  98  100 

Terre  Haute  Water  Works  41/2S,  1919 —  —  93  97 

Texarkana  Gas  &  Elec.  Ref.  &  Prior  6s,  1941  __  __  'lOl 

Texarkana  Gas  &.  Elec.  1st  5s,  1930 —  —  *94  *97y, 

Tex.  &  New  Orl.  Cons.  5s,  1943 —  —  lOOi/g  101 

Texas  &  N.  0.,  Dallas  Div.  1st  4s,  1930 _-  —  87  91 

Texas  &  Okla.  1st  5s,  1943 —  —  lOli/a  102 

Texas  &  Pacific  Ry.— 

1st  5s,  2000 106l^  1061A 

2nd  5s,  2000 —  —  45 

(Louis.  Div.)  5s,  1931 —  —  *95 

Equip.    «A-A"    5s,    1916 - —  —  *100i/8  — 

Texas  Central  1st  5s,  1923 .  —  —  98  103 

Texas  Co.  deb.  6s,  1931 —  —  991/3  99y8 

Tex.  Pow.  &  Lt.  1st  58,  1937 —  —  96  98 

Texas  Trac.  1st  5s,  1937 —  —  —  96 

Third  Ave.  Ry.  Ist  Gen.  5s,  1937 : —  —  IO61/2  107% 

Third  Ave.  Ref.  4s,  1916 8II/2  8II/2 

Third  Ave.  Ref.   4s,  1960 8II/2  8I1/3 

Thirteenth  &  15th  Sts.  Pass.  Ry.  31/2S,  1934-.  „  „  *86i/2  „ 

Thirty-fourth  St.  Crosstown  1st  5s,  1996 —  —  100 

Thompson-Conn.  Coke  58,  1931 —  —  *80  *85 

Three  Rivers  Gas  Ist  5s,  1936 —  —  *80 

Tidewater  Power  1st  5s,   1949 -_  —  94  98 

Tiffin  Water  Works  5s,  1932 —  —  *100 

Tillamook  Timber  &  Logging  Serial  6s *100    "100 

Tintern  Manor  Water  5s,  1930 —  —  *91 

Titusville  Elec.  Trac.  6s,  1913 —  —  "100 

Toledo  &  Indiana  Trac.  1st  5s,  1931 —  —  96  99 

Toledo  &  Ohio  Central  Ry.— 

Ist  5s,  1935 —  —  10614  107 

Western  Div.  6s,  1935 —  —  IO61/8  — 

Gen.  5s,  1935 —  —  100  IOI1/3 

(St.  Mary's  Div.)   4s,  1951 —  —  •87  ^90 

Car.  Tr.  4s,  1917 —  —  614%  4%% 

Car.  Tr.  «B"  4s,  1920 —  —  51/4%  4%% 

Toledo  &  Western  Ry.  1st  5s,  1926 —  —  68  70 

Toledo,  B.  G.  &  So.  Trac.  5s,  1921 —  —  —  85 

Toledo,  Can.  Sou.  &  Det.  1st  4s,  1956 —  —  93 

Toledo,  Fremont  &  Norwalk  5s,  1920 —  —  97  100 

Toledo  Gas,  El.  &  Ht.  Cons.  5s,  1935 —  —  61 1/2  65 

Toledo  Home  Tel.  5s,  1922 —  —  9I1/2  93 

Toledo,  Peor.  &  West.  P.  L.  31/2S,  1925 —  —  83  85 

1st  4s,  1950 —  —  54  561/2 

Toledo,  Peoria  &  Western  1st  48,  1917 —  ~  89  91 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1142 


High  Low  Bid    Asked 

Toledo,  Port  Clinton  &  Lakeside  5s,  1928 __  __  *35 

Toledo,  St.  Louis  &  Western  R.  R.— 

Prior  Lien  31/38,  1925 . __  __  83        85 

Prior  Lien  31/38,  1925    (Reg'd.) __  __  __        83 

4s,   1950 _-  __  64        551/3 

Coll.  Tr.  "A"  4s,  1917 _-  _-  __        60 

Equip.  41/3S,  1916 __  »_  '100 

Toledo  Terminal  1st  41/38,  1957 —  __  84        91 

Toledo  Trac.  Lt.  &,  Pr.  6s,  1918 __  __  100  lOOy, 

Tol.,  Walhoning  Vy.  &  O.  1st  "A"  41/38,  1931  __  __  IOOI/3     _. 

Tol.,  Walhoning  Vy.  &  O.  1st  "B"  41/38,  1933  __  —  IOOI/3     __ 

Tol.,  Walhoning  Vy.  &  O.  lat  "C"  4s,  1942—  —  —  94        98 

Tombigbee  Valley  1st  58,  1956 __  __  92  100 

Tombigbee  Valley  Genl.  63,  1935 __  -_  95  100 

Tonopah  &  Goldfield  1st  68,  1921 __  _.  __     *102 

Topeka  Edison  1st  5s,  1930 __  __  97        99 

Topeka  Ry.  5s,  1930 __  __  97        99 

Toronto  &  York  Radial  Ry.  5s,  1919 _-  __  *100 

Toronto,  Ham.  &  Buff.  1st  4s,  1946 __  __  89        89l^ 

Toronto,  Ham.  &  Buff.  Equip  "A"  41/3S,  1923__  *4%%  basis  — 

Toronto  Paper  Mfg.  6s,  1942 __  __  *96 

Toronto  Ry.  41/3S,  1913-21 »_  __  95 

Torrington  Co.  1st  5s,  1918 _-  __  100 

Trenton  Gas  &  Elec.  1st  Gen.  5s,  1949 __  __  IO31/3     __ 

Trenton  Pass.  Ry.  63,  1931 __  __  113  114 

Trenton,  Penn.  &  Hop.  5a,  1943 _>  __  96 

Trenton  St.  Ry.  Cons.  5s,  1938 __  __  95  100 

Trenton  St.  Ry.  Gen.  6s,  1941 __  __  *99 

Tri  City  Ry.  &  Lt.  58,  1923 97%     97% 

Tri  City  Ry.  &  Lt.  Ref.  5s,  1930 __  __  *92l^  *95 

Trinidad  Elec.  1st  5s,  1931 __  __  __  *92ya 

Troy  &  Boston  78,  1924____ __  ._  120  123 

Troy  &  W.  Troy  Bridge  5s,  1915 __  __  101  103 

Troy  City  Ry.  5s,  1942 __  ._  104  106 

Troy  Gas  2nd  68,  1923 108  110 

Troy  Gas  Cons.  58,  1939 __  —  106  108 

Trumbull  Pub.  Serv.  Ist  6s,  1929 —  __  100  101 

Tuckerton  R.  R.  1st  5s,  1930 __  __  —  100 

Tulsa  (Okla.)  Corp.  1st  5s,  1932 __  >_  92        95 

Turner  (J.  Sp.)  Co.  Deb.  63,  1926 __  —  *81  *82i/a 

Twenty-eighth  &  29th  St.  1st  5s,  1996 —  >_  —        20 

Twin  City  Teleph.  1st  5s,  1912-26 __  __  *92 

Twin  Falls,  North  Side  Land  &  Water  1st  68, 

1912-20 _.  __  __     *100 

Twin  Falls,  Oakley  Land  &  Wat.  6s,  1912-20_-  __  __  —    *100 

Twin  Falls  Ry.  Ist  6s,  1932 *100     •lOO 

Twin  Falls  Salmon  River  Land  &  Wat.  1st 

6s,    1912-20 __  __  >-     *100 

Twin  State  G.  &  E.  1st  &  Ref.  41/3S,  1926 _.  __  „        74 

Ulster  &  Delaware  1st  5s,  1928 __  __  103%     __ 

Ulster  &  Delaware  Ref.  48,  1952 —  —  —        84 

Underg'd.  Elec.  Rys.  of  Lon.  41/38,  1933 __        95l^ 

Underg'd.  Elec.  Rys.  of  Lon.  6s,  1948 __  __  91        95 

Union  Bag  &  Pap.  5s,  1930 __  __  89 

Union  Depot  Cons.  6s,  1918 : _'_  __  IO41/2  IO51/3 

Union  El.  Lt.  &  Pow.  1st  1932 —  -_  100  IOI1/3 

Union  El.  Lt.  &  Pow.  Ref.  &  Ext.  53,  1933 __  __  95        971/4 

Union  Elevated  R.  R.  Ist  5s,  1945 ._  —  '75  *90 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1143 


High    Low 
Union  Ferry  5s,  1920 

Unoin  Gas  (McK.)  5s,  1929 __  -     „ 

Union  Gas  (Spok.)   5s,  1935 

Union  Lt.,  Ht.  &  Pr.  (Gov.)  1st  4s,  1918 -_  ,     __ 

Union  Lt.,  Ht.  &  Pr.  (Fargo)  1st  5s,  1933 

Union  Oil  5s,  1931 

Union  Pacific  R.  R. — 

Conv.  4s,  1927 941/2     94i^ 

4s,   1947 98-78     98% 

Ist  Ref.  4s,  2008 

Union  Ry.  1st  58,  1942 

Union  Ry.,  Gas  &  El.  Coll.  5s,  1939 

Union  Ry.,  Gas  &  El.  5%  Notes,  1916 97iA     97^4 

Union  Steel  1st  5s,  1953 

Union  St.  Ry.  (New  Bedf.)  Cons.  5s,  1914 

Union  Trae.  of  Ind.  5s,  1919 

Union  Trae.  of  Pitts.  5s,  1997 

Union  Trae.  of  (Santa  Cruz)  1st  5s,  1935 __        —  *95 

Union  Trae  (Indep.  &  Coff.,  Kan.)  5s,  1937—      *93i4  *93iA 

Union  Transportation  5s,  1923 91 

Union  Typewriter   5s,  1916 

Union  Utilities  6s,  1944 . 

Union  Water  of  Cal.  6s,  1956 

Unit.  Boxbd.  &  P.  Coll.  6s,  1936 

Unit.  Boxbd.  &  P.  Gen.  6s,  1936 

United  Breweries  1st  6s,  1938 *70      *70 

United  Coal  6%  Notes,  1916-35 

United  Coal  1st  5s,  1955 

United  Elec.  Co.  of  N.  J.  4s,  1949 

United  Elec,  Lt.  &  Pow.  1st  5s,  1934 

United  Elec,  Lt.  &  Pow.  ref.  &  ext.  5s,  1933— 
United  Elec,  Lt.  &  Pr.  1st  Cons.  41/2S,  1939— 
United  Elec  Securities  Co.  C.  T.  5s,  1933-1937 

United  Elec.  Securities  Co.  C.  T.  5s,  1943 *99i/2  *99i/2 

United  Equities  6%  Notes,  1915 *100    *100 

United  Fruit  41/2*,  1923 

United  Fruit  Deb.  41/2S,  1935 

United  Fruit  Deb.   5s,  1916 

United  Gas  &  Elec.  Conv.  5%  Notes,  1915 

United  Gas  &  Elec  5s  (Cal.),  1933 

United  Gas  &  El.  (N.  J.)  1st  Coll.  5s,  1933 

Unit.  Gas,  EL,  Lt.  &  P.  Cons.  5s,  1930 

Unit.  Ilium.  (New  Haven)  1st  5s,  1940 

United  Iron  &  Steel  5s,  1936 

United  Kansas  Portl.  Cement  6s,  1930 

United  Lead  Deb.  5s,  1943 

United  Light,  Ht.  &  Pr.  1st  5s,  1933 

United  Light  &  Pr.  6s,  1914 

Unit.  Lt.  &  Rys.  1st  &  Ref.  5s,  1932 

United  Missouri  River  Pr.  6s,  1936 

United  N.  J.  R.  R.  &  Canal  Co.  Gen.  4s,  1944— 
United  N.  J.  R.  R.  &  Canal  Genl.  4s,  1923 

Genl.  4s,  1939 

1st  31/28,  1951 

United  Properties  Realty  6s,  1916 

Unit.  Pub.  Util.  (Del.)  1st  Coll.  6s,  1943 '100 

United  Publishers  Coll.  6s,  1930 

United  R.  R.  of  S.  F.  4s,  1937 

*QuoUtlon  nearest  March  1.  1913.    No  quotation  on  that  date. 

1144 


Bid  . 

Asked 

88 

93 

*96 



•98 



931/2 

95 

*93i/2 

*96 

871/2 

90 

931/4 

95 

104 



91 

93 

104 

105 

100 

101 

951/2 

— 



971/2 

931/2 

971/2 



•98 

20 



38 

~ 

100 

"■"* 

*83 

•86 

81 

82 



92% 

*95 

•98 

93 

931/2 

98 

100 

~ 

951/2 



95 

^1003/4 



961/2 

98 

1011/4 

100 

1011/2 



100 

93 

__ 

*93i/2 

__ 

*50 



*63 

__ 



•94 

»_ 

•991/2 



92% 

*98 



99 



99 

100 

99 

1001/2 

871/2 

89 

♦96 

•93 

•94 

621/, 

63 

High  Low  Bid    Asked 

United  Rys.  4s,  1949 __  __  74        741/2 

United  Rys.  &  Elec.  5%  Notes,  1914 __  __  lOli/g  102 

Unit.  Rys.  &  EL,  Bait.,  Inc.  4s,  1949 63  63 

Unit.  R.  &  E.  Bait.  1st  Cons.  4s,  1949. __  __  __        85 

Unit.  R.  &  E.  Bait.,  Inc.  5s,  1936 —  871/2     871/2 

Unit.  Rys.,  Inc.,  Ist  Lien  Coll.  5s,  1926 __  —  76%     761/3 

Unit.  Rys.  of  St.  L.  1st  Gen.  4s,  1934 __  __  731/2     741/3 

U.  S.  Envelope  1st  5s,  1913-34 __  __  991/2  IO21/2 

U.  S.  Equipment  6%  Notes,  1916 __  __  __       *99i/2 

U.  S.  Finishing  1st  5s,  1919 __  __  99       102 

U.  S.  Finishing  Cons.  5s,  1929 __  —  __        97 

U.  S.  Glass  5s,  1923 __  __  __      *95 

U.  S.  Gypsum  1st  5s,  1922 __  __  97        98 

U.  S.  Gypsum  6%  Notes,  1917 __  __  *97      *99 

U.  S.  Leather,  deb.  6s,  1913 __  __  lOOi/g  100% 

U.  S.  Long  Dist.  T.  &  T.  Co.  5s,  1934 __  __  70 

U.  S.  Mtge.  &  Trust.— 

Coll.  Tr.  "E"  4s,  1917 __  __  __       100 

Coll.  Tr.  "G"  4s,  1918 __  __  __       100 

Coll.  Tr.  "H"  4s,  1918 __  __  __      100 

Coll.  Tt.  «I"  4s,  1919 _.  -_  >_       100 

Coll.  Tr.  "J"  4s,  1919 __  __  __       100 

Coll.  Tr.  "K"  4s,  1920 __  _.  __      100 

U.  S.  Motor  6s,  1916 __  __  __      *59 

U.  S.  Natural  Gas  6s,  1929 _«  __  *99i/2     — 

U.  S.  Radiator  1st  6s,  1912-27 —  „  __     *100 

U.  S.  Realty  &  Imp.  deb.  5s,  1924 __  __  86        87 

U.  S.  Reduction  &  Ref.  6s,  1931 __  __  25        321/2 

U.  S.  Rubber  6s,  1918 __  __  102%  102% 

U.  S.  Smelt  1st  6s,  1922 __  __  __        50 

U.  S.  Smelt.  Refin.  &  Min.  5%  Notes,  1914__  __  __  99        99% 

U.  S.  Steel  Coll.  Tr.  5s,  1951 __  __  114 

U.  S.  Steel  "S.  F.  5s,  1963 100%  lOOiA 

U.  S.  Telephone  1st  5s,  1919 __  __  __        90 

U.  S.  Whip  1st  6s,  1923 >_  __  __       *96i/2 

United  Trac.  (Albany)  Deb.  41/2S,  1919 __  __  971/3    981/2 

United  Trac.  (Albany)  Cons.  4i/oS,  2004 ...  __  96I/2     971/2 

United  Traction  (Pitts.)  5s,  1997 __  __  95        96 

Unit.  Trac.  &  El.  1st  Coll.  5s,  1933 __  __  100      IO31/2 

Unit.  Traction  R'd'g.  1st  Coll.  5s,  1926 __  __  __        96 

United  Utilities  1st  Coll.  Conv.  6s,  1943 __  __  __        94 

United  Water  &  Light  Coll.  6s,  1912-25 __  __  „       *100 

Universal  Crushed  Stone  Co.  6s,  1922 *100    *100 

Upchurch  Lumber  1st  6s,  1917 __  __  __    *100 

Upper  Coos  1st  4s,  1930 __  __  91 

Upper  Coos,  Ex.  41/2S,  1930 __  __  97 

Upson  Nut  Co.,  Serial  6s __  __  *100 

Urbana  &  Champaign  Ry.,  Gas  &  Elec.  1st  5s, 

1917    __  >_  *101 

Utah  &  Northern  5s,  1926 __  __  103 

Utah  &  Northern  1st  ext.  4s,  1933 __  __  9314     99 

Utah  Central  1st  4s,  1917 __  -_  *82 

Utah  Co.  Coll.  Tr.  6%  Notes,  1917 __  __  —      IOO1/3 

Utah  Fuel  5s,  1931 __  __  85        87 

Utah  Gas  &  Coke  1st  5s,  1936 __  __  91 

Utah  Light  &  Pr.  Cons.  4s,  1930 __        __  8O14     821/3 

Utah  Securities  6%  Notes,  1922 __  __  85%     861/4 

Utica  &  Black  River  4s,  1922 __  __  95 

Utica  &  Mohawk  Valley  1st  41/2S,  1941 __  __  97        981/^ 

^Quotation  nearest  Marcb  1,  1913.    No  quotation  on  that  date. 

1145 


High    Low 

Utica  Belt  Line  1st  6s,  1939 

Utica  Belt  Line  2nd  5s,  1931 

Utica,  Clinton  &  Bing.  Ss,  1939 

Utica  Elec,  Lt.  &  P.  Ist  5s,  1950 

Utica  Gas  &  Elec.  Ref.  &  Ext.  58,  1957 

Uxbridge  &  Blackstone  St.  Ry.  5s,  1923 

Valier-Montana  Lt.  &  Pow.  Ser.  "B"  6s,  1926. 

Valley  Counties  Power  Co.  58,  1930 

Valpraiso  &  Northern  6s,  1929 

Vandalia  Coal  1st  6s,  1930 

Vandalia  R.  R.  Ser.  "A"  4s,  1955 

Vandalia  R.  R.  Ser.  "B»  48,  1957 

Ventura  County  Power  1st  68,  1936 

Vera  Cruz  &  Pac.  41/28,  1934 

Verdigris  Val.  Ind.  &  W.  1st  6s,  1926 

Vermont  Pow.  &  Ltg.  6s,  1927 

Vermont  Valley  1st  41/28,  1940 

Vicksburg  &  Meridian  1st  68,  1921 

Vicksburg  Lt.  &  Trac.  1st  5s,  1932 

Vicksburg  Lt.  &  Trac.  Deb.  6s,  1922 

Vicksb'g.,  ShrVt.  &  Pac.  6s,  1941_- 'lOlVa    ~ 

Vicks.,  Shreve.  &  Pac.  P.  L.  6s,  1915 

Victor- Amer.  Fuel  1st  &  ref.  6s,  1940 

Victor  Fuel  5s,  1953 

Virginia  &  Southw.  5s,  2003 

Ist  6s,  1958 

Virg.-Car.-Chem.  5s,  1923 

Virg.  Iron,  Coal  &  Coke  6s,  1949 

Virginia  Midland  Ser.  "C"  6s,  1916 

Virginia  Midland  Ser  "D"  4s-5s,  1921 

Virginia  Midland  'Ser.  "E"  5s,  1926 

Virginia  Midland  Ser'.  "F"  5s,  1931 

Virginia  Midland  Genl.  5s,  1936 

Virginia  Ry.  &  Pow.  1st  &  Ref.  6s,  1934 

Virginian  Ry.  Ser.  "A"  6s,  1962 

Virginian  Ry.  Equip.  "A"  6s,  1913-18 

Wabash-Pitts.  Term.  1st  4s,  1954 

Wabash-Pitts.  Term.  2nd  4s,  1954 

Wabash-Pitts.  Term.  6%  Rec.  Ctfs.,  1914 *100    *100 

Wabash-Pitts.  Term.  Cent.  Tr.  Rects 

Wabash-Pitts.  Term.  Col.  Tr.  Ctfs.  Dep 

Wabash  R.  R.— 

Omaha  Div.   31/28,  1941 

Deb.  "B"  6s,  1939 

Equip.  "B"  41/2S,  1914 

Equip.  "C"  41/2S,  1916 

1st  5s,  1939 

2nd  5s,  1939 

1st  Lien  Equip.  5s,  1921 

1st  Lien  Term.  4s,  1954 

1st  Ref.  &  Ext.  48,  1956 

Det.  &  Chic.  Ext'n.  6s,  1941 

Tol.  &  Chic.  Div.  48,  1941 

Deg  Moines  Ist  4s,  1939 

Wabash  River  Trac.  6s,  1931 

Waccannaw  Lumber  6s,  1914-28 *100    "100 

Walker  Co.  Ist  6s,  1916 

^Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1146 


Bid    Asked 

104 

110 

102 

108 

102 



103 

105 

98 

100 

~ 

100 

*40 

101 

__ 

*75 





100 



93% 

9iy2 

93 

100 



93 

95 



97 

99 

103 

105 

103 





95 

~ 

100 

103 

" 

96 

100 



79% 



108 

95 

95% 

96% 

97 

961/8 

971/2 

104 

103 



1031/2 



104% 



1051/2 



94 

941/2 



98% 

~ 

•100 

26 

iy4 

•    2 

241/2 

25% 

26% 

65 



108 

51/2%  basis 

51/3%  basis 

104ys 

105 

971/2 

98% 

98 

100 

80 



59% 

60 

105 

107% 

80 

*77 

•79 

— 

♦97 

97 

101 

High  Low  Bid    Asked 

Ward  Baking  1st  6s,  1937 —  —  *95 

Ward  Building  Si/gS,  1925 „  __  —      100 

Warren  R.  R.  1st  &  Ref.  Sy^a,  2000 — __  _-  *83 

Warwick  Iron  &  Steel  6%  Notes,  1914___ __  __  *10iyz    — 

Wash.,  Alex.  &  Mt.  Ver.  5s,  1955 .  —  „  __        97 

Wash.,  Arlington  &  Falls  Church  5s,  1958 —  __  __      *91 

Wash.,  Bait.  &  Ann.  58,  1941 87%  __ 

Washington  Central  Ry.  1st  4s,  1948 __  __  88        93 

Washington  County  Ry.  1st  Si/gS,  1954 __  —  80        83 

Washington  Gas  5s,  1960 —  __  109      110 

Washington  Market  Co.  5s,  1917-27 *104 

Washington  Market  Co.  5s,  1927-47 *102 

Wash.  Market  Cold.  Storage  5s,  1939 *99ya  — 

Wash.,  No.  Car.  1st  6s,  1914 ^  __  __  101 

Wash'gtn.,  Ohio  &  W.  1st  4s,  1924 __  __  93 

Washington  Ry.  &  Elee.  4s,  1951 —  __  83        84 

Washington  Term'l.  Ist  Zy^a,  1945 _-  __  83%     __ 

Washington  Term'l.  1st  4s,  1945 >_  —  97iA     — 

Wash.  Wtr.  Pow.  1st  &  Ref.  53,  1939 __  __  102      104 

Wash.  W^tr.  Pow.  Coll.  5s,  1929 —  —  102 

Watauga  Power  1st  6s,  1952 __  __  —      101 

Waterbury  Lt.  &  Pow.  5s,  1916 __  __  —       *99i/a 

Waterbury  Lt.  &  Pow.  5s,  1921 _-  __  __        99 

Waterford  Min.  Wells  &  Northw'n.  5s,  1930—  __  __  100      102 

Waterloo,  Cedar  Falls  &  No.  R.  1st  5s,  1940—  —  __  87        89 

Waterloo,  Cedar  Falls  &  No.  Ry.  1st  5s,  1929—  —  __  *87 

Watertown  Lt.  &  Pow.  5s,  1959 —  _-  *97y2     — 

Watervliet  &  Turnpike  R.  R.  1st  63,  1919 —  __  106      108 

Watervliet  &  Turnpike  R.  R.  2nd  6s,  1919 —  __  106       108 

Weaver  (W.  T.)  Power  5s,  1931 __  ._  __      *98 

Webster  Coal  &  Coke  Ist  5s,  1942 -_  __  881/2     91 

Welsbaeh  Co.  5s,  1930 -_  __  93        93i/a 

West  End  Colliery  5s,  1913 __  __  96        99 

West  End  St.  Ry.  5s,  1932 __  __  —       1051/9 

West  End  St.  Ry.  41/28,  1914 __  —  99%  100 

West  End  St.  Ry.  41/28,  1923 __  —  98iA     99l^ 

West  End  St.  Ry.  41/33,  1930 ._  __  98        99 

West  End  St.  Ry.  Curr.  4s,  1915 __  -_  98        98% 

West  End  St.  Ry.  Curr.  4s,  1916 —  —  971/2     98% 

West  End  St.  Ry.  Curr.  4s,  1917 —  —  97%     98% 

West  End  St.  Ry.  4s,  1932 __  __  91%     92% 

West  End  Trae.  Cons.  5s,  1938 102%  102% 

West  India  Elec.  5s,  1928 —  __  —      *92 

West  Jersey  &  Seashore  Cons.  4s,  1936 —  —  98        99% 

West  Jersey  &  Seashore  Ser.  "B"  31/2S,  1936—  —  _-  —        90 

West  Kentucky  Coal  58,  1935 „  __  72        80 

West  Koot.  Pr.  &  Lt.  1st  6s,  1940 __  _-  —       109 

West  Liberty  Street  Ry.  1st  5s,  1930 —  __  95      100 

West  Penn.  Rys.  1st  5s,  1931 101%  101% 

West  Penn.  Trac.  1st  58,  1960 —  —  96        97 

West  Phila.  Pass.  Ry.  2nd  5s,  1926 __  —  101      104 

West  Sacramento  Co.  1st  6s,  1930 —  —  —    *100 

West  Shore  1st  48,  2361 —  —  98        98% 

West  Side  Belt  1st  5s,  1937 95      100 

West  Side  Belt  6%  Ctfs.,  1913 _-  _-  —     "100 

West  Transit  Co.  31/2S,  1923 __  —  89%     92% 

West.  Va.  &  Pitts.  1st  4s,  1990 —  __  90 

West  Va.  Pulp  &  P.  58,  1921 ._  ._  *95 

West  Va.  Timber  6s,  1913-22 'lOO    •100 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1147 


High  Low  Bid    Asked 

West  Va.  Trac.  &  Elec.  5%  Notes,  1915 —  —  *96i/2     __ 

Westchester  Electric  1st  5s,  1943 —  __  96      100 

Westchester  Lighting  1st  5s,  1950 __  __  —      IO41/2 

Westchester  Lighting  5%  Notes,  1920 —  —  __       *98 

Westchester  St.  Ry.  1st  5s,  1932 —  —  76        80 

Westerly  Light  &  Pow.  1st  5s,  1937 —  __  —      100 

Western  Canada  Fl.  Mills  1st  6s,  1928 __  —  103       104 

Western  Canada  Fl.  Mills,  1st  &  ref.  6s,  1931  __  __  100      101 

Western  Canada  Pow.  5s,  1949 __  —  __      *88 

Western  Elec.  5s,  1922 —  —  1021/2  IO21/2 

Western  Foundry  &  Metal  7%  Notes,  1913 —  —  —    *102 

Western  Maryland  1st  4s,  1952 —  —    *      —        82 

Western  Maryland  5%  Notes,  1915 „  —  971/2     931/2 

Western  N.  Y.  &  Penna.  5s,  1937 —  __  106 

Western  N.  Y.  &  Penna.  Gen.  4s,  1943 __  —  __        86 

Western  N.  Y.  &  Pa.,  Inc.  5s,  1943 __  —  30        35 

Western  N.  Y.  &  Pa.  Trac.  1st  Ref.  5s,  1957_-  „  —  93        94 

Western  Nor.  Cars  6s,  1914 __  __  *101l^*1013^ 

Western  Ohio  Ry.  5s,  1921 *93i/4     „ 

Western  Pacific  5s,  1933 —  —  86        86% 

Western  Penna.  1st  4s,  1928 __  —  981/2     991/2 

Western  Ry.  of  Ala.  41/2S,  1918___ __  —  95 

Western  States,  G.  &  E.  1st  &  Ref.  5s,  1941__  __  __  88 

Western  Telep.  &  Teleg.  Coll.  5s,  1932 „  __  991/3     991/2 

Western  Union  Tel.  5s,  1938 —  —  100%  101% 

Western  Union  Tel.  Fdg.  &  R.  E.  41/2S,  1950—  —  —  —        95 

West.  Unit.  G.  &  E.  1st  Serial  5s —  —  *99     *100 

West.  Unit.  G.  &  E.  Deb.  Serial  6s __  „  *100 

Westingh.  Elec.  &  Mfg.  6%  Notes,  1913 __  —  IOO1/4  IOO34 

Westingh.  Elec.  &  Mfg.  5%  Notes,  1915 —  __  *100      100% 

Westinghouse  Elec.  &  Mfg.  5s,  1931 92  92 

Westinghouse  Elec.  &  Mfg.  5s,  1917 —  —  96^/4     97i/o 

Westinghouse  Machine  It  &  Ref.  6s,  1940 __  __  83        90 

Westinghouse  Machine  6%  Notes,  1914 —  —  *84 

Whatcom  Co.  Ry.  &  Lt.  5s,  1935 __  —  93        95 

Wheeling  &  Lake  Erie  Ry. — 

Lake  Erie  Div.  1st  5s,  1926 —  __  —      101 1/2 

Wheeling  Div.  5s,  1928 __  —  99 

Ext.  &  Impt.  5s,  1930 ._  —  —       104l^ 

1st  48,  1949 —  —  80%     81 

Equip.  5s,  1922 —  —  98i4     _. 

5%  Rec.  Ctfs.,  1913-23 100-96.19  ace.  to  mat.    __ 

Wheeling  Elec.  (W.  Va.)  1st  58,  1941 „  „  941/2     96I/2 

Wheeling  Term.  4s,  1940 —  —  88        92 

Wheeling  Trac.  5s,  1931 __  —  97        99 

Whipple  Car  1st  6s,  1913-22 *100  *100 

Wliipple  Car  Serial  51/2S, -    •lOO 

White  &  Black  Riv.  Val.  Ist  5s,  1980 —  —  —     *100i/. 

White  Plains  Ltg.  1st  5s,  1938 _.  __  *98i/2     — 

Whittier  Home  T.  &T.  Co.  5s,  1929 __  —  68 

Wichita  Falls  &  Northwestern  Ry. — 

1st   5s,   1939 —  —  "gSi/s'lOO 

1st  &  Ref.  5s,  1940 —  —  *96      *97i/2 

1st  5s,  1925 —  —  —       *96i/2 

South.  5s,  1938 ,—  —  *93       *97 

Wichita  Natural  Gas  1st  6s,  1915 —  —  *97 

Wichita  R.  R.  &  Lt.  Ref.  &  Cons.  5s,  1932 —  ~  —        99 

Wichita  Union  Term.  1st  41/2S,  1941 —  —  99      101 

Wilkes-Barre  &  Eastern  Ist  5s,  1942 —  —  —        98% 

"Quotation  nearest  March  1,  1913.    No  quotation  on  tbat  date. 

1148 


High    Low 

Wilkes-Barre  &  Hazelton  1st  5s,  1951 

Wilkes-Barre  &  Wyo.  Val.  5s,  1931 

Wilkes-Barre  &  Wyo.  Val.  5s,  1925—^ 

Wilkes-Barre  Co.  1st  5s,  1960 

Wilkes-Barre,  Dal.  &  Har.  Lake  5s,  1938 

Wilkes-Barre  Gas  &  Elec.  5s,  1955 

Wilkinsburg  &  E.  Pitts.  1st  5s,  1929 

Wilkinsburg  &  Verona  St.  Ry.  5s,  1931 

Williamsburg  &  Flatbush  AYza,  1941 

Williamsport  &  North  Br.  1st  ^y^s,  1931 

Williamsport  Gas  1st  5s,  1939 

Willimantic  Gas  &  Elec.  5s,  1923 

Wilmur  &  Sioux  Falls,  1st  5s,  1938 

Wilm.  &  Chester  Trac.  5s,  1918 

Wilmington  &  North.  Sk.  Trust  4s 

Wilmington  &  North.  1st  5s,  1927 

Wilmington  &  North.  Genl.  5s,  1933 

Wilmington  &  Weldon  Gen.  5s,  1935 

Gen.  4s,  1935 

Wilmington  City  El.  1st  5s,  1951 

Wilmington  Gas  1st  &  Ref.  5s,  1949 

Wilmington  Lt.  &  Pow.  1st  5s,  1960 

Winnipeg  Elec.  Ry.  1st  &  Ref.  5s,  1935— 

Winnipeg  Terminal  4s,  1939 

Winono  &  Pacific  1st  7s,  1916 

Winona  &  St.  Peter.  1st  7s,  1916 

Winona  Interurban  Ry.,  Goshen  5s,  1925 

Winston-Salem  Southbound  Ry.  5s,  1960 

Wisconsin  Central  Ry. — 

Sup.  &  Dul.  Div.  &  Term.  4s,  1936 

1st  Ref.  4s,  1959 

Marsh.  &  'S.  E.  P.  M.  4s,  1951 

4s,   1949 9014     901/4 

Wisconsin  Gas  &  Elec.  1st  5s,  1952 

Wisconsin,  Minn.  &  Pac.  1st  4s,  1950 

Wisconsin  Pub.  Serv.  1st  &  Ref.  5s,  1943 

Wisconsin  Riv.  Pow.  1st  5s,  1941 

Wisconsin  Trac,  Lt.,  Ht.  &  P.  1st  5s,  1931 

Wladikawkas  Ry.  4s,  1957 

Woodward  Iron  1st  5s,  1952 

Worcester  &  Clinton  Ry.  1st  5s,  1919 

Worcester  &  Conn.,  Eastern  1st  4y2S,  1943 

Worcester  &  Marlborough  St.  Ry.  1st  5s,  1917 
Worcester  &  Southridge  St.  Ry.  41/2S,  1922— 

Worcester  &  Web.  1st  5s,  1919 

Worcester  Cons.  St.  Ry,  4y2S,  1920 

Worcester  Cons.  St.  Ry.  1st  Ref.  41/2S,  1930__ 

Worcester  Cons.  St.  Ry.  Deb.  5s,  1927 

Worcester,  Nashua.  &  Roch.  4s,  1930 

Worcester,  Nashua.  &  Roch.  4s,  1934 

Wright  Bldg.   5s,  1931 

Yadkin  Riv.  Pow.  1st  5s,  1941 

Yale  &  Towne  Mfg.  5s,  1920 

Yonkers  Ry.  1st  5s,  1946 

York  Haven  Wtr.  &  Pow.  1st  5s,  1951 

York  Haven  Wtr.  &  Pow.  Cons.  5s,  1957 

York  Rys.  1st  &  Coll.  5s,  1937 

Yosemite  Valley  R.  R.  5s,  1936 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1149 


Bid  . 

Askeil 

66 

67% 

102 

103 

100 

103 

921/2 

95 

100 

1021/3 

102 

103 

1003/4 

103 

101 



92 

95 

50 

60 

100 





102 

109 



96 

98 

95 

__ 

991/2 



107 

109 

1091/2 

110 

93 



98 

100 

99 

100 

841/3 



100 

102 

94 

97 

IO8I/2 

1091/4 

IO8I/2 

1091/4 

*70 

*80 

~ 

891/2 

893/s 

89% 

*89V^ 

*87 

*90 

97 

99 

35 

45 

95 

96 



90 



99 

841/2 

90 

*96 

98 



100 

__ 

98 



95 



97 



96 



96 



100 

103 

95 

95 

971/2 

96 

— 

85 

991/2 

100 

88 

95 

76 

85% 

60 

65 

94 

951/2 



*90 

High    Low 

Yonghiogheny-Mon.  Coal  6s,  1913-15 

Young  Men's  Christ.  Assoc.  (Indpls.)  1st  41/28    *100    *100 

Youngstown  &  Ohio  River  1st  5s,  1935 

Youngstown  &  Southern  Ry.  1st  5s,  1933 

Youngstown,  Sharon  Ry.  5s,  1931 

Youngstown  Telephone  1st  6s,  1919 

Zanesville  Ry.,  L.  &  P.  5s,  1924 __        __  931/2  100 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 


Bid 

Asked 

981/2 

~ 

98 

100 

82 

87 

100 

102 

— 

•99% 

1150 


Government,  State  and 
Municipal  Bonds 

UNITED  STATES  GOVERNMENT 

High  Low        Bid    Asked 

U.  S.  Cons.  Reg.  2s,  1930 __  __  lOOyg  101 

U.  S.  Cons.  Coup.  23,  1930 __  _.  100%  101% 

U.  S.  Reg.  3s,  1918 __  __  1021/2  103l^ 

U.  S.  Coup.  3s,  1918 __  __  1021/2  103l^ 

U.  S.  Reg.  4s,  1925 __  __  II31/2  114 

U.  S.  Coup.  4s,  1925 __  __  113%  114% 

U.  S.  Pan.  Can.  2s,  1936 „  __  100%  101 

U.  S.  Pan.  Can.  3s,  1961 -_  __  1023/8  103 

U.  S.  Pan.  Can.  2s,  1938 __  __  100%  101 

ALABAMA 

Alabama,  Renewal  CI.  C.  4s,  1956 __  __  103      104 

Alabama,  Curr.  Fdg.  4s,  1920 __  __  100      101 

Alabama,   Renewal    31/2S,   1956 93        96 

Attalla  (Ala.)  6s,  1922 __  __  __    '100 

Bessemer  (Ala.)  5s,  1931 __  __  __     *102i/2 

Birmingham   (Ala.)  Ref.  6s,  1923 __  __  105       108 

Birmingham  (Ala.)  Imp.  5s,  1921 __        102      106 

Birmingham  (Ala.)   School  5s,  1924 __  __  102       106 

Birmingham  (Ala.)   Sewer  5s,  1938 __  __  103      106 

Birmingham  (Ala.)  Fund  5s,  1941 __  __  104      106 

Decatur  (Ala.)   6s,  1923 __  __  _-    *100 

Geneva    (Ala.)    5s,  1930 __  __  __      *97 

Jasper  (Ala.)  Sewer  8s,  1923 __  __  __     *106 

Jefferson  Co.   (Ala.)   6s,  1921 __  __  4%-i/2%  basis 

Jefferson  Co.   (Ala.)   6s,  1917 —  __  4%-i/2%  basis 

Jefferson  Co.   (Ala.)   41/2S,  1931 __  __  100      IO21/3 

Jefferson  Co.  (Ala.)  Hosp.  41/2S,  1963 __  __  101       103 

Jefferson  Co.  (Ala.)  5s,  1920 __  __  41/2%  basis 

Madison  Co.  (Ala.)  5s,  1919 __  __  4%-i/2%  basis 

Madison  Co.  (Ala.)   5s,  1929 __  __  4%-i/2%  basis 

Montgomery  (Ala.)  6s,  1924 __  ._  4%-i/2%  basis 

Montgomery  (Ala.)  6s,  1921 __  __  4%-i/2%  basis 

Montgomery  (Ala.)   St.  Pav.  5s,  1921 ._  -._4.80-.60%  basis 

Montgomery  (Ala.)  Fdg.  5s,  1940 —  —  102      105 

Montgomery  (Ala.)  Wtr.  41/2S,  1928 __  __  .         __        99l^ 

Montgomery  (Ala.)  S.  W.  W.  &  S.  41/2 s,  1944_  __  __  97        99 

Mobile   (Ala.)    5s,  1914-19 __  __  99      100 

Mobile   (Ala.)   Ref.  41/2S,  1937 __  _-  95      100 

Mobile  (Ala.)  Wtr.  &  Sr.  41/2S,  1939 >_  —  95       100 

Mobile    (Ala.)    Impot.  4s,  1921 __  __  90        95 

Mobile  Co.  (Ala.)  Ref.  5s,  1928 __  __  104      106 

Mobile  Co.  (Ala.)  Ref.  5s,  1931 __  __  104      108 

Mobile  Co.  (Ala.)  Road  5s,  1932 4.80-.60%  basis 

^Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1151 


ALABAMA  (Continued). 

High 

Mobile  Co.  (Ala.)  Jail  4s,  1926 

Montgomery  Co.    (Ala.)    5s,  1935 

Prattville   (Ala.)    6s,  1923 

Selma  (Ala.)  Wtr.  5s,  1927 

ARIZONA 

Arizona,  Fund  5s,  1942 

Arizona,  Ref.  41/28,  1928 

Mohave  County  (Ariz.)   5s,  1928-38 

Phoenix  Sch.    (Ariz.)    5s,  1933 

Tucson  (Ariz.)  Wtr.  5s,  1950 

Tucson  (Ariz.)  W.  W.  Mch.  41/28,  1938 

Prescott    (Ariz.)    41/2S,   1948 

Prescott  (Ariz.)  5s,  1955 

ARKANSAS 

Arkansas  Co.  (Ark.)  6s,  1918-32-—^ 

Cypress  Creek  (Ark.)  51/2S.  1930-35 

Danville  Sch.    (Ark.)   6s,  1918 

Dead  Timber  (Ark.)  6s,  1927-32 

Ft.  Smith   (Ark.)   Wtr.  5s,  1918-26 

Ft.  Smith  (Ark.)   Sewer  5s,  1926 

Ft.  Smith  (Ark.)  School  5s,  1917-33 

Green  &  Lawrence  Cos.  (Ark.)  6s,  1916-31 

Heber  Springs  (Ark.)  Sch.  58,  1942 

Jefferson  Co.  (Ark.)  6s,  1925-38 

Little  Rock  (Ark.)   5s,  1913-21 

Miller  Co.   (Ark.)   6s,  1931 

Mississippi  Co.  (Ark.)  6s,  1920-27 

Mississippi  Co.    (Ark.)    51/2S,  1929-31 

Poinsett  Co.   (Ark.)   6s,  1922-36 

St.  Francis  (Ark.)  Levee  Dist.  6s,  1943 

St.  Francis  (Ark.)  Levee  Dist.  6s,  1947 

St.  Francis  (Ark.)  Levee  Dist.  5s,  1949 

St.  Francis  (Ark.)  Levee  Dist.  58,  1939 

White  &  Cache  River  (Ark.)  6s,  1922 

White  River  (Ark.)  6s,  1929-33 

Woodruff  Co.  (Ark.)  Rd.  6s,  1923-33 

Wynne  (Ark.)  Sewer,  Wtr.  &  Lt.  sy^s,  1914-32 


Low 


Bid  Asked 
92        95 

103       105 

__  *107% 

100       102 


99  100 

101  102l^ 

__  *103.86 

_-  *105 

100  101 
4%%  basis 

100 

100 


51/2% 
*5.30% 

•51/2% 


*43/4% 

*5y2% 

•5%% 


*5i/2% 
*5.40% 

*5y8% 

105 

105 

97 

*5y"% 

*5.40% 

'51/4% 


basis 
basis 

*105 
basis 

*100 

*100 
basis 
basis 
•98 
basis 

*100 

*ioiy8 

basis 
basis 
basis 

108 

108 
99 

•981/2 
basis 
*100 


basis 


CALIFORNIA 

California,  Harb.  Imp.  48,  1985 

California,  High.  4s,  1919-20 

Alameda  (Cal.)  4s,  1913-41 

Alameda  (Cal.)  Mun.  Imp.  41/2S,  1948 

Bakersfield   (Cal.)    5s,  1952 

Burlingame  (Cal.)   Sch.  5s,  1930-41 

Colusa  Co.   (Cal.)    Sch.  5s 

Fullerton    (Cal.)    Sewer  7s 

Glendale  (Cal.)  5s,  1914-53 

Inglewood    (Cal.)    5s,  1913-32 

Los  Angeles  (Cal.)  41/33,  1913-35 

Los  Angeles  (Cal.)  O.  R.  41/2S,  1914-47 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1152 


4% 
4% 
4.45% 
4.50% 
4.60%, 
^4.60%, 


-  *4.70%, 

-  *4.70% 
.4.60-.50%, 
.4.60-.50% 


basis 
basis 
basis 
basis 
basis 
basis 
*101 
•101 
basis 
basis 
basis 
basis 


CALIFORNIA  (Continued). 

High  Low        Bid    Asked 

Los  Angeles  (Cal.)  Harb.  imp.  41/38,  1913-51___  __  __4.60-.50%  basis 

Los  Angeles  (Cal.)  Elec.  pit.  41/28,  1917-51 __  __4.60-.50%  basis 

Los  Angeles  (Cal.)  Wtr.  4s,  1913-45 __  __4.60-.50%  basis 

Los  Angeles  (Cal.)  4s,  1913-30 __  __4.60-.50%  basis 

Los  Angeles  (Cal.)  Wtr.  3%s,  1913-41 __  __4.60-.50%  basis 

Los  Angeles  (Cal.)  Sch.  3%8,  1913-44 __  __4.60-.50%  basis 

Los  Angeles  (Cal.)  Water  41/3S,  1923 __  __  —    *100.86 

Los  Angeles  (Cal.)   Ser.  334s,  1932-33 __  __  *4 1/2%  basis 

Los  Angeles  Co.   (Cal.)   41/2S,  1915-49 ._  __  4.30%  basis 

Los  Angeles  Co.  (Cal.)  41/2S,  1941 __  __  __     *100 

Los  Angeles  Co.  (Cal.)  41/2S,  1942 —  —  __     *102i/2 

Los  Angeles  (Cal.)  Sch.  4s,  1932-45 __  „  *4.40%  basis 

Los  Angeles  Co.  (Cal.)  Sch.  41/2 s,  1944-48 __  __  __     *100 

Los  Angeles  Co.  (Cal.)  41/28,  1938-49 __  __  *4i/2%  basis 

Los  Angeles  Co.  (Cal.)  Sch.  41/3S,  1930 __  __  __    *102.39 

Merced  Co.  (Cal.)  4s,  1913-16 __  __  4.30%  basis 

Merced  Co.  (Cal.)  68 __  __  *100      104 

New  Home  (Cal.)  Sch.  5s,  1914-22 __  __  *4.80%  basis 

Newport   (Cal.)   Sch.  5s,  1934-39 __  __  *4.60%  basis 

Oakland  (Cal.)  S.  D.  48,  1913-44 __  __  4.45%  basis 

Oakland  (Cal.)  41/38,  1935 __  __  __     *101% 

Oakland  Co.  (Cal.)  41/38,  1915-47 —  __  4.45%  basis 

Oakland  Co.   (Cal.)    Sch.  &  C.  41/2S,  1913-51__  __  __  4.45%  basis 

Ocean  side- Carlsbad  (Cal.)   Sch.  5s,  1913-31 __  __  *4.70%  basis 

Pasadena  (Cal.)   4s,  1941-42 __  __  41/3%  basis 

Pasadena  (Cal.)  Wtr.  41/38,  1917-36 __  __  41/3%  basis 

Pasadena  (Cal.)  Sch.  Dis.  41/3S,  1913-22 __  __  41/3%  basis 

Sacramento  (Cal.)  4s,  1915-45 __  __  4.40%  basis 

Sacramento  Co.  (Cal.)  41/2S,  1917-46 __  __  4.40%  basis 

San  Diego  (Cal.)  41/38,  1913-41 __  __  41/2%  basis 

San  Diego  (Cal.)  Wh.  &  Har.  41/oS,  1914-52___  __  __  4%%  basis 

San  Diego  (Cal.)  Sch.  5s,  1914-21 __  __  *4.45%  basis 

San  Diego  (Cal.)  41/3 s,  1944-47 __  __'  *4.60%  basis 

San  Francisco  (Cal.)  5s,  1913-55 __  __4.60-.40%  basis 

San  Francisco  (Cal.)  31/3S,  1913-44 __  __4.60-.40%  basis 

San  Francisco  (Cal.)  Sch.  31/2S,  1919 __  __  *4.45%  basis 

San  Francisco    (Cal.)    41/2S,  1913-34 __  __  __     *100 

San  Francisco  (Cal.)  5s,  1940__. __  __  __     *107y8 

San  Francisco  (Cal.)  5s,  1918-39 __  __  *4i/2%  basis 

Santa  Monica  (Cal.)   Sch.  5s,  1939-52 __  __  *4.60%  basis 

Stanislus  Co.  (Cal.)  5s __  __  __     *101 

Suisun   (Cal.)    Water  5s,  1941-53 __  __  *4.70%  basis 

San  Joaquin  Co.  (Cal.)  5s,  1913-49 __  __  4.30%  basis 

San  Jose  (Cal.)  48,  1913-46 __  __  4.45%  basis 

Santa  Barbara  (Cal.)  5s,  1913-41 __  __  41/2%  basis 

Santa  Barbara  (Cal.)  41/38,  1943 __  __  41/3%  basis 

Stockton  (Cal.)   S.  D.  5s,  1913-21 __  —  41/3%  basis 

Tehama  Co.  (Cal.)   Sch.  6s __  __  __     *102 

Venice  (Cal.)   Sch.  6s,  1918-47 __  __  *4.60%  basis 

West  Glendale  (Cal.)  Sch.  5s ,  __  __  *4.45%  basis 

CANADA    (DOMINION   OF) 

Antigonish  (N.  S.)  41/38,  1921 __  __  __     *98.35 

Antigonish  (N.  S.)  41/3S,  1940 _>  __  __       *96i/2 

Bassano  (Alberta)  Wtr.  &  'Sewer  5s,  1914-43-_  __  __  *5%  basis 

Black  Lake  (Que.)  5s,  1938 __  __  __      *96y2 

*Quotatlon  nearest  March  1,  1913.    No  quotation  on  that  date. 

1153 


CANADA,  DOMINION  OP  (Continued). 

High  Low  Bid    Asked 

Bolivia  Ry.  1st  5s,  1927 __  —  94 

Brandon  (Man.)  41/2S,  1942 __  __  __      *92.33 

Brantford  (Ont.)  4s,  1934 __  __  *^%%  basis 

Bridgewater   (N".  S.)   5s,  1954 __  __  __     *100 

Brockville  (Ont.)  41/28,  1931 __  _.  *4i/2%  basis 

Calgary  (Alberta)  41/2S,  1926 —  —  *5%  basis 

Calgary  (Alberta)   Sch.  4y2S,  1947-49 _  *^7s%  basis 

Calgary  (Alberta)  41/28, 1919-52 __  __  *4t%%  basis 

Calgary  (Alberta)  Sch.  41/2S,  1914-53 __  „  *4%%  basis 

Campbellton  (N.  B.)  4s,  1934 __  _-  *5%  basis 

Canada  (Dom.  of)  Ref.  31/28,  1913 __  >_  98 

Cartierville  (Que.)  5s,  1942 _-  __  __     *98.13 

Castor  (Alberta)  51/38,  1913-32 „  __  __      *95.97 

Cobalt  (Ont.)   6s,  1914 __  __  *6%  basis 

Coldstream  (B.  C.)  5s,  1940 __  __  —     *100 

Edmonton  (Alberta)  41/2S,  1913-21 __  __  __     *97.79 

Edmonton  (Alberta)  5s,    1933 __  __  *5%  basis 

Edmonton  (Alberta)  41/2S,  1944-45 __  __  *5i/2%  basis 

Edmonton  (Alberta)  41/2S,  1931-51 __  __  *4.06%  basis 

Edmonton  (Alberta)   5s,    1953™ __  —  —      *96.65 

Fernie  (B.  C.)  5s,  1940 __  —  *5i/2%  basis 

Ft.  William  (Ont.)  5s,  1933 __  _>  —     *100 

Gait  (Can.)  41/2S,  1931 __  __  4%%  basis 

Gait  (Can.)  El.  Pr.  41/2S,  1931 __  __  4%%  basis 

Glace  Bay  (N.  S.)  41/38,  1933 __  __  *5i/2%  basis 

Gravenhurst  (Ont.)  5s,  1939 __  __  *5i/8%  basis 

Guelph  (Ont.)  5s,  1917 —  __  5%  basis 

Guelph  (Ont.)  Cons.  58,  1920 —  —  5%  basis 

Halifax  (N.  S.)  4s,  1945 „  __  4%%  basis 

Halifax  (N.  S.)  31/2S,  1920 __  —  5%  basis 

Hamilton  (Ont.)  48,  1920 __  „  4%%  basis 

Hamilton  (Ont.)  4s,  1932 —  __4.30-.20%  basis 

Manitoba   (Prov.  of)   4s,  1930 __  —  97        98 

Manitoba  (Prov.  of)  Drnge.  4s,  1929 __  __  97        98 

Maisonneuve  (Que.)  414s,  1951 —  —  4%%  basis 

Medicini  Hat   (Alberta)    5s,  1942 —  __  *5.40%  basis 

Medicini  Hat  (Alberta)  58,  1942 __  —  —     *94.13 

Mexico  (U.  S.  of)  External  Loan  of  1899  58__  __  __  92        93 

Mexico  (U.  S.  of)   4s,  1954 __  —  —        84 

Montcalm  (Que.)  41/28,  1952 __  __  —      *97i/4 

Montreal  (Que.)  48,  1925 __  _-  41/2%  basis 

Montreal  (Que.)  4s,  1927 _-  —  4%%  basis 

Montreal  (Que.)  4s,  1933 —  —  41/2%  basis 

Montreal  (Que.)  4s,  1944 __  —  41/2%  basis 

Montreal  (Que.)  Ref.  31/2S,  1939 __  —  41/2%  basis 

Montreal  (Que.)   School  4s,  1942 __  ._  —     *90.44 

Moose  Jaw  (Sask.)  School  41/2S,  1913-28 __  —  '51/2%  basis 

Moose  Jaw  (Sask.)  58,  1933 __  __  —      *97.53 

Manaimo  (B.  C.)  5s,  1922 —  —  —      *96.34 

Nelson  (B.  C.)  53,  1923 —  —  —      *94.06 

New  Brunswick  (Prov.  of)  31/28,  1933 _.  —  92        93 

New  Brunswick  (Prov.  of)  31/2S,  1932-36 __  —  *4.10%  basis 

New  Brunswick  (Prov.  of)  4s,  1921 __  —  99       100 

New  Bnmswick  (Prov.  of)  4s,  1930 _.  —  99       100 

New  Brunswick  (Prov.  of)  4s,  Jan.,  1932 —  —  99      100 

New  Brunswick  (Prov.  of)  3s,    1938 —  —  *4.10%  basis 

New  Brunswick  (Prov.  of)  4s,  1942 —  —  "4.40%  basis 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1154 


CANADA,  DOMINION  OP  (Continuea). 

High  Low        Bid    Asked 

New  Brunswick   (Prov.  of) 4s,  1942 __  __  *4.40%  basis 

No.  Vancouver  (B.  C.)  5s,  1929 __  __  *5%  basis 

North  Vancouver  (B.  C.)  5s,  1960 __  __  __      100 

Nova  Scotia  (Prov.  of)  4s,  1919 __  __  99      100 

Nova  Scotia  (Prov.  of)  4s,  Jan.,  1920 __  __  99      100 

Nova  Scotia  (Prov.  of)  4s,  May,  1920 __  __  99      100 

Oak  Bay  (B.  C.)  5s,  1929 __  „  __    *100 

Oak  Bay  (B.  C.)   5s,  1922-32 __  __  __      *99 

Ontario  (Prov.  of)  SVgS,  1936 __  __  4.-3.90%  basis 

Ottawa  (Ont.)  SYzS,  1928 __  __4.50-.30%  basis 

Ottawa  (Ont.)  4s,  1932 _>  __  __       95.11 

Owen  Sound  (Ont.)  ^%s,  1932 __  __  *5%  basis 

Penticton  (B.  C.)  5s,  1953 __  __  __     *84.90 

Pt.  Arthur  (Ont.)  53,  1937 __  __  *5%  basis 

Pt.  Hawkesbury  (N.  S.)  5s,  1942 „  __  *5i/8%  basis 

Prince  Albert  (Sask.)  5s,  1933 -_  ._  *5.40%  basis 

Quebec  (Prov.  of)  stock  3s,  1937 __  __  —      *80 

Quebec  (Prov.  of)  stock  4s,  1949 __  __  *4.40%  basis 

Quebec  City  (Que.)  31/28,  1930 __  __  41/2-14%  basis 

Quebec  City  (Que.)  41/2 s,  1922 __  __  41/2-14%  basis 

Quebec  City  (Que.)  31/28,  Jan.,  1931 __  __  41/2-14%  basis 

Quebec  City  (Que.)  31/2S,  Jul.,  1931 __  __  41/2-14%,  basis 

Quebec  City  (Que.)  31/2 s,  1933 __  __  41/2-14%,  basis 

Red  Deer  (Alberta)  5s,  1913-15 __  __  *6%  basis 

Revelstoke  (B.  C.)  5s,  1927 __  __  __     *95.05 

Revelstoke  (B.  C.)  5s,  1934 __  __  *5i/8%,  basis 

Richmond  (B.  C.)  41/2S,  1962 __  ._  *5%  basis 

St.  Boniface  (Man.)  5s,  1932 __  __  __     *100 

St.  Boniface  (Man.)  5s,  1932-42 __  __  __     *100 

St.  Boniface  (Man.)  5s,  1931 __  __  4%%  basis 

St.  Thomas  (Ont.)  5s,  1941 __  ._  *5%,  basis 

Sao  Paulo  5s,  1919 __  __  961/2     97 

Sorel  (Que.)  5s,  1952 __  __  __      *98.95 

Spallumcheen  (B.  C.)  5s,  1941 __  __  *5i/8%  basis 

Sydney  Mines  (N.  S.)  41/2S,  1925 __  __  __      *95 

Tokyo  (Japan)  5%,  Loan  of  1912 —  __  86%     8814 

Toronto  (Ont.)  4s,  1916 __  __  5%  basis 

Toronto  (Ont.)  4s,  1918 __  __  5%  basis 

Toronto  (Ont.)  St.  Imp.  4s,  1922 -_  __  „        94% 

Toronton  (Ont.)  31/2S,    1914 __  __  5%  basis 

Toronto  (Ont.)  31/2S,  1944-45 ^-  __  __  __          41/2 

Vancouver  (B.  C.)  St.  Imp.  4s,  1922 __  —  —       92.49 

Vancouver  (B.  C.)  St.  Imp.  4s,  1927 __  —  —       89.76 

Vancouver  (B.C.) St.  Imp.  4s,  1932 __  __  —        87.62 

Vancouver  (B.C.) 31/2S,  1942 —  —  ♦4%%o  basis 

VancouverB.  C.)  4s,  1943 __  —  *4%%  basis 

Vancouver  (B.  C.)  4s,  1946 __  —  *4%%  basis 

Vernon  (B.  C.)  5s,  1926-36 —  —  *5i/2%  basis 

Victoria  (B.  C.)  4s,    1922 __  —  —      *92.51 

Victoria  (B.  C.)  4s,    1936 —  —  *4%%  basis 

Victoria  (B.  C.)  41/2S,    1938 ^ __  —  —     *96.36 

Welland  (Ont.)  41/2S,  1939 —  —  —     *92.70 

Westmount  (Que.)  4s,  1954 _-  _«  *4.40%  basis 

Winnipeg  (Man.)  4i,  1934 _-  __  41/2%  basis 

*Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1155 


CANADA,  DOMINION  OP  (Continued). 

High  Low        Bid    Asked 

Winnipeg  (Man.)  Sch.  31/38,  1948 __  __  *4y2%  basis 

Yorkton  (Sask.)  5s,  1913-40 __  __  *6%  basis 

York  (Ont.)  5s,  1914-31 __  ._  __     *100 

Youville  (Que.)  school  5s,  1952 —  __  —     *97.89 

COLORADO 

Colorado  4s,  1922 __  „  99      100 

Colorado  3s,  1929 —  __  __      *88.01 

Boulder  (Colo)  5s,  1926 __  __  lOli/g  1031/2 

Boulder  (Colo.)  Water  41/2S,  1923 __  __  __      *97.90 

Colo.  Spgs.  (Colo.)  Ref.  4s,  1929 __  __  92        95 

Colo.  Spgs.  (Colo.)  Wtr.  5s,  1918-28 __  __  __     *101i/2 

Cortez  (Colo.)  Water  6s,  1919-24 __  __  __     *101 

Delta  Co.  (Colo.)  Ref.  5s,  1920 __  __  97      100 

Denver  City  &  County  (Colo.)  51/38,  1917-27—  __  __  *5.10%  basis 

Denver  (Colo.)  5s,   1919 __  __  103       105 

Denver  (Colo.)  S.  D.  41/2S,  1917 __  „  99      100 

Denver  (Colo.)  S.  D.  4s,  1922 __  __  41/2%  basis 

Denver  (Colo.)    6s __  «_  __    *101i/2 

Denver  (Colo.)  51/2S,   1915-16 „  __  *5.40%  basis 

Denver  (Colo.)  51/2S,  1927 —  —  —    *100 

East  Denver  (Colo.)  51/2S __  __  __     *100 

Grand  Jet.  (Colo.)  5s,  1926 __  __  100      IOO1/2 

Gunnison  Co.  (Colo.)  4s,  1919 __  __  89        93 

Gypsum  (Colo.)  Water  7s,  1922-27 —  —  —    *105.31 

Haxtun  (Colo.)  Water  6s,  10-15  yrs __  __  __     *100 

Holyoke  (Colo.)  Water  6s,  1919-27 —  —  *5%-6%  basis 

Hotehkiss  (Colo.)  Water  6s,  1914-19— —  „  —     *100i/2 

Jackson  Co.  (Colo.)  5s,  10-20  yrs __  __  „     *100 

Julesburg  (Colo.)  Water  68,  1920 __  „  —    *100.79 

Lake  Co.   (Colo.)  4s,  1921 „  —  82        86 

Las  Animas  Co.  (Colo.)  41/2S,  1931 __  —  98      100 

Ouray  Co.  (Colo.)  48,  1921 __  __  85        90 

Olathe  (Colo.)  Water  6s,  1921-26 —  —  —     *101 

Pueblo  (Colo.)  5s,  1918 __  __  4.60%  basis 

Pueblo  (Colo.)  Wtr.  41/38,  1914 __  __  4.60%  basis 

Pueblo  Co.  (Colo.)  41/2S,  1931 __  —  4.60%  basis 

Pueblo  Co.  (Colo.)   S.  D.  41/38,  1932 —  —  99      100 

Rio  Grande  Co.  (Colo.)  5s,  1919 „  —  96        99 

Trinidad  (Colo.)  Ref.  Wtr.  5s,  1932 __  —  971/2  101 

Victor  (Colo.)   5s,  1916 __  —  85        90 

Weld  Co.   (Colo.)   6s,  1927-42 —  —  —     *107y2 

DISTRICT  OF  COLUMBIA 

Columbia  (Dist.  of)  Fd.  Cur.  3.65s,  1924 —  __  105       107 

CONNECTICUT 

Connecticut  4s,  1936 —  __  3.80%  basis 

Bridgeport  (Conn.)  41/38,1918 __  _.  4.21-10%  basis 

Bridgeport  (Conn.)  4s,  1919 __  __  98 

Bridgeport    (Conn.)    4s,   1920-40 —  — *4.07-4y8%  basis 

Bristol  (Conn.)  Fdg.  4s,  1927 —  —  98 

Danbury   (Conn.)    4s,  1920 __  —  4.20-10%  basis 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1156 


CONNECTICUT  (Continued). 

High  Low  Bid    Asked 

Danbury  (Conn.)  Si/gS,  1941 , __  __  90 

Danbury    (Conn.)    31/38,   1933 __  __  __      *90% 

Danbury  (Conn.)  4s,  1935 __  __  *4i4%  basis 

East  Hartford    (Conn.)    4s,   1924 __        __  99 

East  Hartford  (Conn.)  Fire  D.,  4s,  1931 __  __  99 

Hartford  (Conn.)  4s,  1918 __  __  100 

Hartford  (Conn.)  Wtr.  4s,  1918 __  __  100 

Hartford  (Conn.)  31/28,  1954 __  __  90        92i/8 

Hartford  (Conn.)   S.  D.  Ars'l  4s,  1917 _.  __  100 

Hartford  (Conn.)  2nd  4s,  Nor.  1924 __  __  100 

Hartford  (Cnn.)  4s,  South.,  1927 __  __  100 

Hartford  (Conn.)  31/2S,  South.,  1931 __  __  92 

Hartford  (Conn.)  31/2S,  South.,  1955 __  __  91 

Meriden    (Conn.)    31/2S,  1917-24 __  __  4.15%  basis 

Meriden    (Conn.)   4s,  1914-18 __  __  4.15-10%  basis 

Middletown  (Conn.)  4s,   1922 __  __  98 

Middletown  (Conn.)   Seh.    4s,    1915 __  __  99       100 

Middletown  (Conn.)  31/2S,  1921 __  __  93        96 

New  Britain  (Conn.)   4s,  1927 __  __  98 

New  Britain  (Conn.)   Sewer,  31/2S,  1924 __  __  4.15%  basis 

New  Brit.  Farm  (Conn.)   School,  31/2S,  1929—  __  __  4.15-10%  basis 

New  Haven  (Conn.)  4s,  1913-19 __  __  4:%%  basis 

New  Haven  (Conn.)   Serv.,    4s,    1913-25 __  __  414%  basis 

New  Haven  (Conn.)  31/2S,  1913-24 __  __  4l^%  basis 

New  Haven  Town  (Conn.)  4s,  1939 __  __  41/^%  basis 

New  Haven  (Conn.)  31/3S,  1913-29 __  __  414%  basis 

New  Haven  (Conn.)  31/2S,    1922    __  __  *4.20  basis 

New  Haven  (Conn.)  31/3S,    1939    __  __  *90 

New  Haven  (Conn.)  4s,  1929-30 __  __  4.10%  basis 

New  London  (Conn.)   Sch.  4s,  1927 __  __  98 

New  London  (Conn.)  Wtr.,  31/2S,  1926 __  __  92 

New  London  (Conn.)  4y8S,  1941 __  __  __     *10iy8 

Norfolk  (Conn.)  4s,  1935 __  __  98 

Norfolk  Town   (Conn.)   31/2S,  1918 __  __  95 

Norfolk  (Conn.)  Wtr.,  31/2S,  1929 __  __  92 

Norwich   (Conn.)   4s,  1930 __  __  98 

Norwich  Town    (Conn.)    31/2S,   1925 __  __  92 

Orange  (Conn.)   Fund,  4s,  1925 __  __  98 

South  Norwalk  Conn.)  4i/4s,  1942 __  __  4.30-20%  basis 

South  Norwalk  (Conn.)  4s,   1935   __  __  *100 

Stamford  (Conn.)   Park,  4s,  1942 __  __  __        99 

Waterbury  (Conn.)  'Sch.,  414s,  1921 __  __  4.15%  basis 

Waterbury  (Conn.)  Wtr.,  414 s,  1971 __  __  4.15%,  basis 

Waterbury  (Conn.)  Wtr.,    4s,    1920-49 __  __  4.15%  basis 

Waterbury  (Conn.)  Park,  4s,  1913-58 __  __  4.15%  basis 

Waterbury  (Conn.)   Sch.,  31/2S,   1914-32 __  __  4.15%  basis 

Wallingford  (Conn.)  41/3S,  1943-53 __  __  *4.15%,  basis 

Willimantic  (Conn.)   4s,  1934 __  __  98 

DELAWARE 

Delaware,    4s,    1933 __  __  ggi/g  100 

Delaware  Hos.,  31/2S,  1915 __  __  41/3%  basis 

Delaware,  3s,  1937 __  __  41/3%  basis 

Newcastle  Co.   (Del.)   41/2S,  1936-34 __  __  4.30%  basis 

Newcastle  Co.   (Del.)   Ref.,  4s,  1913-34 __  __  4.30%  basis 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1167 


DELAWARE  (Continued). 

High  Low        Bid    Asked 

Newcastle  Co.  (Del.)   31/28,  1914-20 __  __       4.30%  basis 

Sussex  Co.  (Del.)  4s,  1913-22 __  —        41/8%  basis 

Wilmington  (Del.)  41/28,  1932 >_  —  4.20-10%  basis 

Wilmington  (Del.)  St.  &  Sr.,  41/2S,  1934 __  __  4.20-10%  basis 

Wilmington  (Del.)  4s,  1925 __  —  4.20-10%  basis 

FLORIDA 

Duval  Co.  (Fla.)   51/38,  1932 —  __            991/2  100 

Duval  Co.  (Fla.)  Road,  5s,  1939 —  __          10614  108 

Apalachiola    (Fla.)    6s,  15  yrs >_  „        •102.56    __ 

Bradentown   (Fla.)    5s,  1933-43 __  —          *5%  basis 

Dade  Co.  (Fla.)  5s,  1923-33 __  __       *43/4%  basis 

Ft.  Lauderdale  (Fla.)  Wt.,  Sw.  &  St.,  6s,  1932  —  —            __    *105.95 

Franklin  Co.  (Fla.)  Rd.  41/28,  1923-33 __  __       *4%%o  basis 

Gulfport   (Fla.)   6s,  1923 __  __            —    'lOO 

High  Springs  (Fla.)  St.,  6s,  1922-32 __  __       *5i/4%  basis 

Jacksonville  (Fla.)  5s,  1924 __  „          1043/3  1051/4 

Jacksonville  (Fla.)  Imp.,  5s,   1936 _-  —          lOTVs  108% 

Jacksonville  (Fla).  41/2S,  1936  —  —          IOOI/2  101 1/2 

Jacksonville   (Fla.)  41/2S,  1937 —  —            —      103l^ 

Key  West  (Fla.)  5s,  1935-55 __  __     •4.75%o  basis 

Lakeland  (Fla.)  Sewer  &  St.  5s,  1942-56 __  __            __     *101 

Pensacola   (Fla.)   Ref.  41/3S,  1941 „  __            __      IOI1/2 

Tampa  (Fla.)  6s,  1921 —  —       4.60%  basis 

Tampa  (Fla.)  5s,    1955    __  __       4.60  %basis 

St.  Lucie  Co.   (Fla.)  Rd.,  5s,  1925-40 —  __     *4.90%j  basis 

St.  Petersburg   (Fla.)    6s,  1942 __  __            —    *112 

Titusville  (Fla.)  5s,  28  yrs __  —          *95 

West  Tampa  (Fla.)   5s,  1941 ._  „            —    *103i4 

GEORGIA 

Georgia  Ref.,  41/28,   1914-16 __  __  4.50-40%,  basis 

Georgia  41/2S,   Act  of   '84-'15 „  __            99%  1001/2 

Georgia  41/2S,   1922   —  —    4.10-4%  basis 

Georgia  4s,  1926 __  —     4-3%%  basis 

Georgia  31/2S,  1917-35 __  —    4-3.65%,  basis 

Georgia  31/38,  1929 —  __            —       *97 

Georgia  31/38,  1920-30 __  __            „       *98i/2 

Albany   (Ga.)   5s,  1941 __  ._            —    '108 

Americus  (Ga.)   41/38,  1941 _-  __            —    *100 

Athens  (Ga.)  58,  1922 —  __   4%-i/2%  basis 

Atlanta  (Ga.)  Cap.,  6s,  1914 __  __  4.40-.30%  basis 

Atlanta  (Ga.)  Red.,  5s,  1915 __  __  4.40-.30%  basis 

Atlanta  (Ga.)  Red.,  41/2S,  1916 —  —  4.50-.30%  basis 

Atlanta  (Ga.)  41/38,  1932 —  __  4.50-.40%  basjs 

Atlanta(Ga.)  41/38,   1940  —  __  4.50-.25%j  basis 

Atlanta  (Ga.)  Sewer,  41/2S,  1916-40 —  __  4.35-.20%  basis 

Atlanta  (Ga.)  Wtr.,  4s,  1923 —  -_  4.40-.25%j  basis 

Atlanta  (Ga.)  31/38,  1931-33 „_  —        41/2%  basis 

Augusta  (Ga.)  6s,  1915  __        —        41/3%  basis 

Augusta  (Ga.)  5s,  1921  __        __        4i/o%  basis 

Augusta  (Ga.)  Flood  Prot.,  41/3S,  1942 —        —          101      102 

Augusta  (Ga.)  Red  41/38,  1924 __        __          100      101 

Augusta  (Ga.)  Ref.,   48,   1934   —        —            93 

•Quotation  nearest  March  1,  1913.    No  Quotation  on  that  date. 

1158 


GEORGIA  (Continuea). 

High  Low  Bid    Asked 

Augusta  (Ga.)  Si/gS,  1930 ■  —  >_  41/2%  basis 

Augusta   (Ga.)   41/2S,  1925 __  __  *4.40%  basis 

Baxley   (Ga.)    5s,  1934 —  __  __      *96 

Bogart  (Ga.)   Sch.,  5s,  1924-43 __  __  __     *100 

Buford  (Ga.  5s,  1927-28 —  -_  __       *97 

Brunswick   (Ga.)   5s,  1921 „  __  100       103 

Camilla  (Ga.)  Sewer,  51/2S,  1941 __  ._  —     'lOTy^ 

Chatham  Co.  (Ga.)   5s,  1913-19 _.  __  4.20%  basis 

Claxton  (Ga.)  53,  1931 —  —  —      *96 

Clarke  Co.   (Ga.)   5s,  1923-41 __  __  41/3%  basis 

Columbus  (Ga.)  5s,  1913-22  __  __  41/3%  basis 

Columbus  (Ga.)  Ref.,  4s,  1939 __  __  4.50-.40%  basis 

Columbus   (Ga.)   31/38,  1931 __  __  __       *883^ 

Brunswick  (Ga.)  5s,  1921 —  __  100       103 

Doerum  (Ga.)  SVgS,  1942 __  __  __     *105 

Fitzgerald    (Ga.)    5s,  1942 —  __  —     *104 

Gwinnett  Co.  (Ga.)  Sch.,  6s,  1943 __  __  __    *109.66 

Macon  (Ga.)   5s,    1923    __  __  4.45-.30%  basis 

Macon  (Ga.)  41/38,  1926 —  __  4.45-.30%  basis 

Macon  (Ga.)  W.  W.,  41/38,  1916-36 __  __  4.45-.30%  basis 

Macon  (Ga.)  Pav.  1/2  St.,  4s,  1920-39 —  __  4.45-.30%  basis 

Macon  (Ga.)  4 1/3 s,  1939 __  __  __     *103 

Manchester    (Ga.)    5s,  1936-40 __  __  __       *99 

McRae    (Ga.)    5s,  1936 __  __  __      *96% 

Meigs  (Ga.)  Wtr.  &  Lt.,  5s,  1934-37 __  __  __     *100 

Ocilla  (Ga.)  Sewer,  6s,  1931-43 __  __  *4.85%  basis 

Reidsville  (Ga.)  5s,  1916 __  __  __       *98i/2 

Rockmart  (Ga.)  5s,  1920-31 __  __  __      *99 

Rome  (Ga.)  41/38,  1926 __  __  97        98 

Savannah  (Ga.)  5s,  1913 __  __  100      101 

Savannah  (Ga.)  Ref.,   41/28,   1959 __  __  108      110 

Statesboro   (Ga.)   Sewer,  5s,  30  yrs. __  __  *100.138  __ 

Washington  (Ga.)  5s,  391/3  yrs __  __  *100 

Waycross  (Ga.)  5s,    1938    __  __  __     *103 

Waycross  (Ga.)  5s,  1918-42 __  __  *4.70%  basis 

Wilcox  C.   (Ga.)   5s,  1933 1.  __  ._  __       *97i/2 

IDAHO 

Idaho,  5s,  1915 __  __  100 

Idaho,  41/2S,  1931 __  __  4.30-.20%  basis 

Bannock  Co.  (Id.)  6s,  1914-16 __  __  4%%  basis 

Blaine  Co.  (Id)  5s,  1922-31 __  __  4.70%  basis 

Shoshone  Co.   (Id.)   5s,  1915-24 __  __  43/4%  basis 

Boise  City  (Id.)  5s,  1922 __  __  100 

Boise  City  (Id.)   S.  D.,  5s,  1925 —  —  4%%,  basis 

Boise  City  (Id.)  7s,  1  to  10  yrs __  __  6.00-5.50%  basis 

Nezperce   (Id.)    51/38,  1933 __  __  __    *102.90 

Idaho  Co.  (Id.)  Sch.,  51/2S,  1923-33 __  __  __    *104.70 

Orofino  (Id.)   68,  1922 __  __  —    *104.23 

Rupert  (Id.)   Sch.,  51/2S,  20  yrs __  _.  __     *103 

ILLINOIS 

Altamont   (111.)   Wtr.  &  Sewer,  5s,  1921-32—  „  —  *4.60%  basis 

Aurora   (111.)   41/3S,  1917-32 __  __  *4l^%  basis 

Bridgeport  (111.)  5s,  1914-24 __  __  *4i/3%  basis 

♦Quotation  nearest  March  I,  1913.    No  quotation  on  that  date. 

1159 


ILLINOIS  (Continued). 

Brookfield  (111.)  Water,  5s,  1920-21 

Bumham  (111.)  5s,  1921-31 

Carbondale  (111.)  Rd.,  5s,  1918 

Cass  Co.  (111.)  Sch.,  5s,  due  serially 

Chicago  Hghts.  (111.)  Water,  6s,  1914 

Chicago  (111.)  4s,  1915-22   

Chicago  (111.)  4s,    1913-28 

Chicago  (111.)  Park,  4s,  1919-29 

Chicago  (111.)  4s,  1929   

Chicago  (111.)  River,  4s,  1915 

Chicago  (111.)  Imp.,  4s,  1914-24 

Chicago  (111.)  Wrlds  Fair,  4s,  1921 

Chicago  (111.)  4s,   1914-25   

Chicago  (111.)  Judg.,  4s,  1914-24 

Chicago  (111.)  Gen.  Corp.,  4s,  1914-25 

Chicago  (111.)  43,   1914-31    

Chicago  (111.)   So.  Pk.,  4s,  1913-24 

Chicago  (111.)  Line  Pk.,  43,  1923 

Chicago  (111.)  W.  Chic.  Pk.,  1913-31 

Chicago  (111.)   Sou.  Dis.,  53,  1913-14 

Chicago  (111.)  'Sou.  Dis.,  41/2S,  1914-15 

Chicago  (111.)   Sou.  Dis.,  4s,  1913-23 

Chicago  (111.)     Sou.  Dis.,  4s,  1913-31 

Chicago  (111.)  4s,  due  Serially  1  to  20  yrs 

Chicago  (111.)  4s,    1918    

Chicago  (111.)  Sy^a,  1918-19 

Chicago  (111.)  4s,  1920   

China  (111.)  Rd.,  5s,  5%  yrs 

Colfax  (111.)  Water,  SVgS,  1918-31 

Cook  Co.  (111.)  4s,  1913-23   

Cook  Co.  (111.)  Ct.   H.,   4s,   1913-25 

Cook  Co.  (111.)   31/33,  1914-23 

Cook  Co.  (111.)   Sch.,   41/28 

Cook  Co.   (111.)  4s,   Serially   

Cook  Co.  (111.)  4s,  1928  

Decatur   (111.)   4s,  1923-24 

Edgar  Co.  (111.)  Rd.,  5s,  1915-21 

Evanston  (111.)  41/33,  1915-21 

Ford  Co.  (111.)   Sch.,  5s,  1919-27 

Hamilton  (111.)  Water,  5s,  1914-23 

Hamilton  (111.)  Water,  53,  1922-31 

Hamilton  (111.)  53,  Ser.  1924-31 

Hamilton  &  Saline  Cos.  (111.)  5s,  1915-17 

Hancock  (111.)  Co.  Sch.,  5s,  Serially 

Kenilworth    (111.)   Sch.,  5s,  1929 

Lake  Bluff  (111.)   5s,  Ser.  1914-32 

Lyons  (111.)  5s,  1912-18 

Marion   (111.)    Sch.,  4s,  1915-29 

Moline   (111.)   41/33,  1917-32 

Monticello  (111.)  5s,  1918-22 

Normal   (111.)   St.,  53,  1917 

Pekin  (111.)  5s,  1914-22 

Peoria  (111.)  43,  1917 

Quincy  (111.)  Ref.,  43,  1913-17 

Rock  Island  (111.)  Ref.,  41/2S,  1913-17 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1160 


High    Low 


Bid    Asked 
__     *100 
*4.40%  basis 
*43/4%  basis 
*4i/2%  basis 

_-     *102% 
*4.15%  basis 
*4.05%  basis 
*4i/8%  basis 

-  *99i/2 
995/8  99% 
99y8  99% 
99%  997/8 
99%  99% 
99%  99% 
99%  99% 
991/2  9934 
99  991/2 
99  991/2 
99         991/2 

1001/4     _- 
4.15%  basis 
991A     99% 
991/4     991/2 
__    *96.074 
__      *98.60 
*4i/8%  basis 
♦9914     — 

*100.67  _- 
__  *104l^ 
991/2  100 
991/2  100 
991/2  100 
*4.40%  basis 
4.04%  basis 
__     *100 

-  *97% 
*4.60%  basis 
*4.30%  basis 

♦41/3%  basis 

*5%  basis 

♦41/2%  basis 

*4i/2%  basis 

*100 

*4ya%  basis 

*4y2% 
•4.60% 
*5i/2% 
*4.20% 
41/4% 
*4i/2% 
•4.40% 


basis 
basis 
basis 
basis 
basis 


4.13% 
41/4% 


basis 
♦100 
*99 
basis 
basis 


ILLINOIS  (Continued). 


St.  Clair  Co.  (111.)  Sch.,  5s,  1918-23 

St.  Clair  Co.  (111.)  Sch.,  5s,  1933-27 

Savanna  (111.)  Water,  5s,  1923-29 

Shelby  Co.  (111.)  Sch.,  5s 

Springfield  (111.)  Ref.,  31/38,  1920 

Springfield    (111.)    SVgS,    1921 

Springfield   (111.)   "Sch.,  41/4S,  1915-32 

INDIANA 

Indiana  Fund,  31/28,  1915  (M.  &  N.) 

Indiana  Fund,  31/2S,  1915  (A.  &  0.) 

Blackford  Co.  (Ind.)  41/2S,  1  to  10  yrs 

Boone  Co.  (Ind.)  Ct.  H.,  4s,  1913-20 

Crawfordsville   (Ind.)  4s,  1913-20 

Evansville  (Ind.)  Ref.,  4s,  1932 

Evansville  (Ind.)  Ref.,  4s,  1942 

Evansville  (Ind.)  S.  Cy.,  31/2S,  1913-17 

Floyd  Co.  (Ind.)  4s,  1914-30 

Ft.  Wawne    (Ind.)    41/3S,  1913 

Ft.  Wayne  (Ind.)  31/38,  1918-20 

Ft.  Wayne  (Ind.)   S.  D.  4s,  1914-23 

Franklin  Co.  (Ind.)  4s,  1913-20 

Gary  (Ind.)  6s,  1918-21 

Hendricks  Co.  (Ind.)  Ct.  H.,  4s,  1923-32 

Huntington  Co.  (Ind.)  31/38,  1914-24 

La  Porto  (Ind.)  Sewer,  5s,  1913-21 

Perry  Co.  (Ind.)  41/3S,  10  to  34  yrs 

Indianapolis  (Ind.)  4s,  1924 

Indianapolis  (Ind.)  Pk.  Imp.,  4s,  1927 

Indianapolis  (Ind.)  Fire  Dept.,  4s,  1941 

Indianapolis   (Ind.)  Hosp.,  31/2S,  1936 

Indianapolis  (Ind.)  C.  H.,  31/38,  1939 

Indianapolis  (Ind.)   S.  D.,  48,  1913-26 

Indianapolis  (Ind.)  Bldg.,  4s,  1946 

Jeffersonville  (Ind.)  Ref.,  31/38,  1925 

Knox  Co.  (Ind.)  4s,  1913-20 

Kokoma  (Ind.)  4s,  1916-31 - 

Lafayette   (Ind.)   41/38,  1920 

La  Porte  Co.   (Ind.  5s,  1913-28 

Logansport   (Ind.)  31/38,  1926 

Marion  Co.   (Ind.)  Ref.,   4s,   1921 

Marion  Co.  (Ind.)  Bridge,  31/3S,  1924 

Marion  Co.   (Ind.)  Ref.,   31/38,    1925 

New  Albany   (Ind.)    5s,  1915 

Richmond   (Ind.)   4s,  1927 

Richmond  (Ind.)   Sch.  Cy.,  4s,  1919 

St.  Joseph  Co.   (Ind.)  31/3S,  1922-24 

St.  Joseph  Co.  (Ind.)   31/3S,  1914-26 

South  Bend  (Ind.)  4s,    1925 

South  Bend  (Ind.)  31/38,  1918  

South  Bend  (Ind.)   Sch.  D.,  48,  1917-27 

Terre  Haute  (Ind.)  6s,  1913-18 

Terre  Haute  (Ind.)  4s,  1915 - 

Terre  Haute  (Ind.)  48,   1927   

Terre  Haute  (Tnd.)   Sewer,  4s,  1930 

Terre  Haute  (Ind.)  Sch.  Cy.,  48,  1931 

Vigo  Co.  (Ind.)  41/38,  1912-27 

'Quotation  nearest  March  1,  1913.    No  Quotation  on  that  date. 

1161 


High    Low 


Bid  Asked 
*4.40%  basis 
*4i/3%  basis 
*4.40%  basis 
*4.40%  basis 
4.30%  basis 
-  *9378 
*4.20%  basis 


B%%  basis 

B%%  basis 

*100.92   __ 

3%%  basis 

4%  basis 

99 

99 

4%  basis 

4%  basis 

41/3%  basis 

4%  basis 

4%  basis 

3%%  basis 

__    *100 

3%%  basis 

3%%  basis 

-_    *100 

*100.407  — 

414%  basis 

4iA%  basis 

3.70%  basis 

3.80%  basis 

3%%  basis 

3%%  basis 

3.70%  basis 

4%  basis 

4%  basis 

4%  basis 

4%  basis 

4%  basis 

4l^%  basis 

4l^%  basis 

3%%  basis 

3%%  basis 

4%  basis 

4%  basis 

4%  basis 

3.85%  basis 

3.85%  basis 

4%  basis 

4%  basis 

4%  basis 

41/3%  basis 

4%  basis 

4%  basis 

4%  basis 

4%  batis 

3%%  baiii 


High  Low        Bid    Asked 
IOWA 

Atlantic  (la.)  SVgS,  1920 __  __  __      *94 

Bedford  (la.)  5s,  1921-33 __  __  *4i/2%  basis 

Belle  Plaine  (la.)   Sch.,  41/28,  1921 __  __  __     *100 

Belle  Plaine  (la.)  Wtr.  &  Sewer  5s,  1918-28__  __  __  *4yo%  basis 

Boone  (la.)  41/38,  1917-31  __  __  4.30%  basis 

Boone  (la.)  31/2S,  1919 ._  ._  >_       *94% 

Boone  (la.)  41/2S,  1917-22  __  —  __     *100 

Boone  (la.)  41/2S,  1928 __  __  __     *100 

Burlington  (la.)  4s,  1924 —  __  4.20%  basis 

Cedar  Rapids  (la.)  41/2S,  1913-18 __  __  4.10%  basis 

Cedar  Rapids  (la.)  4s,  1913-19 __  __  4.10%  basis 

Cedar  Rapids  (la.)  Sch.  D.,  4l^s,  1921 __  „  4.50%  basis 

Central  City  (la.)  Wtr.,  5s,  1932 —  __  __    *104% 

Council  Bluffs  (la.)  Wtr.,  41/2S,  1916-30 __  __  414%  basis 

Council  Bluffs  (la.)  Fire,  41/2S,  1920 __  __  41/4%  basis 

Council  Bluffs  (la.)    Sch.  D.,  4s,  1920 __  __  41/2%  basis 

Council  Bluffs   (la.)   41/2S,  1915 __  __  __     *100 

Davenport  (la.)  4s,  1913-29 —  „  4%  basis 

Davenport  (la.)  S.  D.,  4s,  1916 __  —  4%  basis 

Davenport  (la.)  Sch.,  41/2S,  1921 __  __  —     *101s/8 

Davenport  (la.)  4s,    1922    —  —  *4 1/2%  basis 

Davenport  (la.)  4s,  1921-25 —  —  *4i4%  basis 

Des  Moines  (la.)  41/2S,    1913-31    __  —  4.15-.10%  basis 

Des  Moines  (la.)  Fdg.,  4s,  1916 —  —  4.15-.10%  basis 

Des  Moines  (la.)  City  HI.,  4s,  1926 —  __  4%-i4%  basis 

Dubuque  (la.)  4s,  1917 —  __  4l^%  basis 

Dubuque  Co.  (la.)  4l^s,  1921-31 —  —  4%%  basis 

Dubuque  (la.)  1925 __  —  *4.40%  basis 

Iowa  City  (la.)  Fund  5s __  __4.70-.50%  basis 

Jackson  Co.  (la.)  5s,  Ser.  1919-23 __  __  *4i/2%  basis 

Jackson  Co.   (la.)  5s,  1913-30 __  __4.70- .50%  basis 

Keokuk  Co.  (la.)  4s,  1919 __  __  *4i/2%  basis 

Ottumwa  (la.)  41/2S,  1917 —  —  4l^%  basis 

Ottumwa  (la.)  Sch.  41/2S,  1922 —  __  —    *101.55 

Page  Co.   (la.)   6s,  1918-22 __  „  *5i/8%  basis 

Polk  Co.  (la.)  41/2S,    1922-32 __  __  414%  basis 

Polk  Co.  (la.)  Ct.  Hse.  4s,  1924 __  __  4.10%  basis 

Polk  Co.  (la.)   Ct.  Hse.  31/28,  1917 —  —  4.10%  basis 

Polk  Co.  (la.)  Ct.  Hse.  41/2 s,  1920-24 __  __  *4.30%  basis 

Seymour  (la.)  5s,  1932 __  __  —    *106.55 

Waterloo  (la.)  Wtr.  41/2S,  1930 __  „  414%  basis 

Webster  City  (la.)  Lt.  41/08,  1931-31 __  __  __     *100 

Winnebago  Co.  (la.)  6s,  1914-24 __  —  *5i/8%  basis 

KANSAS 

Atchison    (Kans.)    4s,   1915 —  —  —       •9878 

Atchison  Co.  (Kan.)  Ref.  5s,  1916 —  __  104      IO41/2 

Atchison  Co.  (Kan.)  Ref.  4s,  1914 __  __  90        94 

Belle  Plaine  (Kans.)  5s,  1933-43 __  —  *4.80%  basis 

Caney   (Kans.)    5s,  1928-29 , __  —  —     *102% 

Emporia  (Kan.)  414s,  1929 __  —  100 

Emporia  (Kan.)  S.  D.  41/2S,  1922 —  —  41/2%  basis 

Ft.  Scott  (Kan.)  41/2^,  1935 „  __  99      100 

Ft.  Scott  (Kan.)  V/^^,  1932-42 —  —  *^Vz%  basis 

*Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1162 


KANSAS  (Continued). 

High 

Independence  (Kans.)  Water  4%s,  1936-40 

Independence  (Kans.)  Water  4%s,  1942^ 

Hutchison  (Kan.)  5s,  1913-15 

Kansas  City  (Kan.)  Ref.  6s,  1915 

Kansas  City  (Kan.)  5s,  1917 

Kansas  City  (Kan.)  Sch.  41/28,  1939 

Kansas  City  (Kan.)  Wtr.  Pit.  Pur.  41/28 

Kansas  City  (Kan.)  Ref.  41/3S,  1939 

Kansas  City  (Kan.)  Ser.  5s,  1915-23 

Kansas  City  (Kan.)  5s,  1918-33 

Kansas  City  (Kan.)  5s,  1914-33 

Kansas  City  (Kans.)  41/38,  1933-33 

Kingman   (Kans.)   Elec.  Lt.  5s,  1923-43 

Mulberry  (Kans.)  Wtr.  &  Elec.  Lt.  5s,  1923-43 

Norton  (Kans.)  5s,  1917-33 

Norton  (Kans.)  41/2S,  1933 

Rosedale  (Kans.)  Wtr.  5s,  1932 

Leavenworth  (Kan.)  5s,  1915 

Leavemvorth  (Kan.)  Fund  4s,  1914 

Leavenworth  (Kan.)  Bd.  Ed.  41/2S,  1921 

Leavenworth  Co.  (Kan.)  Ref.  5s,  1915 

Sedgwick  Co.  (Kan.)  Fund  5s,  1925 

Shawnee  Co.  (Kan.)  4s,  1924 

Topeka  (Kan.)  Wtr.  5s,  1926 

Topeka  (Kan.)  El.  Lt.  41/38,  1929 

Topeka  (Kan.)  Wtr.  4s,  1924 

Topeka  (Kan.)  Ref.  3%s,  1919 

Topeka    (Kan.)  Sch.  Dis.  48,  1925 

Wichita  (Kan.)  6s,    1915 

Wichita  (Kan.)  41/38,    1923 

Wichita  (Kan.)  Sch.  Dis.  41/3S,  1923 

Wyandotte  Co.  (Kan.)  Edge.  41/3S,  1932-41 

KENTUCKY 

Corydon  (Ky.)  Elec.  Lt.  6s,  1915-32 

Fulton  (Ky.)  68,  Ser.  1913-33 

Horse  Cave  (Ky.)  Sch.  5s 

Lexington  (Ky.)  6s,  1-10  yrs 

Lexington  (Ky.)  68,  1917-33 

Louisville  (Ky.)  Hosp.  41/3S,  1951 

Louisville  (Ky.)  Imp.  4s,  1933 

Louisville  (Ky.)  Imp.  4s,  1928 

Louisville  (Ky.)  Park  4s,  1930 

Louisville  (Ky.)  Ref.  48,  1937 

Louisville  (Ky.)  Sewer  4s,  1947 

Louisville  (Ky.)  Ref.  31/08,  1940 

Louisville  (Ky.)  Ref.  31/38,  1943 

Louisville  (Ky.)  Sr.  &  Pk.  3s,  1941 

Nicholasville  (Ky.)  Sch.  58,  5-20  yrs 

McCracken  Co.  (Ky.)  Rf.  5s,  1933,  op.  1913___ 
McCracken  Co.  (Ky.)  Rf.  58,  19133,  op.  1923— _ 
Shelby  Co.  (Ky.)  5s 

LOUISIANA 

Louisiana  4s,  1914 

Louisiana  Pt.  Com.  5s,  1924-59 

Louisiana  Port.  Comm.  5s,  1928 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1163 


Low        Bid    Asked 

—      *4.60%  basis 

__      *4.60%  basis 

100 

— 4.30-.20%  basis 

__4.30-.20%  basis 

__4.30-.20%  basis 

-4.45-4.35%  basis 

-4.45-4.35%  basis 

_-      *4.35%  basis 

__      *4.40%  basis 

__      *4.40%  basis 

4.35%  basis 

__    *103.63 

*5%  basis 

__     *100 

__     *100 

__    *104.78 

98 

93         95 

__       100 

100       103 

414%  basis 

97       100 

__4.35-.25%  basis 

__4.35-.25%  basis 

__4.35-.25%  basis 

__4.35-.35%  basis 

100 

100 

100 

100 

4.40%  basis 

__      *5i/8%  basis 

*5%  basis 

*100 

*100 

__      *5.40%  basis 

108 

100       101 

1001/4  1011/3 

10014  1011/3 

1001/4  1011/3 

1001/3  1011/3 

90         911/3 

90         91 

80 

__  *101.356 

41/3%  basis 

41/3%  basis 

*101.61     -_ 

983/4       .- 

4.40%  basis 

__     *106 

LOUISIANA  (Continued). 

High  Low  Bid    Asked 

Louisiana  Port  Comm.  5s,  1943-58 •4.40%  basis 

Acadia  (La.)  5s,  Serially __  _-            *100 

Acadia   (La.)   5s,  1920-40 „  __  __     *100 

Atchafalaya  Dist.  (La.)  Ref.  &  Imp.  5s,  1949—  ♦llO 

Bossier  Dist.  (La.)  Lev.  6s,  1923 —  __  991/2    __ 

Caddo  Dist.  (La.)    (40-50)  5s,  1951 __  __  __        971/2 

Fifth  District  (La.)  5s,  1950 __  —  100      110 

Fifth  District  (La.)  5s,  1952 MOS 

Fifth  District   (La.)   5s,  1954 *108 

Fifth  District  (La.)  58,  1962 „  __  110 

Lake  Borgne  (La.)  Dis.  Lev.  5s,  1952 >_  „  HOi^     — 

Kentwood  (La.)  Wtr.  &  Sewer  5s,  1926-31 __  __  —    *100 

Madison  Co.  (La.)  5s,  1921-28 __  __  __     '100 

Morehouse  Co.  (^La.)   5s,  1921-27 —  ._  __     *100 

Maryland  SVgS,  1923-28 ._  ._  —      *93y8 

Maryland  4s,   1927-28 __  „  __       *99 

Lewiston  (Me.)  4s,  1913 __  __  *5%  basis 

New  Orl.  (La.)  Fltg.  Debt  4s,  1948 __  ._  85        95 

New  Orl.  (La.)  Constitutional  4s,  1942 __  __  96        961/2 

New  Orl.  (La.)  7s,   1922 *120i4  __ 

New  Orl.  (La.)  Premium   5s 254 

New  Orl.  (La.)  Premium  5s,  (dr'n.  nos.) __  —  320 

New  Orl.  (La.)  Pub.  Impvt.  old  4s,  1950 __  __  931/2     94% 

New  Orl.  (La.)  Pub.  Impvt.  new  4s,  1942 >-  __  92 

New  Orl.  (La.)  Sch.  Tchrs.  Sal.  4s,  1927 —  —  85        95 

New  Orleans  (La.)   5s,  1916-25  —  __  '4.90%  basis 

New  Orleans  (La.)   5s,  1922-25   __  __  *4%%  basis 

New  Orleans  (La.)  5s,  1915-27  _>  ._  —    •lOl 

Plaquemine  Parish  East  Bank  (La.)   5s,  1952  *102i/2  — 

Pontchartrain  District  (La.)  D.  6s,  1944 *121 

Red  River  (La.)  A  &  B  B  Dis.,  5s,  1950 ._  __  102 

Red  River  (La.)  A  &  B  B  Dis.,  5s,  1953 __  ._  IO21/2  106i/a 

St.  Mary  (La.)  Sch.,  5s,  1919-33 _>  __  •4.90%  basis 

Sabine  (La.)   Sch.,  5s,  1913-22 __  __  ._     '100 

Vermillion  Co.  (La.)  5s,  1920-27 —  __.  __     '100 

MAINE 

Maine,    5s,    1919 __  __  105      106 

Maine,    5s,    1917 __  __  99 

Maine,    3s,    1913-29 __  __  91         92 

Aroostook  Co.  (Me.)  41/2S,  1915 __  __  100 

Aroostook  Co.   (Me.)  C.  H.  4s,  1925 98 

Auburn  (Me.)  31/2S,  1925 __  __  90 

Augusta  (Me.)  Ref.,  4s,  1913-19 __  __  98      101 

Bangor   (Me.)   4s,  1914 __  __  99 

Bangor  (Me.)  Ref.,  Wtr.,  4s,  1935 98 

Bath  (Me.)  Ref.,  4s,  1941 __  __  100      101 

Belfast    (Me.)    4s,    1918 __  __  98 

Cumberland  Co.  (Me.)  3y2S,  1921 __  __  __        96 

Gardiner  (Me.)  Wtr.,  Dis.,  4s,  1934 __  __  97 

Kennebec  (Me.)  Wtr.  Dis.,  31/2S,  1925 __  __  90 

Lewiston   (Me.)    5s,  1917 __  __  102      103 

Lewiston   (Me.)    4s,  1927 __  __  98 

Portland  (Me.)  4s,  1929 __  __  971/,    98% 

Portland  (Me.)  Cy.  HI.,  4s,  1926-45 _-  ..  3.80-75%  basis 

♦Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1164 


MAINE  (Continued). 


Portland  (Me.)  Ref.,  Si/gS,  1922 

Portland  (Me.)  Bridge  Dis.,  Si/gS,  1939. 

Portland  (Me.)  Wtr.  Dis.,  4s,  1928 

Rockland   (Me.)   SVaS,  1917 

Washington  Co.  (Me.)  4s,  1928 

Waterville    (Me.)    4s,  1927 

Waterville    (Me.)    Si/gS,  1935 

Westbrooke  (Me.)  4s,  1915 

MARYLAND 

Maryland  4s,  1927 

Maryland  Sy^s,  1919 

Maryland  State  Rds.,  Sy^s,  1924 

Maryland  State  Rds.,  SVaS,  1926 

Maryland  State  Rds.,  Si/gS,  1927 

Maryland   3s,   1914   

Annapolis  (Md.)  41/28,  1942 

Attleborough  (Md.)   4s,  1924 

Attleborough   (Md.)   31/2*,  1935 

Arlington  (Md.)  Wtr.,  4s,  1922 - 

Baltimore  (Md.)  5s,  1916 

Baltimore  (Md.)  Parks,  4s,  1955 

Baltimore  (Md.)  Annex,   4s,    1954 

Baltimore  (Md.)  4s,  1920  

Baltimore  (Md.)  Wtr.,  4s,  1926 

Baltimore  (Md.)  4s,  1961  

Baltimore  (Md.)  sy^s,  1930  

Baltimore  (Md.)  Corp.  stock  4s,  1961 

Baltimore  (Md.)  Impvt.,  31/285  1940 

Baltimore  (Md.)  31/2S,  1945 

Baltimore  (Md.)  Ref.,  31/2S,  1952 

Baltimore  (Md.)  3l^s,  1927  

Beverly  (Md.)  Water,  4s,  1917 

Beverly   (Md.)   Sewer,  4s,  1936 

Cumberland  (Md.)  Wtr.,  41/2S,  1941 

Frederick  (Md.)  48,  1918 

Talbot  Co.   (Md.)  5s,  1-15  yrs 

Worcester  Co.  (Md.)  5s,  1914 

MASSACHUSETTS 

Massachusetts  31/2S,  1918 

Massachusetts  3l^s,  1923 

Massachusetts  31/2S,  1935 

Massachusetts  Wtr.,  31/2S,  1942 

Massachusetts  Wtr.,  31/2S,  1944 

Massachusetts  3s,  1915 

Massachusetts  3s,  Apr.  1929 

Massachusetts  3s,  May  1929 

Massachusetts  Met  Swge.,  3s,  1936 

Massachusetts   3s,   1939 

Massachusetts  Wtr.,  3s,  1941 

Massachusetts  4s,  1916 

Massachusetts  4s,  1916-17 

Massachusetts  4s,   1916-18 

Massachusetts  4s,  1920 

"Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1165 


High    Low 


Bid     Asked 
94        951/3 
4%  basis 
__      102l^ 
95 
98 
98 
90 
98 


99 
93 
93 
93 
93 


98 
90 


991/2 

933/8 

93% 
93% 
93% 
99 
*102.06 


102 

961/2  97 

961/2  97 

98  100 

98  100 

961/4  _- 
92 


92 
91 
90 
83 
99 
4.10%  basis 

100     1011/2 

96        98 
*102.27    — 
__    *100.58 


4%  basis 
4%  basis 
91  92 
893/4  __ 
4%  basis 
4%  basis 
4%  basis 
4%  basis 
4%  basis 
4%  basis 
8II/2  821/2 
__  *100.67 
*3  3/4%  basis 
*3%%  basis 
__    *101.51 


MASSACHUSETTS  (Continued). 


Massachusetts  SVgS,  1920 

Massachusetts  SVgS,  1922 

Massachusetts  48,  1923   

Massachusetts   sy^a,   1922-25 

Massachusetts  4s,  1916-26 

Massachusetts  43,  1918-26 

Massachusetts  4s,  1916-27 

Massachusetts  4s,  1928 

Massachusetts  4s,  1916-30 

Massachusetts  3s,  1930 

Massachusetts  31/28)  1931 

Massachusetts  4s,  1933 

•Massachusetts  3i/^s,  1933 

Massachusetts  31/38,  1937 

Massachusetts  3s,  1938 

Massachusetts  31/28,  1938-39 

Massachusetts  31/2S,  1931-40 

Massachusetts  31/2S,  1940 

Massachusetts  31/28,  1935-45 

Massachusetts  4s,  1945 

Massachusetts  31/2S,  1947 

Massachusetts  31/2S,  1918-48 

Massachusetts  31/2S,  1948 

Massachusetts  31/2S,  1949 

Massachusetts  4s,  1949-50 

Massachusetts  48,  1913-52 

Amesbury  (Mass.)  4s,  1918 

Arlington  (Mass.)  4s,  1916 

Attleborough  (Mass.)  31/38,  1920 

Attleborough    (Mass.)    31/2S,  1935 

Belmont  (Mass.)  4s,  1943 

Beverly  (Mass.)  4s,  1921-23 

Boston  (Mass.)  3s,  1921 

Boston  (Mass.)  31/38,    1923 

Boston   (Mass.)   31/38,  1924 

Boston  (Mass.)  31/28,  1932 

Boston  (Mass.)  31/38,  1934 

Boston  (Mass.)  31/3S,  1935 

Boston  (Mass.)  31/38,  1943 

Boston  (Mass.)  31/3S,  1944 

Boston  (Mass.)  31/3S,  1945 

Boston  (Mass.)  4s,  1936 

Boston  (Mass.)  4s,  1913-37 

Boston  (Mass.)  Wtr.  4s,  1919 

Boston  (Mass.)  Park  4s,  1920 

Boston  (Mass.)  Tun.  &  Sub.  4s,  1948 

Boston  (Mass.)  Sub.  4s,  1957 

Boston  (Mass.)  Wtr.  31/38,  1917 

Boston  (Mass.)  Swge.  31/3S,  1919 

Boston   (Mass)   31/38,  1920 

Boston  (Mass.)  31/3S,  1919-36 

Boston  (Mass.)  31/38,  1936 

Boston  (Mass.)  sy^s,  1922-44 

Boston  (Mass.)  4s,  1917-33 

Boston  (Mass.)  4s,  1923-33 

Boston  (Mass.)  48,  1933 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1166 


High    Low 


Bid 


*33/4% 
*33/4% 

*3.75% 


Asked 

*98.45 
*983/s 
*103.49 
basis 
basis 


basis 

basis 

__    *103.93 

*3%%  basis 
_-      *87.32 
basis 
basis 

—  *963/4 

*33/4%  basis 
__       *88 


*4% 
'3.75% 


*33/4% 
*3.90% 
*4.00% 

*4.05% 
*4.00% 


*33A% 
*3.75% 


basis 
basis 
basis 
basis 
basis 

__       *94i/4 
*33A%  basis 

-       *953/8 
*953/3 
basis 
basis 

*99i/i 
*100.33 

*96i/8 
*90% 

*102% 
basis 
basis 
basis 
basis 
basis 
basis 
basis 
basis 
basis 
basis 
basis 
basis 
basis 
basis 
102 
basis 
basis 
basis 

*96% 
basis 
*90i/2 
*88% 
basis 
basis 
*101.40 


*33/4% 

4.15-4% 
4.15-4%, 
4.15-4% 
4.15-4% 
4.15-4%, 
4.15-4% 
4.15-4% 
4.15-4% 
4.15-4% 
4.15-4% 
4.15-4%o 
4.15-4% 
4.15-4% 

101 
4.15-4%, 
4.15-4%, 
4.15-4%o 

4.10% 


*3.85% 
♦3.85%, 


MASSACHUSETTS  (Continued). 

High  Low  Bid    Asked 

Boston  (Mass.)  4s,  1933-41 —  —  *3.90%  basis 

Boston  (Mass.)  4s,  1927-46 —  —  *4.10%  basis 

Boston  (Mass.)  4s,  1950 —  —  —    *101.95 

Boston  (Mass.)  4s,  1917-58 —  —  *3.85%  basis 

Brocton  (Mass.)  4s,  1927 —  —  98 

Brocton  (Mass.)  Wtr.,  31/28,  1932 —  —  91 

Brocton  (Mass.)    31/38,  1916  —  —  —       *98 

Brocton  (Mass.)  414s,  1920 —  —  —     *101% 

Brocton  (Mass.)    31/2S,  1934   __  —  —      *90% 

Brocton  (Mass.)    4l^s,    1921-43 —        —  *4%  basis 

Brookline  (Mass.)  4s,  1913-23 —  —  99 

Brookline  (Mass.)   31/2S,  1915 —  —  —      *99 

Cambridge  (Mass.)  Wtr.,  4s,  1917 —  —  99 

Cambridge  (Mass.)    31/2S,    1925 __  __4.12i/2-.05%  basis 

Cambridge  (Mass.)    Bdge,   3s,   1941 __  —  81 

Cambridge  (Mass.)    31/2S,    1930 __  —  —       *95 

Cambridge   (Mass.)   4s,  1923-33 __  —  *3%%  basis 

Cambridge  (Mass.)    31/2S,    1939 —  —  —       *90y2 

Cambridge   (Mass.)   31/2S,  1942___ —  —  —       *90i/8 

Cambridge  (Mass.)    31/2S,  1944 __  —  —       *90% 

Canton   (Mass.)    4s,  1922-24 __  —  *4.20%  basis 

Chelsea  (Mass.)   Park,  4s,  1936 —  —  98 

Chelsea  (Mass.)   4s,  1958 __  „  —     *100 

Chelsea  (Mass.)   Si/gS,  1959 __  __  —      *89y3 

Chicopee  (Mass.)   4s,  1918-19 —  —  *4l^%  basis 

Chicopee  (Mass.)   4s,  1913-21 —  —  *3.70%  basis 

Chicopee  (Mass.)   4s,  1916-21 —  —  *3.85%  basis 

Chicopee  (Mass.)   4s,  1921-35 __  —  *3.80%  basis 

Concord  (Mass.)  31/2S,  1929 —  —  —       *96y8 

Concord  (Mass.)  4s,  1937-42 —  —  *3.90%  basis 

Concord  (Mass.)    4s,   1940-42 —  —  *3.90%  basis 

Danvers  (Mass.)  Elec.  Lt.,  4s,  1915 __  __  „       *99% 

East  Bridgewater  (Mass.)  Wtr,  41/2S,  1-30  yrs.  __  __  *101i/2     — 

East  Bridgewater  (Mass.)   4i/4s,  1924-41 __  *4%  basis 

Essex  Co.  (Mass.)  31/2S,  1916 __  —  —       *98 

Everett    (Mass.)    Swr.  4s,  1929 __  __  98 

Everett  (Mass.)  4s,  1921 —  __  __       *99iA 

Everett   (Mass.)   4s,  1924 __  __  __       *99 

Fall  River  (Mass.)   4s,  1942 __  __  __     *102 

Fall  River  (Mass.)   Sch.,  414s,  1913 __  __  991/2     — 

Fall  River  (Mass.)  Mun.,  4s,  1922 __  __  __       102y2 

Fall  River  (Mass.)   Wtr.,  31/2S,  1920 __  __  92 

Fall  River  (Mass.)   31/38,  1924 __  __  __       *95% 

Fall  River  (Mass.)  4s,  1922-23 __  __  __     *100y8 

Fall  River  (Mass.)   31/38,  1925 __  __  __      *94l^ 

Fall  River  (Mass.)  31/38,  1934 __  __  __        931/3 

Fall  River  (Mass.)    31/38,  1930 __  __  „       *92y^ 

Fall  River  (Mass.)   4s,  1938 __  __  __       *98 

Fall  River  (Mass.)  31/38,  1939 __  __  __       *93i/2 

Fitchburg  (Mass.)   Reg.,  4s,  1922 __  __  99 

Fitchburg  (Mass.)  Wtr.,  31/3S,  1926 __  __  92 

Franklin  (Mass.)  Wtr.,  4s,  1922-25 __  __  *4.15%  basis 

Gardner  (Mass.)  Wtr.,  48,  1913-34 __  __  97 

Gardner   (Mass.),  Wtr.,  4s,  1931-32 __  __  *4.15% basis 

Gloucester  (Mass.)   Wtr.,  31/38,  1913-31 __  __  4.15-.10%  basis 

♦Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1167 


MASSACHUSETTS  (Continued). 

High    Low 

Gloucester  (Mass.)  SVgS,  1921 

Haverhill  (Mass.)   48,  1927 

Haverhill  (Mass.)  4s,  1917-22 

Heverhill  (Mass.)  4s,  1922 

Holyoke  (Mass.)   4s,  1927 

Holyoke  (Mass.)    SVzS,  1913-32 

Holyoke  (Mass.)   3yaS,  1928 

Holyoke  (Mass.)    BYzS,    1932 

Hudson  (Mass.)   4s,  1921 

Indianola  (Mass.)  Sch.  5s,  5-20  yrs 

Ipswich  (Mass.)  43,  1924 

Lawrence  (Mass.)   4s,  1924 

Lawrence  (Mass.)    4s,    1014-22 

Lawrence  (Mass.)   4s,  1919 

Lawrence  (Mass.)     4s,  1923 

Leominster   (Mass.)   43,  1926 

Lowell  (Mass.)    Wtr.,  4s,  1920 

Lowell  (Mass.)  4s,  1919-22 

Lynn  (Mass.)  4s,  1927 

Lynn  (Mass.)  sy^s,  1932 : 

Lynn  (Mass.)   4s,  1917 

Lynn  (Mass.)  43,  1919 

Lynn  (Mass.)   31/28,  1932 

Lynn  (Mass.)  4s,  1917-42 

Maiden  (Mass.)   4s,  1924 

Maiden  (Mass.)  Wtr.,  SVgS,  1924 

Maiden  (Mass.)   4s,  1926 

Maiden  (Mass.)   3y2S,  1935 

Maiden  (Mass.)   4s,  1942 

Mansfield  (Mass.)  4s,  1918 

Mansfield  (Mass.)   4s,  1933 

Marblehead   (Mass.)   4s,  1919 

Marlborough  (Mass.)   4s,  1915 

Marlborough  (Mass.)  4s,  1926 

Marlborough  (Mass.)    4s,    1918 

Medford  (Mass.)   4s,  1917 

Medford  (Mass.)   4s,  1930 

Melrose  (Mass.)  4s,  1924 

Methuen    (Mass.)    43,   1928 

Middleboro    (Mass.)    4s,  1921 

Middlesex  Co.  (Mass.)  4s,  1916-21 

Milton  (Mass.)   3sy2,  1913-32 

Milton  (Mass.)    sygS,   1919 

Natick  (Mass.)  31/28,  1924-25 

Natick  (Mass.)    31/28,   1925 

■NTatick    (Mass.)    31/28,   1026-28 

Needham   (Mass.)    31/33,  1931 

New  Bedford  (Mass.)    4s,  1957 

New  Bedford  (Mass.)    41/2S,  1917 

New  Bedford  (Mass.)   Wtr.,  4s,  1926 

New  Bedford  (Mass.)  Swr.  4s,  1913-41 

New  Bedford  (Mass.  31/2S,  1918 

New  Bedford  (Mass.)  4s,  1916-22 

New  Bedford  (Mass.)    31/28,   1922 

New  Bedford  (Mass.)    4s,  1928 

New  Bedford  (Mass.)    4s,  1935 

^Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1168 


Bid 

Asked 



*955/3 

98 

99 

*3.90%  basis 



*iooy4 

98 

99 

3.85% 

basis 

__ 

*938/8 



*98i/8 



*99i/2 

100 

__ 



*98 

96 

4.15%  basis 



*100.53 



*99 

971/2     -- 

98 

__ 

•33/4%,  basis 

98 



91 



*993/4 

*100 



*913/4 



*100 

98 



93 

_ 



*983/4 



•91% 

— 

♦1031/3 



*993/8 

__ 

•981/4 



•1001/2 

99 



98 





•1001/2 

99 



98 



98 



98 



•98% 

99 



92 

__ 



•97 

*4.10%  basis 



•94 

*4.20%  basis 



♦90% 



•97y4 

102 

98 



3.85%  basis 

•41/8%  basis 



•100 



•951/2 



•100 



•98% 

MASSACHUSETTS  (Continued). 
High 

New  Bedford  (Mass.)    31/38,  1951 

Newburyport  (Mass.)  Wtr.,  31/2S,  1913-34 

Newburyport  (Mass.)  4s,  1914-23 

Newton  (Mass.)  Wtr.,  4s,  1935 

Newton  (Mass.)  Wtr.,  31/28,  1926 

Newton  (Mass.)  31/2S,  1922 

Newton  (Mass.)  31/2S,  1931 

Newton  (Mass.)  4s,  1936 

Newton  (Mass.)  4s,  1939 

No.  Andover  (Mass.)  48,    1923 

No.  Attleboro  (Mass.)  4s,  1913-18 

No.  Attleboro  (Mass.)  4s,  1918 

No.  Attleboro  (Mass.)  4s,  1922 

Northampton  (Mass.)  31/2S,  1913-26 

Palmer   (Mass.)   414s,  1913-19 

Peabody  (Mass.)   4s,  1917-21 

Peabody  (Mass.)   4s,  1925 

Pittsfield  (Mass.)   Sch.,  4s,  1913-17 

Pittsfield  (Mass.)    31/2S,  1915 

Pittsfield  (Mass.)  4s,  1923 

Quincy  (Mass.)  4s,  1913-22 

Quiney  (Mass.)    4s,  1918 

Quincy  (Mass.)    4s,  1915 

Quincy  (Mass.)    31/2S,   1924-26 

Quincy  (Mass.)    31/2S,   1926 

Quincy  (Mass.)    4s,   1926 

Quincy    (Mass.)    4s,  1928-37 

Quincy  (Mass.)  31/2S,  1931-38 

Salem  (Mass.)   4s,  1921 

Salem  (Mass.)  4s,  1926 

Salem  (Mass.)   31/oS,  1940 

Sharon   (Mass.)   4s,  1921 

Shelburne  Falls  (Mass.)  41/38 

Somerville  (Mass.)    4s,  1913-19 

Somerville  (Mass.)    4s,  1927-38 

So.  Hadley  (Mass.)  4s,  1917-28 

Springfield  (Mass.)  Wtr.,  4s,  1913__ 

Springfield  (Mass.)  Sch.,  4s,  1917 

Springfield  (Mass.)   31/2S,  1913-18 

Springfield  (Mass.)  Sch.  31/38,  1925 

Springfield  (Mass.)    Swr.,   3s,    1930J 

Springfield  (Mass.)    31/38,    1929 

Stockbridge  (Mass.)    4s,    1923-32 

Swampscott  (Mass.)  31/38,  1925 

Swampscott  (Mass.)  314s,  1926 

Swampscott  (Mass.)  3l^s,  1928 

Taunton  (Mass.)    4s,    1927 .__ 

Taunton  (Mass.)  Swr.,  31/38,  1930 

Taunton  (Mass.)    31/3S,    1932 

Wakefield  (Mass.)  Wtr.,  4s,  1913-33 

Wakefield  (Mass.)  Sch.,  4s,  1-10  yrs 

Wakefield  (Mass.)    31/38,    1923-30 

Wakefield    (Mass.)    4s,   1930 

Waltham  (Mass.)   Wtr.,  4s,  1913 

Waltham  (Mass.)   31/38,  1920 

Waltham  (Mass.)    48,  1928-31 

Watertown  (Mass.)  4s,  1913-34 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date, 

1169 


Low        Bid    Asked 

-_         *873/4 

4.10%  basis 
__      *4i^%  basis 
98 
93 

-  "95% 

-  *923/8 

-  *98 
__       *99i/2 

-  *99 
__      *3.85%  basis 

__       '99% 

__     *100% 

95 
__      *3.80%  basis 
__      *4i4%  basis 

__      *97% 
3.85%  basis 

__        *983/4 

__     *100% 
—  4.15-.10%  basis 

-  *99% 
__    *100i/4 

__     4.10%  basis 
__       *938^ 
„      *98i/4 
__      *3.80%  basis 
__     *4.10%  basis 
__    '101.69 
__    *102.57 
_.       *90i/8 
99 

::     "  *io4i/2 
99 

__   noii/a 

„     *100 

993/4  „ 

99 

981/3  - 
941/4  -- 
86I/2     - 

-  *95% 
__      *3%%  basis 

__  *92% 

__  *94 

__  *94i/a 

98 

92 

_-  *92iA 

971/2     - 

*100.14    __ 

__     *4.10%  basis 

__       *99 

991/3     -_ 

95 

3.90%  basis 

971A     - 


MASSACHUSETTS  (Continued). 

High  Low        Bid    Asked 

Westfield  (Mass.)  SVgS,  1927 —  —  —       *93% 

Weymouth    (Mass.)    4s,  1919 —  __  -_      *99iA 

Whitman  (Mass.)  1916 —  __  —       *99% 

Winchester  (Mass.)   Swr.,  4s,  1918-24 __  __  99 

Winchester  (Mass.)    Sch.,  Zy^s,  1917-18 __  —  *4.15%  basis 

Worcester  (Mass.)    4s,   1922 —  —  99 

Worcester  (Mass.)  SVgS,  1922 __  —  951/2     __ 

Worcester  (Mass.)    4s,   1922 __  —  —    *101.19 

Worcester  (Mass.)    4s,   1917-23 __  „  *3.85%  basis 

Worcester  (Mass.)    4s,   1920-29 __  —  *3.85%  basis. 

Worcester  (Mass.)    4s,   1917-33 __  —  *3.85%  basis 

Worthington  (Mass.)  4s,  1936-40 __  __  —     *100 

Wrentham  (Mass.)  4s,  1934-36 __  >_  *4.15%  basis 

MICHIGAN 

Alger  Co.  (Mich.)  Road,  5s,  1922 „  __  To  net  4.40% 

Ann  Arbor  (Mich.)  Sch.  Dis.,  4s,  1935 „  __  To  net  4.10% 

Ann  Arbor  (Mich.)  4s,  1920 —  —  —       *983/8 

Battle  Creek  (Mich.)  Wtr.,  5,  1915-17 —  —  To  net  41/2% 

Bay  City  (Mich.)    8s,  1913 —  __  41/2%  basis 

Bay  City  (Mich.)    5s,  1920 __  __  41/2%  basis 

Bay  City  (Mich.)    4s.  1934 __  __  41/2%  basis 

Bay  Co.  (Mich.)    5s,  1919 __  —  41^%  basis 

Bay  Co.  (Mich.)   Ref.,  4s,  1923 __  __  4.30%  basis 

Benton  Harbor   (Mich.)   Pk.,  4s,  1933 __  __  41/2%  basis 

Brown  City  (Mich.)  4s,  1928-34 __  __  •4.35%  basis 

Carson  City  (Mich.)  4y2S,  1917-20 __  —  *4.20%  basis 

Crystal  Falls  (Mich.)  Sch.,  5s „  __  *4.30%  basis 

Delta  Co.  (Mich.)  Rd.,  4y2S,  9^4  yrs __  __  *101.155  — 

Detroit  (Mich.)    Swr.,  4s,  1922 __  —  4%  basis 

Detroit  (Mich.)  Pub.  Imp.,  3.65s,  1918 __  __  4%  basis 

Detroit  (Mich.)   Park,  31/2S,  1930 __  __  4%  basis 

East  Towas  (Mich.)  1921 __  __  __      *97 

Flint  (Mich.)    Sch.,  41/28,  12l^   yrs __  __  *102.527 — 

Flint  (Mich.)  41/2S,  1914-37 —  _.  *4.10%  basis 

Gladstone  (Mich.)  41/2S,  1919 __  __  41/2%  basis 

Grand  Haven  (Mich.)  Sch.,  4s,  1932 __  __  *4i4%  basis 

Grand  Rapids  (Mich.)  Flood  Prot.,  41/2S,  1933  —  __  4.20-.10%  basis 

Grand  Rapids  (Mich.)   Mkt.,  4s,  1916 __  __  4.20-10%  basis 

Grand  Rapids  (Mich.)  Wtr.,  4s,  1929 __  __  4.20-.10%  basis 

Grand  Rapids  (Mich.)   4s,  1931 __  __  «_    "lOO 

Hamtramck  (Mich.)   5s,  1938 __  __  __    •110.78 

Hancock  (Mich.)    5s,  1914-18 __  __  ♦414%  basis 

Hancock  (Mich.)    41/2S,  1919 __  __  __     *101i/2 

Highland  Park  (Mich.)  Sch.,  41/2S __  __  •4.20%  basis 

Holland  (Mich.)  Ref.,  4s,  1914-23 __  __  41/2%  basis 

Holland  (Mich.)   41/4 s,  1914-22 __  __  ^4.08%  basis 

Jackson    (Mich.)    4s,   1930 __  __  __      •99.40 

Lake  Odessa  (Mich.)  Wtr.,  5s,  1922-27 __  __  *4.15%  basis 

Lansing  (Mich.)    5s,   1913-23 __  __  41/2-4%  basis 

Lansing  (Mich.)    Wtr.,  4s,  1920 __  __  41/2-4%  basis 

Marquette   (Mich.)   4s,  1916 .  __  __  41/2%  basis 

Muskegon  (Mich.)  Sch.,  41/2S,  1915-20 __  __  •4.10%  basis 

Muskegon  (Mich.)  41/2S,  1926 __  __  __     ^1041/8 

Muskegon  (Mich.)  Wtr.,  5s,  1913-25 __  __  4.60%  basis 

Muskegon  (Mich.)  Wtr.  Wks.,  41/2S,  1915-44- _  __  __  4.60%  basis 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1170 


MICHIGAN  (Continued). 

High  Low  Bid    Asked 

Muskegon  (Mich.)  4s,  1934 __  __  4.50%  basis 

Muskegon  (Mich.)   Sch.  Dis.,  5s,  1943— —  __  4.50%  basis 

Muskegon  Co.  (Mich.)  41/28,  1933 __  __  4.50%  basis 

Owosso    (Mich.)    Ref.,  4s,   1930 __  __  41/3%  basis 

New  Baltimore  (Mich.)  4y2S,  1933 __  __  —     *100 

Oceana  Co.  (Mich.)  53,  1918-37 __  —  *4.40%  basis 

Oscoda  (Mich.)   5s,  1914-38 __  __  *4.30%  basis 

Petoskey    (Mich.)    4l^s,  1930 >.  __  __     *101 

Pigeon  (Mich.)  1917-37 „  __  __     *106 

Pontiac  (Mich.)  Sch.,  41/28,  14  yrs __  __  *103.571  — 

Port  Huron  (Mich.)  Ref.,  4s,  1919 __  __  4.60%  basis 

Port  Huron  (Mich.)   4s,  1933 __  __  4.60%  basis 

Port  Huron  (Mich.)  Pk.,  31/2S,  1930 __  __  4.60%  basis 

Port  Huron  (Mich.)    41/3S,  1914-38 __  __  *4.10%  basis 

Riverton  (Mich.)  Rd.,  5s,  1917-31 __  __  *4l^%,  basis 

St.  Joseph  (Mich.)  41/2S,  1937 __  __  __     *101 

St.  Johns  (Mich.)   5s,  1914 __  __  4.30-.S0%  basis 

Saginaw  (Mich.)  Wtr.,  41/2 s,  1935 __  __4.30-.30%  basis 

Saginaw  (Mich.)  "Swr.,  4s,  1918 __  __  4.30-.30%  basis 

Saginaw  (Mich.)    Wtr.,   31/2S,   1930 __  __  4.30-.30%,  basis 

Sault  Ste.  Marie  (Mich.)  Wtr.,  6s,  1913 __  __  4.60%  basis 

Sault  Ste.  Marie  (Mich.)  Ref.,  5s,  1917 __  __  4.50%  basis 

Sault  Ste.  Marine  (Mich.)  Bdge.,  41/2S,  1930—  __  __  4.50%  basis 

Sault  Ste.  Marie  (Mich.)    4s,    1933 __  __  4.50%  basis 

South  Haven  (Mich.)  5s,  1918-33 __  __  *4i4%  basis 

Travers  City  (Mich.)  El.  Lt.  &  Pr.,  4l^s,  1933  __  __  *4.10%,  basis 

Wayne  Co.   (Mich.)   31/2S,  1914 __  __  4.10-.39%  basis 

Wyandotte    (Mich.)    41/2S,  1934 __  __  4.40%  basis 

MINNESOTA 

Otter  Tail  Co.   (Minn.)   Ditch,  5s,  1918-33 __  __  4.45%,  basis 

Beltrami  Co.   (Minn.)  41/2S,  1913-34 __  __  4%%  basis 

Clay  Co.   (Minn.)  41/2S,  1915-16 __  __  41/2%,  basis 

Crookston  (Minn.)  Ind.  5  D,  41/oS,  1937 __  __  __       100 

Cass  Co.  (Minn.)  Sch.,  5s,  1934_''_ __  __  __    *103.37 

Duluth  (Minn.)  Wtr.  &  St.,  5s,  1936 __  __  4.35%,  basis 

Duluth  (Minn.)    41/2S,  1936 __  __  4.35%,  basis 

Duluth  (Minn.)   Wtr.,  4s,  1938 __  __  4.35%  basis 

Duluth  (Minn.)  Wtr.  &  Lt.,  4s,  1936 __  __  4.35%,  basis 

Duluth  (Minn.)  Ind.  S.  D.  5s,  1913 __  __  100 

Duluth  (Minn.)  Ind.  S.  D.  5s,  1933 __  __  41/2%  basis 

Duluth  (Minn.)  Ind.  S.  D.  41/2S,  1940 __  __  IOII/2  IO31/3 

Duluth  (Minn.)  Ind.  S.  D.  4s,  1934 __  __  41/2%  basis 

Duluth  (Minn.)  Wtr.  &  Lt.,  41/pS,  38  yrs __  __  *100 

Duluth  (Minn.)  Sch.,  41/2S,  1931 __  __  __     *101 

Duluth  (Minn.)    Sch.,   5s,   1933 __  __  __     *105 

Duluth  (Minn.)  Wtr.,  4s,  1938-36 __  __  *4.40%  basis 

Duluth  (Minn.)    41/2S,  1941 __  __  __     *10314 

Grand  Rapids  (Minn.)  Rd.,  5s,  1937 __  __  __    *103.54 

Greenbush  (Minn.)  6s,  1933 __  __  __    *107.18 

Hennepin  Co.   (Minn.)   41/2S,  1934 __  __  __     *103 

Jackson  Co.   (Minn.)  5s,  1913-31 __  __  4.55%  basis 

Koochiching  Co.    (Minn.)    4s,  1935-31 __  __  *4i/2%  basis 

Lac  Qui  Parle  Co.  (Minn.)  5s,  1930-30 __  __  4.55%  basis 

Marshall  Co.  (Minn.)   51/2S,  1918-33 __  __  *4%%  basis 

Marshall  Co.   (Minn.)    Ser.,   51/3S,  1918-38 _.  __  *4.60%  basis 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

117X 


MINNESOTA  (Continued). 


Marshall  Co.  (Minn.)  Ditch  5s,  1913-29 

Polk  Co.  (Minn.)   Sch.  Dis.,  58,  1927 

Ramsey  Co.   (Minn.)  5s,  1915 

Ramsey  Co.  (Minn.)  Ct.  Hse.,  41/28,  1916 

Ramsey  Co.  (Minn.)  Si/gS,  1921 

Red  Lake  Co.  (Minn.)  SVjjS,  1920. 


High    Low 


s  (Minn.)  Park,  41/2S,  1913 

3  (Minn.)  41/28,  1920 

s  (Minn.)    Sch.,  4s,  1927 

s  (Minn.)   Sch.,  4s,  1935 

s  (Minn.)  Imp.,  4s,  1937 

s  (Minn.)  Imp.,  4s,  1942 

8  (Minn.)  Sch.,  31/2S,  1929 

8  (Minn.)  Wtr.  Wks.,  31/2S,  1932. 
s  (Minn.)  Wtr.  Wks.,  41/2S,  1914_. 

s  (Minn.)    4s,   1917 

s  (Minn.)    43,   1918 

3  (Minn.)    4s,   1922 

8  (Minn.)    4s,   1941 

8  (Minn.)    43,   1942 


Minneapol: 
Minneapol 
Minneapol 
Minneapol 
Minneapol 
Minneapol 
Minneapol 
Minneapol 
Minneapol 
Minneapol 
Minneapol 
Minneapol 
Minneapol 
Minneapoli 

Rosean  Co.  (Minn.)  6s,  1919-33 

Rosean  Co.  (Minn.)  63,  1925-33 

St.  Paul  (Minn.)    Wtr.,  5s,  1915 

St.  Paul  (Minn.)  41/38,  1917 

St.  Paul  (Minn.)    Wtr.,   41/38,   1918 

St.  Paul  (Minn.)    Ref.,  48,  1939 

St.  Paul  (Minn.)  Sw'ge,  4s,  1939 

St.  Paul  (Minn.)    43,    1940 

St.  Paul  (Minn.)  31/2S,  1922 

Osakis  (Minn.)  Sch.,  41/2S,  1917 

Skakopee   (Minn.)  Wtr.,  5s,  31/2  yrs 

Virginia  (Minn.)  Wtr.  &  Lt.,  5s,  15  yrs.. 


Bid    Asked 

4.65%  basis 

__  1021/3 
4.15%  basis 
4.15%  basis 
4.15%  basis 
4.60%  basis 
4.15%  basis 
4.15%  basis 
4.15%  basis 
4.15%  basis 
4.15%  basis 
4.15%  basis 
4.15%  basis 
4.15%  basis 
-_     *100 

-  *99% 

-  '99 

-  •988/8 
_-        *973/4 

*4.125%  basis 
*5%  basis 
*5%  basis 
4.15  %basi3 
4.15%  basis 
4.15%  basis 
4.15%  basis 
4.15%  basis 
4.15%  basis 
4.15%  basis 

-  *^W» 
•100 
•lOli/a     - 


MISSISSIPPI 

Mississippi    31/38,    1934 

Adams  Co.   (Miss.)  Rd.,  5s,  1952 

Bolivar  Co.  (Miss.)  6s,  1914-31 

Chickasaw  Co.   (Miss.)   Rd.,  5s,  1925-27 

Covington  Co.  (Miss.)  Rd.,  6s,  1927 

Reene  Co.  (Miss.)  6s,  1923 

Greenwood  (Miss.)  58,  1926 

Hancock  Co.  (Miss.)  Rd.,  6s,  1933 

Itawamba  Co.  (Miss.)   6s,  1913-32 

Jackson  (Miss.)  Wtr.,  58,  1928 

Jackson  (Miss.)   5s,  1932 

Jackson  (Miss.)   5s,  1930 

Lauderdale  Co.    (Miss.)    51/28 

Lauderdale  Co.  (Miss.)  51/38,  I714  yrs 

Le  Flore  Co.   (Miss.)  6s,  1921-30 

Lincoln  Co.   (Miss.)  51/38,  1923-37 

Marks  (Miss.)  Wtr.  &  Sewer,  6s,  1931 

Miss.  Levee  Dist.,  58,  1944 

Miss.  Levee  Dist.,  41/33,  1934 

Mize   (Miss.)   Sch.,  68,  Ser.  1913-26 

Monroe  Co.  (Miss.)  Rd.,  5s,  1927-37 

Noxubee  Co.  (Miss.)  Rd.  51/38,  1928-37 

^Quotation  nearest  llarcb  1,  1913.    No  quotation  on  tliat  date. 

1173 


_-       *90 

*4.65%  basis 

•5.40%  basis 

*5%  basis 

__    *109.64 

•4.70%  basis 

•4.80%  basis 

•5%  basis 

•51/3%  basis 

4%%  basis 

103  105 
•4.50%  basis 

5%  basis 

•100.11    _- 

•53/4%  basis 

♦5%  basis 

__    •104.70 

104  105 
100       101 

•51/2%  basis 

•5%  basis 

•5%%  basis 


MISSISSIPPI  (Continued). 


Prentiss  Co.  (Miss.)  6s,  1913-33 

Richton   (Miss.)   6s,  1932 

Sunflower  Co.  (Miss.)  6s,  1921-30 

Tallahatchie  Co.   (Miss.)   Rd.,  6s,  1926-34 

Tallahatchie  Co.   (Miss.)   Rd.,  6s,  1922-36 

Tutwiler  (Miss.)  Wtr.,  6s,  20  yrs 

Vicksburg  (Miss.)  St.  Imp.,  5s,  1913-32 

Vicksburg  (Miss.)   Swr.,  41/23,  1928 

Yazoo  (Miss.)  Delta  Lev.  Dis.,  6s,  1947 

Yazoo  (Miss.)  Delta  Lev.  Dis.,  41/33,  1949 

Yazoo  (Miss.)  Delta  Lev.  Dis.,  1952 

Yazoo  (Miss.)  Delta  Lev.  Dis.,  5s,  1924 

Yalobusha  Co.   (Miss.)   Rd.,  5s,  1934-37 


High    Low        Bid    Asked 

*5 1/2%  basis 

*5i4%  basis 

51/2%  basis 

__      *5.30  %basis 

_-       *5i/4%  basis 

*100 

—  4.80-.65%  basis 

4%%  basis 

103       106 

102       104 

92         94 

__      *4.80%  basis 

_-     *100 


MISSOURI 

Bates  Co.  (Mo.)   6s,  1922-30 —  __  *5l^%  basis 

Bertrand   (Mo.)   Sch.,  5s,  1932 —  —  —     *102l^ 

Crooked  River   (Mo.)   6s,  1914-23 —  -_  *5l^%  basis 

Duenweg   (Mo.)    Sch.,  5s,  1922-32 —  —  —    "102.80 

Dunklin  Co.    (Mo.)    6s,  20  yrs —  —  $100,385  __ 

Dunklin  Co.  (Mo.)  6s,  1917-19 —  —  —     *101 

Excelsior  Springs  (Mo.)  'Sewer,  5s,  1932 —  —  —    *104.86 

Farmington  (Mo.)  Elec.  Lt.,  5s,  1928 __  —  —     *100i4 

Ferguson  (Mo.)  5s,  (various  maturities) __  __  *4%%  basis 

Hannibal  (Mo.)  Sch.,  4s,  1915 —  __  —       *99 

Higginsville  (Mo.)  Wtr.  &  Lt.,  5s,  1923-33 __  __  *4.70%  basis 

Huntsvillc  (Mo.)  Wtr.  &  Lt.,  5s,  1921-30 __  —  —    *101.88 

Kansas  City  (Mo.)  Westpt.,  5s,  1916 __  __  102 

Kansas  City  (Mo.)    Wtr.,  41/2S,   1915 __  __  IOOI/2  lOiy, 

Kansas  City  (Mo.)Mkt.  Hse.,  s4,  1924 __  __  99      100 

Kansas  City  (Mo.)  Wtr.,  43,  1924 __  __  99      100 

Kansas  City  (Mo.)   Pk.  &  Blvd.,  4s,  1924 __  __  99      100 

Kansas  City  (Mo.)  6s,  Ser.  1  to  10  yrs __  —  *100i/2     — 

Kansas  City  (Mo.)   Sewer,  41/2S,  1930 __  __  __     *104i4 

Kansas  City  (Mo.)  Park  Dist.,  7s,  1913-21 __  __  41/3%  basis 

Kansas  City  (Mo.)   Sch.  Dist.,  4s,  1914 __  __  991/2     __ 

Kansas  City  (Mo.)   Sch.  Dist.,  4s,  1927 —  __  99 

Kansas  City  (Mo.)    Sch.  Dist.,  4s,  1930 __  ._  99 

Kansas  City  (Mo.)   Sch.  Dist.,  31/2S,  1923 __  __  93        94 

Kansas  City  (Mo.)   Sch.  Dist.,  31/2S,  1925 __  ._  92        94 

Jefferson  Co.  (Mo.)  Ref.,  41/2S,  1914-19 __  __  4%%  basis 

Jefferson  (Mo.)  41/2S,  1922-32 _-  __  __  __     *102  • 

Lewis  &  Clark  Co.  (Mo.)  C.  H.,  51/28,  1913-19-_  __  __  4.70%  basis 

Lincoln  Co.   (Mo.)   5s,  1932 __  __  4%%  basis 

Lincoln  Co.  (Mo.)  Fund,  5s,  1931 __  __  4%%  basis 

Maryville  (Mo.)  Wtr.,  4%s,  1917-32 __  __  __    "lOLS? 

Mexico  (Mo.)   Sch.,  41/2S,  Ser.  6-20  yrs __  __  *100 

Mountain  Grove   (Mo.)   Wtr.,  53,  1922-32 __  __  __    *101.89 

Missoula   (Mo.)   41/2S,  1924 __  __  4%%  basis 

Missoula  Co.  (Mo.)  Ref.,  4s,  1921 __  __  4.70%  basis 

New  Madrid  Co.   (Mo.)   6s,  1915-16 __  __  *5i4%  basis 

Pemiscot  Co.  (Mo.)  6s,  1918-32 __  _.  *5i4%  basis 

Poplar  Bluff  (Mo.)  Sch.,  5s,  1923-33 __  __  *4.70%  basis 

Pettis  Co.   (Mo.)  4s,  1918 __  __  41/3%  basis 

Richmond   (Mo.)   "Sewer,  5s,  1917-32 __  __  *4.80%  basis 

St.  Louis  (Mo.)    Ren'l,   3.65s,    1927 ._  __  95%     9614 

•QuoUtion  nearest  March  1,  1913.    No  quotation  on  that  date. 

1173 


MISSOURI  (Continued). 

High 

St.  Louis  (Mo.)    Ren'l,    3.65s,    1915 

St.  Louis  (Mo.)    Ren'l,  SVgS,  1918 

St.  Louis  (Mo.)   31/28,  1925 

St.  Louis  (Mo.)   3y4S,  1922 

St.  Louis   (Mo.)   31/2S,  1919 

St.  Louis  (Mo.)   31/2S,  1920 

St.  Louis  (Mo.)  Ren'l,  4s,  1913 

St.  Louis  (Mo.)  Ren'l,  4s,  1914 

St.  Louis  (Mo.)    Ren'l.  4s,  1918 lOOVs 

St.  Louis  (Mo.)  Ins.  Asylum,  4s,  1928 

St.  Louis  (Mo.)   Pub.  Imp.,  4s,  1928 

St.  Louis  (Mo.)  Pub.  Bldg.,  4s,  1929 

St.  Louis  (Mo.)   Wtr.  Wks.,  4s,  1931 

Scotland  Co.   (Mo.)    41/2S,    1917 

Scotland  Co.   (Mo.)  41/2S,  1917 

Sedalia  (Mo.)  Rd.,  5s,  Ser.  1914-24 

Sedalia  (Mo.)  Rd.,  5s,  Ser.  1914-27 

Sheldon  (Mo.)  Sch.,  5s,  1919-20 

Silver  Bow  Co.  (  Mo.)  Fund,  53,  1917 

Springfield  (Mo.)    5s,   1932 

Yellowstone  Co.   (Mo.)  Ref.,  5s,  1918 

MONTANA 

Bozeman   (Mont.)    5s,  1919 

Beaverhead  Co.  (Mont.)  Sch.,  5s,  10-20  yrs.__ 

Butte  (Mont.)    4%^,  1925 

Butte  (Mont.)  Sch.  Dis.,  41/23,  1924 

Cascade  Co.  (Mont.)  4s,  1921 

Chinook  (Mont.)   6s,  8  yrs 

Custer  Co.  (Mont.)  6s,  1925 

Deer  Lodge  Co.  (Mont.)  5s,  1919 

Glasglow  (Mont.)  51/2S,  1924-29 

Glasglow  (Mont.)   Wtr.,  51/2S,  1929 

Great  Falls  (Mont.)  Wtr.,  5s,  1913 

Great  Falls  (Mont.)  Wtr.,  5s,  1918 

Great  Falls  (Mont.)  4s,  1923 

Great  Falls  (Mont.)   6s,  8  yrs 

Great  Falls  (Mont.)   Sch.  Dis.,  4s,  1925 

Harlem  (Mont.)  Wtr.,  6s,  1921-31 

Helena  (Mont.)    Ref.,   4s,   1916 

Helena  (Mont.)  Wtr.  Wks.,  5s,  1931 

Helena  (Mont.)    Sch.  Dis.,  41/2S,  1922 

Kalispell  (Mont.)  6s,  1921 

Lincoln  Co.  (Mont.)  Rd.,  5s,  1927-32 

NEBRASKA 

Beatrice  (Neb.)   4s,  1914 

Dodge  Co.  (Neb.)  Ref.,  4s,  1919 

Dodge  Co.  (Neb.)  Frem't  Prct.,  4s,  1919 

Douglas  Co.    (Neb.)   4s,  1918 

Douglas  Co.    (Neb.)    3^/43,  1922 

Grand  Island  (Neb.)  4l^3,  1925 

Johnson  (Neb.)  6s,  Ser.  1917-27 

Lincoln   (Neb.)   5s,  1913-14 

Lincoln  (Neb.)    41/28,  1913-19 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1174 


Low 


Bid    Asked 

98         99 


96 
96 


971/4 
9SVz 


lOOi/s 


93  3^  94 

96  971/2 

96  97 

99%  103 

1001/2  1001/2 

10014  1001/2 
1001/4  1001/3 
1001/4  1021/2 
10014  1001/2 
41/8%  basis 
41/8%  basis 
__     *100 
*4.70%  basis 
__     *101% 
100 

—       1031/2 
100 


100 
*102 

4.70%  basis 

4.70%  basis 

4%%  basis 

__     *100 

4.70%  basis 

100 

__    *104.22 

__    *104.22 

4.70%  basis 

4.70%  basis 

4.70%  basis 

__     *100 

4.65%  basis 

*5i/2%  basis 

99      100 

4%%  basis 

4.70%  basis 

__     *100 

*4.70%  basis 


4.90%  basis 
414%  basis 
4.70%  basis 
4.40%  basis 
4.40%  basis 
4.80%  basis 
•514%  basis 
4%%  basis 
41/3%  basis 


NEBRASKA  (Continued). 


Lincoln  (Neb.)    Ref.,   41/28,   1920-29 

Lincoln  (Neb.)  Ref.,  4s,  1919 

Lincoln  (Neb.)  Sch.  Dis.,  41/28,  1924 

Omaha  (Neb.)  41/2-8,  1914-21 

Omaha  (Neb.)    Ren'l,   41/38,   1924 

Omaha  (Neb.)   41/38,  1932 

Omaha  (Neb.)  Ref.,  41/38,  1934 

Omaha  (Neb.)  Wtr.  Wks.,  41/38,  1941 

Omaha  (Neb.)   Funding,  4s,  1918 

Omaha  (Neb.)  Sch.  Dis.,  41/28,  1928 

Omaha  (Neb.)  Sch.  Dis.,  4s,  1931 

Omaha  (Neb.)    Sch.   Dis.,  4s,   1919 

Omaha  (Neb.)  Sch.  Dis.,  41/2S,  1929-31 

Omaha  (Neb.)   Sch.  Dis.,  41/38,  1933 

Omaha  (Neb.)   Sch.  Dis.,  41/28,  1941 

South  Omaha  (Neb.)   5s,  1915 

South  Omaha  (Neb.)  41/38,  1924 

South  Omaha  (Neb.)   Sch.  Dis.,  5s,  1929 

South  Omaha  (Neb.)  Sch.  Dis.,  5s,  1923 

Winnebago  (Neb.)  Wtr.  58,  1917-32 

Wymore   (Neb.)   58,  1931 

NEVADA. 
Reno    (Nev.)    5s,  1924 

Yerington   (Nev.)   'Sewer,  6s,  1922-27 

NEW  HAMPSHIRE 

New  Hampshire,  Hosp.,  31/oS,  1913-25 

Bethlehem   (N.  H.)   48,  1923 

Berlin  (N.  H.)  48,  1917 

Concord  (N.  H.)  4s,  1923 

Concord  (N.  H.)  31/38,  1924-29 

Dover  (N.  H.)    31/38,  1928-31 

Dover  (N.  H.)    4s,  1913-16 

Keene  (N.  H.)   4s,  1914-17 

Keene  (N.  H.)  Wtr.,  31/3S,  1913 

Laconia  (N.  H.)  4s,  1924 

Laconia  (N.  H.)  4s,  1932 

Laconia  (N.  H.)  43,  1934 

Laconia  (N.  H.)  4s,  1937 

Manchester  (N.  H.)   5s,  1913 

Manchester  (N.  H.)   41/28,  1913 

Manchester  (N.  H.)  Wtr.,  4s,  1917 

Manchester  (N.  H.)  Fund,  31/38,  1919 

Manchester  (N.  H.)  48,  1914 

Nashua  (N.  H.)  4s,  1913-15 

Nashua  (N.  H.)  3s,  1923 

Portsmouth  (N.  H.)  4s,  1914 

Portsmouth  (N.  H.)    Sch.,  4s,  1923 

Portsmouth  (N.  H.)  Wtr.,  4s,  1932 

Rochester  (N.  H.)  4s,  1922 

Somersworth  (N.  H.)  4s,  1913-18 

NEW  JERSEY 

Asbury  Park  (N.  J.)  58,  1924 

Atlantic  City  (N.  J.)  5s,  1925 

Atlantic  City  (N.  J.)  Wtr.,  41/3S,  1926 

*Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1175 


High    Low 


Bid 

4%% 

-  4%% 

-  41/3% 
__  4i/3-.40% 
__  4i/2-.40% 
__  4i/3-.40% 
__  4i/2-.40% 
__  4i/2-.40% 
__  4i/2-.40% 

4.40% 

4.40% 

4.40%, 

_-      *4.40% 


4.65%, 
4.65% 
4.65%, 
4.65% 


Asked 
basis 
basis 
basis 
basis 


basis 
basis 
basis 
basis 
basis 
basis 
basis 
basis 
*100 
*100 
basis 
basis 
basis 


^100 
1011/3 


100 
__    *103.81 


97 

98 
100 
95 
92 
99 
99 
98 
100 


99 

*98% 


98 
93 


*99 
*99i/3 


^973/4 


101 
1001/3     _. 

99 

94 


100 


99 

89 

99 

99 

981/3 

98 

98 


4.35%  basis 
4.30%  basis 
4.30%  basis 


NEW  JERSEY  (Continued). 


Atlantic  City  (N.  J.)   41/28,  1945 

Atlantic  City  (N.  J.)   Wtr.,  4s,  1930 

Atlantic  Highlands  (N.  J.)  Swr.,  4s,  1928 

Bayonne  (N.  J.)    Fund,  5s,  1928 

Bayonne  (N.  J.)   Fund,  41/28,  1931 

Bayonne  (N.  J.)  Fltg.  Dbt.,  4s,  1928 

Belleville  (N.  J.)  41/2S,  1927-42 

Belleville  (N.  J.)  41/2S,  Ser.  1927-42 

Belleville  (N.   J.)    41/2S,   1942 

Belmar  (N.  J.)  Wtr.,  5s,  1942 

Bergen  Co.  (N.  J.)   41/38,  1915-39 ._._ 

Bergen  Co.  (N.  J.)  41/38,  1917-88 

Bergen  Co.  (N.  J.)  Bdge.,  4s,  1913-24. 

Bergen  CO.  (N.  J.)  Ct.  Hse.,  4s,  1914-38 

Bergen  Co.  (N.  J.)  41/2S,  1915 

Bergen  Co.  (N.   J.)    41/2S,   1932 

Bergenfield  (N.  J.)   58,  1913-24 

Bernards  (N.  J.)   5s,  1929-30 

Bridgeton   (N.  J.)  Wtr.  41/2S,  1943 

Camden  (N.  J.)  Wtr.,  41/28,  1923_ 

Camden  (N.  J.)  Dock,  41/28,  1930 

Camden  (N.  J.)  Paving,  48,  1929 

Camden  (N.   J.)    31/2S,    1913-34 

Camden  Co.  (N.  J.)  4s,  1944 

Camden  (N.  J.)    Sch.,  41/28,  1943 

Cape  May  (N.  J.)  5s,  1934 

Cap  May  Co.  (N.  J.)  Rd.,  58,  1943 

East  Orange  (N.  J.)  48,  1934 

East  Orange  (N.  J.)  Wtr.,  4s,  1933 

East  Orange  (N.  J.)  Wtr.,  31/2S,  1933 

Edgewater  (N.  J.)  41/2S,  1915 

Edgewater  (N.  J.)    5s,  1914-36 

Elizabeth  (N.  J.)   48,  1922 

Englewood  (N.  J.)  4s,  1935 

Essex  Co.  (N.  J.)   48,  1926 

Essex  Co.  (N.  J.)  Pk.,  4s,  1938 

Essex  Co.  (N.  J.)  Hosp.,  4s,  1946 

Essex  Co.  (N.  J.)  Pk.,  3.65s,  1935 

Essex  Co.   (N.  J.)  3.658,  1915 

Ft.  Lee  (N.  J.)  5s,  1917-25 

Guttenberg  (N.  J.)  Ref.,  58,  1913-18 

Hackensack  (N.  J.)  41/2S,  1942 

Harrison  (N.  J.)  48,  1930 

Harrison  (N.  J.)   41/2S,  1936 

Hoboken  (N.  J.)  4s,  1919 

Hoboken  (N.  J.)  41/38,  1940 

Hoboken  (N.  J.)  31/28,  1931 

Hoboken  (N.  J.)  Wtr.,  4s,  1939 

Hoboken  (N.  J.)    4s,   1918 

Hudson  Co.  (N.  J.)  Rd.,  41/28,  1953-63 

Hudson  Co.   (N.  J.)    41/38,  1948 

Hudson  Co.  (N.  J.)  Rd.,  41/2S,  1923 

Hudson  Co.  (N.  J.)   Pk.,  41/28,  1950 

Hudson  Co.  (N.  J.)  Pk.,  4s,  1954 

Hudson  Co.  (N.  J.)  Pk.  48,  1959 

Hudson  Co.   (N.  J.)  Co.  Bldgs.,  4s,  1946 

Hudson  Co.  (N.  J.)  Ref.,  4s,  1935 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1176 


High    Low 


Bid 

4.30% 

4.30% 

4.40% 

4.30-.20% 

4.30-.20% 

4.30-.20% 

*4.30% 


Asked 
basis 
basis 
basis 


-  41/4% 

-  4.35-.25% 

-  41/4% 

-  41/4% 


•4.60% 
*4.38% 


basis 
basis 
*  102% 
basis 
*102i/3 
*10Gi/3 
basis 
basis 
basis 
basis 
*101 
*104 
basis 
basis 
__    *102 

4*A%  basis 
414%  basis 
4l^%  basis 
4iA%  basis 
4iA%  basis 

—  *104% 
4.60%  basis 

._     n02i/4 
4.30%  basis 
4.30  %ba8i8 
4.30%  basis 

—  *10134 
*4.45%  basis 

971/2     991/2 

4.30%  basis 

4l^%basis 

41/8%  basis 

414%  basis 

4%%  basis 

__       *99 

♦41/3%  basis 

5%  basis 

4.40%  basis 

4.30%  basis 

—  •1031/g 
414%  basis 
414%  basis 
414%  basis 

—  *98y4 
*4.30%  basis 
•4.30%  basis 

4:20%  basis 
4.20%  basis 
4.20%  basis 
4.20%  basis 
4.20%  basis 
4.20%  basis 
4.20%  basis 


NEW  JERSEY  (Continuea). 


Hudson  Co.  (N.  J.)  Bridge,  Sy^s,  1920 

Jersey  City  (N.  J.)  Wtr.,  7s,  1913 

Jersey  City  (N.  J.)    7s,  1913 

Jersey  City  (N.  J.)  Assess.,  5s,  1924 

Jersey  City  (N.  J.)   Wtr.,  5s,  1921 

Jersey  City  (N.  J.)  Assess.,  5s,  1916 

Jersey  City  (N.  J.)  Wtr.,  5s,  1916 

Jersey  City  (N.  J.)  Ref.,  41/38,  1928 

Jersey  City  (N.  J.)   Sch.,  41/28,  50  yrs 

Jersey  City  (N.  J.)  Wtr.,  41/2S,  1961 

Jersey  City  (N.  J.)    Sch.,  41/4S,  1961 

Jersey  City  (N.  J.)  Pk.,  41/4S,  1961 

Jersey  City  (N.  J.)   Wtr.,  4s,  1932 

Jersey  City  (N.  J.)   4s,  1935 

Jersey  City  (N.  J.)  Ref.,  4s,  1949 

Jersey  City  (N.  J.)  Ref.,  31/aS,  1920 

Kearny  (N.  J.)   41/28,  1936 

Kearny  (N.  J.)   41/2S,  1962 

Lodi  (N.  J.)  Wtr.,  5s,  1939 

Long  Branch   (N.  J.)   4s,  1935 

Mercer  Co.  (N.  J.)  41/38,  1933 

Mercer  Co.  (N.  J.)  Rd.,  48,  1933 

Mercer  Co.  (N.  J.)  31/38,  1941 

Middlesex  Co.  (N.  J.)  Bridge,  1922-31 

Montclair  (N.  J.)   Sch.,  41/3S,  1941 

Montclair  (N.  J.)  Sch.,  31/3S,  1932 

Morris  Co.  (N.  J.)   4s,  1935 

Morris  Co.  (N.   J.)    41/38,    1942 

Newark  (N.  J.)  4s,  1941 

Newark  (N.  J.)  Wtr.  41/38,  1915 

Newark  (N.  J.)  Ref.  4s,  1923 

Newark  (N.  J.)  Sch.  48,  1959 

Newark  (N.  J.)  Pas.  Vy.  Sr.  4s,  1961 

Newark  (N.  J.)  31/3S,  1929 

Newark  (N.  J.)  Trk.  El.  31/3S,  1954___ 

Newark  (N.  J.)  Sch.  3.35s,  1917 

New  Brunswick  (N.  J.)  4s,  1922 

North  Bergen  (N.  J.)  53,  1941 

Nutley  (Neb.)  41/3S,  1922-32 

Nutley  (Neb.)  41/3S,  1942 

Orange  (N.  J.)   5s,  1923-32 

Orange (  N.  J.)  Wtr.  5s,  1938 

Orange  (N.  J.)  Swr.  41/38,  1915-21 

Orange  (N.  J.)  Sch.  43,  1934 

Orange  (N.  J.)  41/38,  1931 

Passaic  (N.  J.)  41/3S,  1914-40____ 

Passaic  (N.  J.)  Sch.  41/38,  1942 

Passaic  (N.  J.)  31/3S,  1913-20 

Passaic  Co.  (N.  J.)  4s,  1920-24 

Paterson  (N.  J.)  58,  1913-22 

Paterson  (N.  J.)  41/3S,  1933-44 

Paterson  (N.  J.)  N.  C.  H'l.  43,  1923-32 

Paterson   (N.  J.)  41/3S,  1914 

Paterson  (N.  J.)  41/38,  1939 

Paterson  (N.  J.)  41/3S,  1942 

Perth  Amboy   (N.  J.)   41/38,  1922 

Perth  Amboy  (N.  J.)  Sch.,  41/3S,  1938 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1177 


High    Low 


Bid    Asked 

4.20%  basis 
414%  basis 
4iA%  basis 
4.20%  basis 
4.20%  basis 
4.20%  basis 
4.20%  basis 
4.20%  basis 
*102.531  __ 
4.20%  basis 
4.20%  basis 
4.20%  basis 
4.20%  basis 
4.20%  basis 
4.20%  basis 
4.20%  basis 
4.30%  basis 
4.30%  basis 

_.     *107% 
4.30%  basis 

__  102.65 
414%  basis 
414%  basis 
4V4%  basis 
4l^%  basis 
4.20%  basis 
4.15%  basis 
4.15%  basis 

-  *99i/3 
4.15%  basis 
4.15%  basis 
4.15%  basis 
4.15%  basis 
4.15%  basis 
4.15%  basis 
4.15%  basis 
4.30%  basis 
41/3%  basis 
*4.40%  basis 

__  *102i/4 
4.30%  basis 
4.30%  basis 
4.30%  basis 
4.30%  basis 
♦414%  basis 
41/4%  basis 
414%  basis 
4i/t%  basis 
4l^%  basis 
414%  basis 
4iA%  basis 
414%  basis 
*4.40%  basis 

__    *103.15 
*4i^%  basis 
414%  basis 
4l^%  basis 


NEW  JERSEY  (Continuea). 

High  Low  Bid    Asked 

Plainfield  (N.  J.)  4s,  1913-34 __  __  41/4%  basis 

Plainfield  (N.  J.)  Sch.,  4s,  1959 __  __  41/4%  basis 

Rahway  (N.  J.)  Adj,  4s,  1922 __  __  90        95 

Red  Bank  (N.  J.)  Wtr.,  5s,  1914 __  __  *4.40%  basis 

Ridgewood  (N.  J.)  5s,  1013-26 __  __  4.35%  basis 

South  Amboy  (N.  J.)  Sewer,  5s,  1928-32 __  __  *4.55%  basis 

South  Orange  (N.  J.)  4s,  1913-44 __  __  4.30%  basis 

Summit  (N.  J.)  Sch.,  41/2S,  1941 __  __  414%  basis 

Summit  (N.  J.)  4s,  1933 __  __  414%  basis 

Trenton  (N.  J.)  4y2S,  1941 __  __  4l^%  basis 

Trenton  (N.  J.)  Fund.,  4s,  1934 __  __  414%  basis    ■ 

Trenton  (N.  J.)  City  HI.,  4s,  1939 __  __  4^4%  basis 

Trenton  (N.  J.)    Sch.,  31/28,  1929 __  __  4l^%  basis 

Trenton  (N.  J.)   4s,  1917 __  __  __       *99 

Trenton   (N.  J.)    41/2S,  1943 __        __  4^4%  basis 

Union  Co.  (N.  J.)  41/28,  1937 __  __  1031/3  103% 

Union  Co.  (N.  J.)  41/38,  1942 __  __  1033/3  104l^ 

Union  Co.  (N.  J.)  4s,  1942 __  __  4.20%  basis 

Vailsburg  (N.  J.)   Swr.,  41/2S,  1934 __  __  4.15%  basis 

Weehawken  (N.  J.)   Fdg.,  41/2S,  1920 __  __  4.30%  basis 

Weehawken  (K  J.)  Fdg.,  41/2S,  1913-28 __  __  4.30%  basis 

West  New  York  (N.  J.)  Sch.,  68,  1945-59 __  __  __     *106 

Wildwood   (N.  J.)   5s,  1943 __  __  __  *106.125 

NEW  MEXICO 

New  Mexico  Ref.,  6s,  1923 __  —  41/2%  basis 

New  Mexico  6s,  1913-17 __  __  5-41/2 %j  basis 

New  Mexico    41/2S,    1916-52 __  __  101      101.60 

New  Mexico  Ref.,  4s,  1937 —  —  4.40%  basis 

New  Mexico  Bldg.,   4s,   1929 __  __  41/2%  basis 

New  Mexico  Fund.,  4s,  1939 __  __  4.40%  basis 

Alburquerque  (N.  M.)  41/2S,  1929 _»  __  4.60%  basis 

Alburquerque  (N.  M.)  5s,  1933-43 __  __  __    *104.35 

Bernalills  Co.  (N.  M.)  Fund.,  6s,  1922 __  __  100 

Bemalills  Co.  (N.  M.)  5s,  1931 __  „  4%%  basis 

Portales  (N.  M.)  Wtr.  &  Sewer,  6s,  1927-39—  —  —  *4.80%  basis 

Socorro  Co.  (N.  M.)  5s,  1931 __  __  4.80%  basis 

NEW  YORK 

New  York  Can.  Term.,  4s,  1942 __  __  1001/2  lOlVa 

New  York  High.  Imp.,  48,  Mar.  1958 __  __  lOli/g     __ 

New  York  High.  Imp.,  4s,  Sept.  1958 __  __  lOli/g     — 

New  York  High.  Imp.,  4s,   1960 __  __  101 

New  York  Can.  Imp.,  4s,   1960 ._  >_  lOli/g     — 

New  York  Can.  Imp.,  4s,  Jan.  1961 __  —  lOlVs  1021/3 

New  York  Can.  Imp.,  4s,  July  1961 __  __  IOI1/2     — 

New  York  Can.  Imp.,  48,   1962 —  —  lOiy^     __ 

New  York  High.  Imp.,  4s,  1961 __  __  lOlVs     _- 

New  York  High.  Imp.  4s,  1962 __  __  IOI1/2    — 

New  York  3s,  1923 __  __  97i/a     — 

New  York  3s,  1956 ,_  __  971/2     __ 

New  York  3s,  1958 __  __  971/2    — 

New  York  Canal,  3s,  1959 __  __  971/2     __ 

New  York  Canal,  4s,  30  yrs __  __  *100.026  __ 

Albany  (N.  Y.)  6s,  1915-19 __  __  4l^-.15%  basis 

*QuotatiOD  nearest  March  1,  1913.    No  quotaUon  on  that  date. 

1178 


NEW  YORK  (Continued). 


Albany  (K  Y.)    Wtr.,  41/48,  1932 

Albany  (N.  Y.)  Pk.,  4s,  1920-30 ■- 

Albany  (N.  Y.)   Sch.,  4s,  1914-31 

Albany  (N.  Y.)   Imp.,  31/28,  1914-24 

Albany   (N.  Y.)   4s,  1922 

Albany  Co.   (N.  Y.)  31/38,  1913-25 

Albany  Co.  (N.  Y.)   31/3S,  1925 

Albion  (N.  Y.)  Sewer,  4.65s,  5-29  yrs 

Altamount  (N".  Y.)  5s,  1913-15 

Argyle  (N.  Y.)  4.40s,  1929-41 

Auburn  (N.  Y.)  41/2S,  1913-31 

Auburn  (N.  Y.)  Wtr.,  4s,  1914-25 

Bloomingdale  (N.  Y.)  4.65s,  1930-42 

Binghampton  (N.  Y.)  4s,  1928-29 

Binghampton  (N.  Y.)  Bdge.,  31/3S,  1935 

Brooklyn  (N.  Y.)   31/38,  1934 

Brooklyn  (N.  Y.)  31/08,  1936 

Brooklyn  (N.  Y.)  Bdge.,  3s,  1925 

Brooklyn   (N.  Y.)   7s,  1915 

Brooklyn  (N.  Y.)   6s,  1924 

Brooklyn  (N.  Y.)  Bdge.,  5s,  1919 

Brooklyn  (N.  Y.)  Bdge.,  4s,  1926 

Brooklyn  (N.  Y.)  Sch.,  4s,  1920 

Brooklyn  (N.  Y.)   Wtr.,  4s,  1914 

Brooklyn  (N.  Y.)  31/38,  1914-37 

Brooklyn  (N.  Y.)   31/38,  1925 

Brooklyn  (N.  Y.)   31/38,  1927 

Buffalo  (N.  Y.)   4s,  1960 

Buffalo  (K  Y.)   31/38,  1917 

Buffalo  (N.  Y.)  Pk.,  31/38,  1927 

Buffalo  (N.  Y.)  31/3S,  1913-19 

Buffalo  (N.  Y.)  Wtr.,  31/38,  1913-35 

Buffalo  (N.  Y.)  Road,  3s,  1913 

Buffalo  (N.  Y.)   41/48,  1932 

Buffalo  (N.  Y.)    7s,  1924-35 

Buffalo  (N.  Y.)  Pk.,  6s,  1924 

Buffalo  (N.  Y.)  41/48,  1962 

Buffalo  (N.  Y.)  Swr.,  4s,  1913 

Buffalo  (N.  Y.)  Sch.,  4s,  1929 

Buffalo  (N.  Y.)  4s,  1913-29 

Buffalo  (N.  Y.)   4s,  1913-30 

Buffalo  (N.  Y.)  48,  1931-61 

Cheektowaga  (N.  Y.)   58,  1914-42 

Cohoes  (N.  Y.)    7s,  1913 

Cohoes  (N.  Y.)   4s,  1920 

Cortlandt  (N".  Y.)   4.10s,  Ser.  1914-45 

East  Syracuse  (N.  Y.)  41/38,  1917-18 

Elmira  (N.  Y.)   4s,  1935 

Elmira  (N.  Y.)  31/38,  1913-21 

Elmira  (N.  Y.)   41/38,  18%  yrs 

Elmira  (N.  Y.)  41/38,  Ser.  1  to  3  yrs 

Erie  Co.  (N.  Y.)  Road  41/4 s,  1915-36 

Evans  (N.  Y.)  Sch.,  4.608,  1918-47 

Fallsburg  (N.  Y.)  58,  1925-31 

Far  Rockaway  (N.  Y.)  Imp.,  Ss,  1913-21 

Franklin  Co.  (N.  Y.)  41/33,  1931-40 

Fulton  (N.  Y.)  3.40s,  1913-29 

*QuotatioD  nearest  March  1,  1913.    No  quotation  on  that  date. 

1179 


High 


Low        Bid    Asked 
__  4 1^ -.15%  basis 
__  4i/4-.15%  basis 
__  4l^-.15%  basis 
__  4l^.20%  basis 

—       *9834 

__  4l^-.15%  basis 

__  4i4-.15%  basis 

*100.10    — 

_-       *4i/3%  basis 

__     *100 

—  4.30-1/4%  basis 
__  4.30-14%  basis 
__  *4.40%  basis 
__  4.20-.15%  basis 
__  4.20-.15%  basis 
__  4.35-.30%  basis 
__  4.35-.30%  basis 
__  4.35-.30%  basis 
__  *4.35%  basis 
__  4.35-.30%  basis 
__  4.35-.30%  basis 
__  4.35-.30%  basis 
__  4.35-.30%  basis 
_-  4.35-.30%  basis 
__  4.35-.30%  basis 
__  4.35-.30%  basis 
__  4.35-.30%  basis 
__  4l^-.15%  basis 
__  4l^-.15%  basis 
__  4l^ -.15%  basis 
-_  41/41.15%  basis 

—  4l^-.15%  basis 
__  4iA-.15%  basis 

_-     *100% 
__  41/4 -.15%  basis 

—  4i/4-.15%  basis 
-_  4l^-.15%  basis 
__  4V4-.15%  basis 
__  4i4-.51%  basis 
__  414 -.15%  basis 
__  4l^-.15%  basis 

__       *993/4 

__  *4.38%  basis 
__  4i/i-.20%  basis 
__  4l^-.20%  basis 
__  *100 
-_  *4.35%  basis 
_-  4i4-.20%  basis 
__  4l^-.20%  basis 

*102.80    _- 

*100 

4i4-.15%  basis 

__  *4.375%  basis 
__  *4i/3%  basis 
__  4.35-14%  basis 
__  4.35-.20%  basis 
__  4.30-.20%  basis    • 


NEW  YORK  (Continued). 

High  Low        Bid    Asked 

Geneva  (N.  Y.)  Wtr.,  4g,  1926 —  —  4.30-.20%  basis 

Glens  Falls  (N.  Y.)  Swr.,  41/28,  1917-28 ._  _-        41/4%  basis 

Gloversville  (N.  Y.)  31/28,  1917 —  —  4l^-.20%  basis 

Haverstraw  (N.  Y.)  4.12s,  1913-27 —  —  4.35-.20%  basis 

Harrison  (N.  Y.)  41/2S,  1914-65 —  —     *4.30%  basis 

Hempstead  (N.  Y.)   4s,  1923 __  —  4.35-1/4%  basis 

Hempstead  (N.  Y.)  41/38,  1918-20 _-  —            —     *100% 

Herkimer  (N.  Y.)  41/2 8,  1912-27 —  __  4.35-.20%  basis 

Hornellsville  (N.  Y.)  31/38,1921 —  —  4.30-.20%  basis 

Honeoye  Falls  (N.  Y.)  Wtr.,  4.90s,  I71/4  yrs-_  ._  __            __    *100.44 

Interlaken  (N.  Y.)  4.60s,  91/2  yrs __  —            —    *100.17 

Hudson  (N.  Y.)  Wtr.,  48,  1913-22 —  4.35-.20%  basis 

Ithaca  (N.  Y.)   4.30s,  1927 —  __  4.30-.20%  basis 

Ithaca  (N.  Y.)  Wtr.,  41/4S,  1942 —  —            99       100 

Jamaica  (N.  Y.)  4s,  1917 —  —  4.30-1/4%  basis 

Jamestown  (N.  Y.)   48,  1943 —  __  4.35-.20%  basis 

Kings  Co.  (N.  Y.)   Pk.,  4s,  1913-44 —  —  4.30- .20%  basis 

Kingston  (N.  Y.)  31/2S,  1913-36 _  4i4-.15%  basis 

Kingston  (N.  Y.)  Ref.,  38,  1914 __  —  ^y^-,15%  basis 

La  Salle  (N.  Y.)  4.70s,  1924-41 __  __     *4.40%  basis 

Lackawanna   (N.  Y.)  41/2S,  1927-29 __  —     •4.30%;  basis 

Larchmont  (N.  Y.)  4.75s,  5  to  18  yrs __  —        *100.20    — 

Larchmont  (N.  Y.)  4.75s,  1918-31 „  —     *4.40%  basis 

Locke   (N.  Y.)   4.80s,  1914-33 —  __     *4.40%j  basis 

Long  Island  City  (N.  Y.)  6s,  1914-19 __  _-4.30-.20%,  basis 

Long  Island  City  (N.  Y.)  41/28,  1913-23 __  —  4.30-.20%,  basis 

Long  Island  City  (N.  Y.)   Wtr.,  4s,  1920 __  „  4.30-.20%  basis 

Long  Island  City  (N.  Y.)  Wtr.,  31/28,  1920__  —  >_  4.30- .20%  basis 

Lysander  (N.  Y.)  41/28,  1914-35 __  __      *4.40%  basis 

Malone  (N.  Y.)  4.30s,  1913 __  —        *100 

Mayville  (N.  Y.)  4.60s,  1932-42 —  __      •4.40%)  basis 

Middleport  (N.  Y.)  4.35s,  1915-42 __  __  4.30-.20%  basis 

Middleport  (N.  Y.)  Swr.,  4.35s,  1913-39 __  __  4.30-.20%  basis 

Middletown  (N.  Y.)  31/2S,  1931 __  __  4.30-.20%  basis 

Middletown  (N.  Y.)   41/3S,  1933 _.  __            __     ^104 

Mt.  Vernon  (N.  Y.)  41/oS,  1931-43 __  __  4.30-.20%,  basis 

Mt.  Vernon  (N.  Y.)   Swr.,  4s,  1950-55 __  __  4.30-.20%  basis 

Mt.  Vernon  (N.  Y.)   Sch.,  41^8,  1962-73 __  __            99       100 

Mt.  Vernon  (N.  Y.)  41/38,  1933 __  __            __     ^102% 

Mt.  Vernon  (N.  Y.)  41/38,  1952 „  „      •41^%,  basis 

Mt.  Vernon  (N.    Y.)    41/38,    1960-61 __  —            __     •104l^ 

Mt.  Vernon  (N.  Y.)   41/38,  1964-65 __  __            __       •99iA 

Nassau  Co.  (N.  Y.)   41/3S,  1920-29 _.  __  4.30-.20%  basis 

Nassau  Co.  (N.  Y.)  Ct.  Hse.,  31/38,  1930 „  __  4.30-.20%  basis 

New  Berlin  (N.  Y.)  4s,  1939-44 __  __            __     •lOO 

Newburgh  (N.  Y.)   41/2S,  1914-34 -_  «_        4l^%  basis 

Newburgh  (N.  Y.)   3.85s,  1929 __  __            __       *96 

New  Rochelle  (N.  Y.)  41/2S,  1915-22 ._  __  4.30-iA%,  basis 

New  Rochelle  (N.  Y.)  4s,  1913-30 __  __  4.35-l^%  basis 

New  Rochelle  (N.  Y.)  31/2S,  1913-33 »_  __  4.35-1/4%  basis 

N.  Y.  City  Stk.,  31/38,  1953 __  __            831/3     84% 

N.  Y.  City  Stk.,  31/2S,  May  1954 ..  _.            841/4     86 

N.  Y.  City  Wtr.,  31/28,  1954 __  __            83%     84% 

N.  Y.  City  Stk.,  31/38,  Apr.  1954 ..  __            83%     84% 

N.  Y.  City  Stk.,  31/38,  1955 __  __            833/4     84% 

N.  Y.  City  31/2S,  1929 __  __  4.40-.30%  basis 

N.  Y.  City  Co.,  3.30s,  1917-21 __  '  ._  4.40- .30%  basis 

'Quotation  nearest  March  1,  1913.    No  quotation  on  tliat  date. 

1180 


NEW  YORK  (Continued). 

High 

N.  Y.  City  Sch.,  3s,  1913 

N.  Y.  City  41/28,  (old)  May,  1957 

N.  Y.  City  41/28,   (new)  Nov.  1957 104 

N.  Y.  City  41/2S,  (old)  May  1917 101 

N.  Y.  City  iVoS,  (new)  Nov.  1917 

N.  Y.  City  41/48,  Mar.  1960 99% 

N.  Y.  City  4l^s,   Sept.   1960 

N.  Y.  City  414s,  Mar.  1962 

N.  Y.  City  48,   1913 

N.  Y.  City  31/2S,   1915 

N.  Y.  City  31/2S,   1932 

N.  Y.  City  Bklyn.,  31/38,  1927 

N.  Y.  City  Dk.,  3148,  1927 

N.  Y.  City    31/28,    1941 

N.  Y.  City    31/2S,    1942 - 

N.  Y.  City  E.  T.,  31/2S,  1948-50 

N.  Y.  City    31/2S,    1952 

N.  Y.  City  4s,  1913-36 

N.  Y.  City   48,    1955 

N.  Y.  City  4s,  1913-56 

N.  Y.  City  Stk.,  4s,  1957 

N.  Y.  City  Stk.,  4s,  1958 

N.  Y.  Citv  Stk.,  4s,  1959 —        96i/8 

N.  Y.  City  31/2S,  1914 

N.  Y.  City  Pk.,  31/2S,  1916 

N.     Y.  City  Str.,  3s,  1916 

N.  Y.  City  Dk.,  3s,  1924 

N.  Y.  City  R.  T.,  3s,  1950 

N.  Y.  City  Pk.  21/2S,  1929 

N.  Y.  City   31/28,    1914 

N.  Y.  City    31/2S,    1940 

Niagara  Falls  (N.  Y.)  4s,  1921 

Niagara  Falls  (N.  Y.)  31/2S,  1942-45 

No.  Daneaville  (N.  Y.)   S.  D.,  58,  1913-28 

North  Elba  (N.  Y.)  Sewer,  5s,  5  to  24  yrs 

No.  Hempstead  (N.  Y.)  4.60s,  1913-33 

Ossining  (N.  Y.)  4.40s,  171/2  yrs 

North  Tonawanda  (N.  Y.)  4s,  1924 

Pelham  (N.  Y.)   41/2S,  1917-30 

Pelham  (N.  Y.)   Sch.,  41/2S,  1919-52 

Oneida  Co.  (N.  Y.)  31/2S,  1914-28 

Onandago  Co.   (N.  Y.)  3s,  1913-29 

Orange  Co.  (N.  Y.)  31/2S,  1915-24 

Oswego  (N.  Y.)  31/2S,  1913-23 

Penn  Yan   (N.  Y.)  4.35s,  1913-31 

Poughkeepsie  (N.  Y.)   7s,  1913 

Poughkeepsie  (N.  Y.)  Sch.,  41/28,  1922 

Poughkeepsie  (N.  Y.)  31/38,  1913-30 

Poughkeepsie  (N.  Y.)   41/2S,  10  yrs 

Port  Chester  (N.  Y.)  5s,  1-3  yrs 

Port  Chester  (N.  Y.)    5s,  1918 

Port  Chester  (N.  Y.)  41/2S,  1915-29 

Port  Chester  (N.  Y.)   5s,  1929-40 

Portville  (N.  Y.)   5s,  1914-18 

Putnam  Co.  (N.  Y.)  41/2S,  1918-29 

Queens  Co.   (N.  Y.)   48,  1917 

Queens  Co.  (N.  Y.)    4s,  1927 

*Quotatioo  nearest  March  1,  1913.    No  quotation  on  that  date. 

1181 


Low        Bid    Asked 
__  4.40-.30%  basis 
1031/2  104 
104 
101 

101       102 

99%         _-         - 

99%  100 

98%     98% 

__  4.35-14%  basis 

__  4.40-.30%  basis 

__  4.40-.30%  basis 

__  4.40-.30%  basis 

__  4.40-.30%  basis 

851/2     86% 

851/2     86% 

831/2         - 

831/2 


94 
94 
96 
96 


8434 

84% 

96 

96 

96 

961/4 

961/4 


96%         -         - 

__  4.40-.30%  basis 

__  4.40-.30%  basis 

__  4.40-.30%  basis 

__  4.40-.30%  basis 

__  4.40-.30%  basis 

4.45%  basis 

__     *4.30%  basis 

__      *4.35%  basis 

4.30%  basis 

4.30%  basis 

__  4.35-14%  basis 

*100i/2     - 

__     *4.30%  basis 

*100.315  __ 

4.40%  basis 

__      *4.40%  basis 

_-      *4.35%  basis 

__  4.30-.20%  basis 

4.30%  basis 

__  4.30-.20%  basis 

__  4.30-.20%  basis 

__4.30-.20%  basis 

__  4i4-.20%  basis 

—  4i4-.20%  basis 

__  4i4-.20%  basis 

*101.73    — 

*100.07    — 

*4.45%  basis 

_-     *4.35%  basis 

__      *4.35%  basis 

__      *4.40%  basis 

_.  4i4-.20%  basis 

__  4 1/4 -.15%  basis 

__  4i4-.15%  basis 


NEW  YORK  (Continuea). 


Richmond  Co.  (N.  Y.)  Fund.,  4s,  1914 

Richmond  Co.  (N.  Y.)  4s,  1921 

Rochester  (N.  Y.)  4s,  1922-27 

Rochester  (N.  Y.)  Ref.,  sy^s,  1914 

Rochester  (N.  Y.)  Imp.,  SVgS,  1919 

Rochester  (N.  Y.)  Imp.,  3i/oS,  1924 

Rochester  (N.  Y.)  Ref.,  sy^s,  1933 

Rochester  (N.  Y.)  Edge.,  3l^s,  1921 

Rockland  Co.   (N.  Y.)  4s,  1913-34 

Rockland  Co.  (N.  Y.)  Fd.,  31/2S,  1914-24 

Rome  (N.  Y.)    414s,  1931 — - 

Rye  (N.  Y.)   5s,  1913-38 

Saranac  Lake  (N.  Y.)   4y2S,  1917-26 

Saranac  Lake  (N.  Y.)  4.45s,  1915-30 

Saratoga  Co.  (N.  Y.)  Rd.,  5s,  1914-18 

Saratoga  Spgs.  (K  Y.)  Pk.,  4y4S,  1916-40 

Schenectady  Co.  (N.  Y.)  4y2S,  1943-45 

Schenectady  (N.  Y.)   4y28,  1913-31 

Schenectady  (N.  Y.)  Mkt.,  4y4S,  1913-31 

Schroeppel  (N.  Y.)  4y2S,  1923-27 

Schuyler  (N.  Y.)   3s,  1916-40 

Silver  Springs  (N.  Y.)  4.80s,  1917-30 

Southampton  (N.  Y.)  4y2S,  1914-20 

Solvay  (N.  Y.)  4y2S,  1916-40 

Syracuse  (N.  Y.)  Wtr.,  4s,  1920 

Syracuse  (N.  Y.)  Ref.,  4s,  1929 

Syracuse  (N.  Y.)  Wtr.,  3y2S,  1928 

Syracuse  (N.  Y.)  Wtr.,  38,  1920 

Troy  (N.  Y.)   4y2S,  1913-25 

Troy  (N.  Y.)   Sch.,  4y2S,  1913-31 

Troy  (N.  Y.)  Wtr.,  3y2S,  1916-36 

Troy  (N.  Y.)  Wtr.,  4s,  1915-25 

Troy  (N.  Y.)  4y2S,  1937-42 

Utica  (N.   Y.)    4s,   1914-19 

Utica  (N.  Y.)    31/38,   1913-35 

Watertown  (N.  Y.)   4y2S,  1942 

Watertown  (N.  Y.)  4s,  1938 

Watertown  (N.  Y.)  Swr.,  3y2S,  1913-27 

Westchester  Co.  (N.  Y.)    3y2S,  1927-28 

Westchester  Co.  (N.  Y.)  4s,  1930-35 

Westchester  Co.  (N.  Y.)  Swr.,  4y2S,  1933-38__ 

Westchester  Co.  (N.  Y.)    3.10s,  1913-14 

West  Seneca  (N.  Y.)  5s,  1913-38 

West  Seneca  (N.  Y.)   5s,  1929-31 

White  Plains  (N.  Y.)  4s,  1914-28 

White  Plains  (N.  Y.)   3y2S,  1931 

White  Plains  (N.  Y.)  31/28,  1913-14 

Whitehall    (N.  Y.)    5s,  1913-27 

Wolcott     (N.  Y.)  41/28,  1931 

Yonkers  (N.  Y.)   4s,  1914-25 

Yonkers  (N.  Y.)  Wtr.,  4s,  1913-22 


High 


Low  Bid  Asked 
__  414 -.20%  basis 
__  414 -.20%  basis 
__  4.30-14%  basis 
__  4.30-14%  basis 
__  4.30-14%  basis 
__  4.30-14%  basis 
__  4.30-14%  basis 
__  4.30-14%  basis 
__  4.35-.20%  basis 
__  4.35-.20%  basis 
__  4.35-.20%  basis 
__  4.30-.20%  basis 
__  4.35-20%  basis 
__  4.35-.20%  basis 
__  4.35-.20%  basis 
__  4.35-.20%  basis 
__  *4i4%  basis 
__  4.30-.20%  basis 
__  414 -.20%  basis 
__  *4.375%  basis 
__  *4.40%  basis 
__  *4i/2%  basis 
__  •1001/2  -- 
414%  basis 
__  4.30-.20%  basis 
__  4.30-.20%  basis 
__  4.30-.20%  basis 
__  4.30-.20%  basis 
__  4.40-.30%  basis 
__  4i4-.30%  basis 
__  4i4-.30%  basis 
__  4i4-.30%  basis 
__  *4.20%  basis 
__  4.30-.20%  basis 
__  4.30-.20%  basis 
__  102 
__  4.30-.20%  basis 
__  4.30-.20%  basis 
__  4.30-.20%  basis 
__  4.30-.20%  basis 
__  414 -.20%  basis 
*98%  _- 
__  4.35-14%  basis 

__  *109.84 
__  4.35-.20%  basis 
__  4.35-.20%  basis 
__  *4.40%  basis 
__  *4.40%  basis 
__  4.30-.20%  basis 
__  4.30-.20%  basis 
__  4.35-.20%  basis 


NORTH  CAROLINA 

North  Carolina  Constr.,  6s,  1919 

North  Carolina  Ref.,  4s,  1950 

North  Carolina  Bldg.,  4s,  1951 

*QuotatioD  nearest  March  1,  1913.    No  quotation  on  that  date. 

1182 


109 

99 

100 


111 
101 
101 


NORTH  CAROLINA  (Continued). 

High  Low        Bid    Asked 

Albemarle  (N.  C.)  5s,  1943 , —  —  —     *104 

Asheville  (N.  C.)  Swr.  &  Wtr.,  6s,  1918 __  __  4.60%  basis 

Asheville  (N.   C.)    Ref.,   5s,   1941 —  __  4.70%  basis 

Asheville  (N.  C.)   1943 —  —  *4.73%  basis 

Beaufort  Co.   (N.  C.)   5s,  1937 —  —  —     *105 

Buncombe  Co.  (N.  C.)  5s,  1931 —  __  4.60%  basis 

Buncombe  Co.  (K  C.)  Fdg.,  4y2S,  1939 —  —  —       100 

Burlington  (K  C.)  Wtr.,  5s,  1938 __  —  —     *105i4 

Carthage  (K  C.)  Wtr.  &  Sewer,  51/38,  1943 __  __  __    *107.73 

Cleveland  Co.  (N.  C.)  Rd.,  5s,  1933-37 —  —  —     *100 

Charlotte  (N.  C.)  St.  &  'Swr.,  5s,  1939 __  __  4%-y2%  basis 

Charlotte  (N.  C.)  Wtr.,  4%s,  1935 __  __  4%-.40%  basis 

Charlotte  (N.  C.)  Wtr.,  41/38,  1941 __  __  4%-.40%  basis 

Charlotte  (N.  C.)  Sch.,  41/38,  1941 __  __  4%-.40%  basis 

Charlotte  (N.  C.)    41/38,  1943 __  __  99       101 

Durham  (N.  C.)   Swr.  &  St.,  41/38,  1941 __  __  98       101 

Durham  (N.  C.)    Sch.,  5s,  1933 __  __  *4i/3%  basis 

Gastonia  (N.  C.)   5s,  30  yrs __  __  *101.61    __ 

Granville  Co.  (N.  C.)  41/3S,  1939 __  __  98 

Greensboro  (N.  C.)   Wtr.,  5s,  1930 __  __  IO31/0     __ 

Greensboro  (N.  C.)   Wtr.,  4s,  1954 __  __  85  "^     90 

Greenville  (N.  Y.)   5s,  1937 __  __  103       105 

Guilford  Co.  (N.  C.)  5s,  1^33 __  __  __       110 

Iredell  Co.  (N.  C.)  5s,  1943 __  __  4.90-%%  basis 

Iredell  Co.  (N.  C.)  51/38,  3  to  11  yrs __  __  *103.135  __ 

La winburg  (N.  C.)  51/38,  1933 __  __  *5%,  basis 

Lee  Co.  (N.  C.)  Road,  5s,  1953 __  __  4.70%  basis 

Mecklenberg   (N.  C.)    6s,  1930 __  __  106       108 

New  Hanover  Co.  (N.  C.)  41/3S,  1936 __  __  4.30%  basis 

Raleigh  (N.  C.)  58,  1937 __  __  104      106V4 

Raleigh  (N.  C.)   4s,  1939 __  __  90 

Rich  Square  (N.  C.)   51/38,  1933-36 __  __  *5%  basis 

Scotland  Co.   (N.  C.)  Rd.,  6s,  1934-39 __  __  *5i4%,  basis 

Tarboro  (N.  C.)  Wtr.,  5s,  1946 __  __  __     *103 

Thomasville  (N.  C.)   5s,  1943 __  __  __     *104 

Wilmington  (N.  C.)  Fd.,  5s,  1933 __  __  4%-i/2%  basis 

Wilmington  (N.  C.)  Wtr.  &  Swr.,  41/38,  1948„  __  __  43/4-.40%  basis 

Wilmington  (N.  C.)  Wtr.  &  Swr.,  41/38,  1953—  __  __  4%-.40%  basis 

Wilmington  (K  C.)  Ref.,  4s,  1939 __  __  90 

Winston  (N.  C.)  Imp.,  41/38,  1951 __  __  99       101 

Winston  (N.  C.)   41/38,  1953 __  __  99       101 

NORTH  DAKOTA 

North  Dakota  Fdg.,  4s,  1930-31 __  __  100 

Cavalier  Co.   (No.  Dak.)  6s,  1915-35 __  __  *5i/3%  basis 

OHIO 

Adams  Co.  (Ohio)  41^8,  1947 __  __  *3.85%  basis 

Akron  (Ohio)  Wtr.,  4s,  1943 __  __  3.90%  basis 

Akron  (Ohio)  41/3S,  13  yrs __  __  *100.846  „ 

Akron  (Ohio)    41/38,  I31/3  yrs __  __  *100.65    — 

Alliance  (Ohio)  Elec.  Lt.  41/38,  17%-18i/2  yrs.  —  __  *100.66-100.92 

Alliance  (Ohio)  41/38,  1937-33 __  __  3.90%  basis 

Archbold  (Ohio)   St.,  41/2S,  1-10  yrs. »_  __  *100 

Ashtabula   (Ohio)   48,  1936 __  __  __     *103i4 

♦Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1183 


OHIO  (Continued). 

Auglaize  Co.  (Ohio)  Bldg.,  5s,  1913 

Avondale   (Ohio)   5s,  1916 

Barberton  (Ohio)  Sch.,  41/28,  1923-37 

Barnesville  (Ohio)  5s,  1913-15 - 

Bellaire   (Ohio)   Sch.,  48,  1923-31 

Bellefontaine  (Ohio)  Sch.,  41/38,  1921-34 

Bratenahl  (Ohio)  41/38,  1919-22 

Bowling  Green  (Ohio)  Ref.,  58,  1914-17 

Butler  Co.  (Ohio)  Bdg.,  41/38,  1921-24 

Butler  Co.   (Ohio)   4s,  1914-16 

Burton  (Ohio)  St.,  58,  1-4  yrs 

Cambridge  (Ohio)  41/38,  1914-34 

Cambridge  (Ohio)   48,  1923 

Canton  (Ohio)    58,   1915-17 

Canton  (Ohio)  Wtr.,  41/38,  1930 

Canton  (Ohio)    48,  1921-27 

Canton  (Ohio)   S.  D.  4s,  1917-18 

Canton  (Ohio)  St.  &  Swr.,  41/38,  1916-23 

Canton  (Ohio)   Sewer,  41/38,  1922 

Canton  (Ohio)  Wtr.  Swr.  &  St.,  41/38,  1916-32 

Carthage  (Ohio)  31/38,  1925 

Cincinnati  (Ohio)  48,  1949-52 

Cincinnati  (Ohio)    Wtr.,  31/38,  1945 

Cincinnati  (Ohio)    Ref.,   31/3S,   1953 

Cincinnati  (Ohio)   Wtr.,  38,  1939 

Cincinnati   (Ohio)    Sch.  Dis.,  4s,  1936 

Cincinnati  (Ohio)    Sch.  Dis.,  31/38,  1940 

Cincinnati  (Ohio)  31/38,  1935-36 

Cincinnati  (Ohio)   3.658,  1937 

Cincinnati  (Ohio)  31/28,  1943-65 

Cincinnati  (Ohio)    58,  1930 

Cincinnati  (Ohio)    4s,  1934 

Cincinnati  (Ohio)    S.  F.  48,  1941 

Cincinnati  (Ohio)    4s,   1949 

Cincinnati  (Ohio)  3.65s,  1937 

Cincinnati  (Ohio)  Ref.,  31/28,  1956 

Cincinnati  (Ohio)    31/3S,  1938 

Cleveland  (Ohio)   Libr.,  58,  1918 

Cleveland  (Ohio)   Bdge.,  4148,  1943 

Cleveland  (Ohio)    Bdge.,  4148,  1931 

Cleveland  (Ohio)    Pk.,  4l^s,  1938 

Cleveland  (Ohio)  Pvg.,  4.108,  1930 

Cleveland  (Ohio)    Swr.,  4.108,  1930 

Cleveland  (Ohio)  Ref.,  4s,  1918 

Cleveland  (Ohio)   Infirm.,  4a,  1930 

Cleveland  (Ohio)  Wtr.,  4s,  1930 

Cleveland  (Ohio)    Swr.,  4s,  1935 

Cleveland  (Ohio)  Ref.,  4s,  1937 

Cleveland  (Ohio)  Pk.,  4s,  1939 

Cleveland  (Ohio)    Pk.,  48,  1931 

Cleveland  (Ohio)  Swr.,  4s,  1919 

Cleveland  (Ohio)    Pk.,  43,  1934 

Cleveland  (Ohio)  Gde.  Cr.,  4s,  1930 

Cleveland  (Ohio)   Sch.  Dis.,  43,  1933 

Cleveland  (Ohio)   Sch.  Dis.,  48,  1933 

Cleveland  (Ohio)  Sch.  Dis.,  41/08,  1930 

Cleveland  (Ohio)   Sch.  Dis.,  58,  14  5/6  yrs 

""Quotaticm  nearest  March  1,  1013.    No  quotation  on  that  date. 

1184 


High    Low 


Bid 

3.90% 
3.80% 

*3.90% 

*4% 

*3.80% 

*3.90% 

*3.90% 

4% 

3.90% 

3.90% 

*100 

4% 

4% 

3.80% 

3.80% 

3.80% 

3.90% 

*3.85% 

*3.90% 

*3.90% 

*96i/2% 

3.80% 
3.80% 
3.80% 
3.80% 
3.80% 


Asked 

basis 
basis 
basis 
basis 
basis 
basis 
basis 
basis 
basis 
basis 

basis 
basis 
basis 


basis 
basis 
basis 
basis 
basis 
basis 
*105 
basis 
basis 
basis 
basis 
basis 
*96y4 


-  •941/3 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
•103.30   — 


OHIO  (Continued). 


Cleveland  (Ohio)  Sch.  Dis.,  4s,  1915 

Cleveland  (Ohio)    Wtr.,   4s,   1917 

Cleveland  (Ohio)   5s,  1919 

Cleveland  (Ohio)   St.,  4s,  1937-37 

Cleveland  (Ohio)    4s,    1942 

Clifton   (Ohio)    Wtr.,  41/28,  1913-22 

College  Hill  (Ohio)  Wtr.,  31/38,  1929 

Columbiana  Co.   (Ohio)   Rd.  41/2S,  1913-22 

Columbus  (Ohio)    Swr.,   41/2S,   1921 

Columbus  (Ohio)  F.  D.,  4s,  1916 

Columbus  (Ohio)    4s,    1927 

Columbus  (Ohio)  Swr.,  4s,  1933 

Columbus  (Ohio)  Wtr.,  4s,  1945 

Columbus  (Ohio)    31/2S,    1932 

Columbus  (Ohio)  Sch.  Dis.,  4s,  1926 

Columbus  (Ohio)  Sch.  Dis.,  Si/gS,  1923 

Columbus  (Ohio)    4s,    1922 

Cuyahoga  Co.  (Ohio)   5s,  1913-20 

Cuyahoga  Co.  (Ohio)  Eef.  4s,  1913-26 

(^yahoga  Co.  (Ohio)  4s,  1913-41 

Cuyahoga  Co.  (Ohio)  41/2S,  7^-71/2  yrs 

Cuyahoga  Co.  (Ohio)  41/38,  1920 

Cuyahoga  Co.  (Ohio)  Rd.  41/2S,  1914-22 

Cuyahoga  Co.   (Ohio)   4s,  1924-27 

Cuyahoga  Co.  (Ohio)  Ser.  1914-43 

Dayton  (Ohio)   5s,  1915 

Dayton  (Ohio)    4s,  1913-18 

Dayton  (Ohio)   Wtr.,  31/2S,  1913-15 

Dayton  (Ohio)  Sch.  Dis.,  4s,  1920 

Dayton  (Ohio)  5s,  514  to  6  yrs 

Defiance  (Ohio)    5s,  1914-15 

Defiance  (Ohio)  41/2S,  1913-16 

Delphos   (Ohio)    Sch.,  41/4S,  1917-45 

Dover  (Ohio)  Sch.,  5s,  I61/4  yrs 

East  Cleveland   (Ohio)  "Sch.,  4s,  1932 

East  Liverpool  (Ohio)  Ref.,  4s,  1940 

East  Palestine  (Ohio)  Sewer,  5s,  4  yrs 

Elyria  (Ohio)  Wtr.  4s,  1913-23 

Elyria  (Ohio)  Wtr.  4s,  1924-28 

Elyria  (Ohio)  Sch.  41/38,  1917-20 

Elyria   (Ohio)    Sch.  4s,  1924-40 

Elyria  (Ohio)  4s,  1925-50 

Fostoria  (Ohio)   4s,  1925 

Franklin  Co.  (Ohio)  Def.  &  Bdg.  5s,  1913 

Franklin  Co.  (Ohio)  Fund  4s,  1914-19 

Franklin  Co.  (Ohio)  Bldg.  4s,  1914-25 

Gallipolis  (Ohio)  Wtr.  5s,  1914 

Gallipoli  (Ohio)  Red.  4s,  1920 

Glendale  (Ohio)  Wtr.  41/2S,  1-4  yrs 

Glenville  (now  Cleveland)  Sewer  41/2S,  1917-32 

Grafton  (Ohio)  Rd.  5s,  1927-28 

Hamilton   (Ohio)   4s,  1940 

Hamilton  (Ohio)  Gas  5s,  1914-18 

Hamilton  (Ohio)   41/38,  1919 

Hamilton  Co.  (Ohio)  58,  1934 

Hamilton  Co.  (Ohio)  C.  H.  4s,  1921-39 

Hardin  (Ohio)  58,  1915-18 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date 

1185 


High    Low        Bid    Asked 

__     *100 

_-      *3.90%  basis 

—     *3.90%  basis 

__      *3.80%  basis 

__    *103.62 
3.80%  basis 
_.        _-  _-       *96i/2 

__  *3.85%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
3.80%  basis 
__  *100 
3.80%  basis 
3.80%  basis 
3.80%  basis 
*100 

3.85%  basis 

__      *3.85%  basis 

__      *3.80%  basis 

__     *3.80%  basis 

3.80%  basis 

3.80%  basis 

3.80%  basis 

3.80%  basis 

♦102.53    _- 

4%  basis 

4%  basis 

_-     *3.95%  basis 

*105V4     — 

._      *3.85%,  basis 

3.90%  basis 

*100.10    — 


4% 

4% 

*3.90% 

*3.85%, 

*378% 

4% 
3.80% 
3.80% 
3.80%, 
3.90%) 
3.90% 

*3.90% 

*4% 

3.90% 
3.90% 
3.70%? 
3.70% 
*4y4% 


basis 

basis 

basis 

basis 

basis 

basis 

basis 

basis 

basis 

basis 

basis 

100.431 

basis 


♦10314 
basis 
basis 


basis 
basis 


OHIO  (Continiiea). 

High  Low  Bid    Asked 

Hardin  (Ohio)  4s,  1915-22 __  __  •3.80%  basis 

Harris  (Ohio)  Rd.  5s,  26%yrs __  __  *103.02    „ 

Kennedy  Hghts.  (Ohio)  Sch.  4s,  1952 __  „  __     *104y2 

Knox  Co.  (Ohio)  5s,  Ser.  1  to  5  yrs __  __  *101.52    __ 

Lake  Co.  (Ohio)  Rd.  41/2S,  12  yrs __  __  *100.80   __ 

Lake  Co.  (Ohio  4y2S,  12y6 __  __  *100.61    — 

Lake  Co.  (Ohio)  4s,  1921 __  __  *3.85%  basis 

Lake  Co.  (Ohio)  4y33,  1923-29 „  __  *4.30%  basis 

Lakewood  (Ohio)  4y2S,  1921-39 —  „  4%  basis 

Lakewood  (Ohio)  5s,  3y2  to  6  yrs __  __  *100.80   „ 

Lakewood  (Ohio)  5s,  5%  to  13l^  yrs __  __  *101.53    _. 

Lakewood  (Ohio)  5s,  22y2  yrs __  __  *107.40   __ 

Lakewood   (Ohio)    Sch.  4y2S,  1913 __  __  *4%  basis 

Lakewood  (Ohio)   St.  5s,  1914-31 __  „  *4y2%  basis 

Lakewood  (Ohio)  Sch.  4y2S,  1928-34 __  __  *3.90%  basis 

Lima  (Ohio)   5s,  1916 __  __  3.90%  basis 

Lima  (Ohio  )Swr.  4s,  1913-25 __  __  3.90%  basis 

Lima  (Ohio)  Ref.  3y2S,  1930 __  __  3.90%  basis 

Lockland  (Ohio)  Sch.  4s,  1952 __  __  __     *104^ 

Lorain  (Ohio)  Riv.  Imp.  58,  1918-32 __  __  4%  basis 

Lorain  (Ohio)  4y2S,  10  yrs __  __  *100.875  __ 

Louisville  (Ohio)  St.  5s,  Ser.  3  to  6  yrs __  __  *100.403  __ 

Lucas  Co.  (Ohio)  Ct.  Hse.  4s,  1944 __  __  3.80%  basis 

Lucas  Co.  (Ohio)  5s,  1917 __  __  *4%  basis 

Lucas  Co.  (Ohio)  Rd.  4y2S,  1915-21 __  __  *3.80%  basis 

Lyme  Co.  (Ohio)   5s,  9%  yrs __  __  *101.81%  basis 

Madison  Co.  (Ohio)  58,  1914-15 __  __  *4%  basis 

Madisonville  (Ohio)   5s,  1932 __  __  3.80%  basis 

Marietta    (Ohio)    3y2S,   1931 __  __  3.90%  basis 

Marion  (Ohio)  Swr.  5s,  1914-23 __  __  3.90%  basis 

Martin's  Ferry  (Ohio)  Sch.  5s,  1926-44 >_  __  3.90%  basis 

Matamoras  (Ohio)  St.  4s __  __  *100 

Mercer  Co.  (Ohio)  5s,  1914-24 __  __  3.90%  basis 

Middletown  (Ohio)  Pk.  4s,  1930 __  —  3.90%  basis 

Middletown  (Ohio)  St.  4y2S,  1-10  yrs __  __  *100.102  __ 

Norwood    (Ohio)    5s,  1915 __  __  3.85%  basis 

Norwood  (Ohio)  4y2S,  1925 __  „  3.85%  basis 

Norwood  (Ohio)  4s,  1930 __  —  3.85%  basis 

Montgomery  Co.  (Ohio)  5s,  2  yrs __  __  *100i4     __ 

Montgomery  Co.  (Ohio)  5s,  414  yrs __  —  *101.13    — 

Monroeville  (Ohio)  St.  5s,  1920 —  __  *4%  basis 

Portsmouth  (Ohio)   4s,  1913-24 __  __  3.80%  basis 

Portsmouth  (Ohio)  Sch.  D.  3y2S,  1917-22 „  —  3.80%  basis 

Navarre  (Ohio)  4y2S,  Ser __  __  *3.85%  basis 

Newburg  (now  Cleveland)  Sewer  4y2S,  1913—  __  __  *4%  basis 

Newburgh  Hghts.  (Ohio)  Wtr.  4y2S,  1932 __  —  *3.90%  basis 

Niles  (Ohio)  Wtr.  &  -Elec.  Lt.  5s,  16  to  17  yrs  __  __  105.69  to  106.03 

Norwalk  (Ohio)  5s,  9%  yrs —  __  *102.056  „ 

Oak  Run  (Ohio)  Sch.  5y2S,  5% __  _.  *103.536  — 

Oakley  (Ohio)  St.  5s,  1913-22 —  —  *3.85%  basis 

Palestine  (Ohio)  Sch.  6s,  5%  yrs __  —  *104.904  __ 

Paulding  Co.  (Ohio)  5s,  4  yrs __  __  *101.08    __ 

Pemberville   (Ohio)    Sch.  5s,  914 -  __  —  *101 1/5  __ 

Pike  (Ohio)   Sch.  5y2S,  Ser.  2-7 —  —  *100y2     — 

Piqua  (Ohio)  'Sch.  4s,  1942-48 __  __  *3.80%  basis 

Portage  Co.  (Ohio)  4y2S,  1914-27 „  —  *3.85%  basis 

Pleasant  Ridge  (Ohio)  Sch.  4y2S,  1936-42 __  __  "S.SS^)  basis 

^Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1186 


OHIO  (Continued). 

Pultney  (Ohio)  Rd.  5s,  Ser.  10  to  19  yrs 

Salem  (Ohio)   43,  1925 

Sandusky  (Ohio)  Wrf.  5s,  1914-26 

Sandusky  (Ohio)  St.  Imp.  4s,  1914-18 

Sandusky  (Ohio)  4s,  9%  yrs 

Sandusky  (Ohio)  4s,  1922 

Sandusky  (Ohio)   4s,  1917-24 

Sandusky   (Ohio)    Sch.  4s,  1915-51 

Steubenville   (Ohio)    4s,  1924 

Tiffin  (Ohio)  4s,  1915 

Shaker   Heights    (Ohio)    Sewer    &    Wtr.    5s, 

1914-22  

Stark  Co.  (Ohio)  Rd.  5s,  4  yrs 

Struthers  (Ohio)  Sch.  41/33,  1926-45 

Sullivan  (Ohio)  Rd.  5s,  10  yrs 

Toledo  (Ohio)   5s,  1913 

Toledo  (Ohio)  41/38,  1919 

Toledo  (Ohio)  41/2S,  1914 

Toledo  (Ohio)   Bdge.,  4l^s,  1928-38 

Toledo  (Ohio)  4s,  1926 

Toledo  (Ohio)  Pk.  4s,  1942 

Toledo  (Ohio)  Ref.  31/2S,  1930 

Toledo  (Ohio)   Sch.  D.  4s,  1923-29 

Springfield  (Ohio)  Fire  5s,  1915-21 

Springfield  (Ohio)  Bldg.  41/3S,  1913-21 

Springfield  (Ohio)   4s,  1921-25 

Springfield   (Ohio)   41/2S,  1913-14 

Springfield  (Ohio)  41/38,  1934 

Troy  (Ohio)   St.  48,  1925-32 

Tuscarawas   (Ohio)   5s,  5%  yrs 

Union  Co.  (Ohio)  5s,  1%  yrs 

Urbana  (Ohio)  Sewer  4i/4s,  1928-29 

Van  Wert  Co.  (Ohio)  Rd.  6s,  1913-19 

Warren  (Ohio)  4s,  8l^  yrs 

Warren  (Ohio)  4s,  1932-33 

Willoughby  (Ohio)   41/38,  1932 

Wooster  (Ohio)  4i^s,  1932 

Youngstown  (Ohio)  Pk.  58,  1914 

Youngstown   (Ohio)   Fire  5s,  1913 

Youngstown  (Ohio)  II/3  to  3l^  yrs 

Zanesville   (Ohio)   4s,  1915 

OKLAHOMA 

Oklahoma,  Funding  4s,  1918-27 

Allen    (Okla.)    6s,   1937 

Anadarko  (Okla.)  Elec.  Lt.  51/3S,  1929 

Canadian  Co.  (Okla.)  Ct.  H.  48,  1922-31 

Ardmore  (Okla.)   5s,  1922 

Ardmore  (Okla.)  58,  1937 

Atoka  Co.  (Okla.)  5s,  Serially 

Bartlesville   (Okla.)    1913-22 

Blackwell  (Okla.)  6s,  1937 

Bokchito  (Okla.)  6s,  1937 

Checotah  (Okla.)  Wtr.  6s,  1926 

Clinton    (Okla.)    6s,  1933 

Clinton  (Okla.)  6s,  1938 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

Wt  1187 


High    Low 


Bid  Asked 
♦103.069  __ 
*3.90%  basis 
3.80%  basis 
3.80%  basis 
*100 

-     *100i/8 

*3.80%  basis 

*3.85%  basis 

3.90%  basis 

4%  basis 

*4i/2%  basis 

*101.81    _- 

*4.30%  basis 

101.64    __ 

__     *100i/8 

3.80%  basis 

3.80%  basis 

3.80%  basis 

3.80%  basis 

3.80%  basis 

3.80%  basis 

3.80%  basis 

3.80%  basis 

3.80%  basis 

3.80%  basis 

*4%  basis 

•*3.80%  basis 

*3.80%  basis 

*101.51    __ 

*100.18    __ 

*3.85%  basis 

3.80%  basis 

*100.40    „ 

*3.90%  basis 

*4%  basis 

*3.90%  basis 

3.80%  basis 

3.80%  basis 

^100.04  to  101.04 

3.80%  basis 


993/4  100 
__    *103.29 
__    *104.17 
98 
4^8%  basis 
__    *102.89 
*4.70%  basis 


*106%%  basis 

*103.29    „ 

__     *106 

*5.40%  basis 

__    *108.18 


OKLAHOMA  (Continued). 


CoUinsville  Wtr.  &  Sewer  6s,  1938 

Dewey  (Okla.)  Sch.  6s,  1929 

Durant   (Okla.)   Sewer  &.  Wtr.  6s,  1933 

Enid   (Okla.)    Sewer  53,  1919-34 

Enid  (Okla.)   5s,  1937 

Erick  (Okla.)  Sch.  6s,  1933 

Enfaula  (Okla.)  68,  1937 

Francis    (Okla.)    Wtr.  6s,  1936 

Frederick   (Okla.)    6s,  1928 

Garvin  Co.  (Okla.)   Sch.  5s,  1928 

Gaymon  (Okla.)  6s,  1923-32 

Guthrie  (Okla.)  5s,  1933 

Hastings   (Okla.)   6s,  1937 

Heavener  (Okla.)   6s,  1*932 

Hughes  Co.  (Okla.)  Sch.  6s,  1932 

Idabeir(Okla.)  6s,  1937 

Lincoln  Co.  (Okla.)  6s,  1917-24 

Love  Co.  (Okla.)   51/28,  1937 

McAlester  (Okla.)  Sch.  5s,  1937 

Mcintosh  Co.  (Okla.)  Sch.  6s,  1932. 

Miami  (Okla.)  Wtr.  &  Lt.  53,  1920-35 

Mounds  (Okla.)  5s,  1929 

Mounds  (Okla.)  6s,  1933 

Muskogee  (Okla.)  41/28,  1925 

Muskogee  (Okla.)   5s,  1924 

Muskogee  (Okla.)  Fdg.  5s,  1929 __ 

Muskogee  (Okla.)  41/2S,  1929 

Muskogee  (Okla.)  Sch.  5s,  1936 

Muskogee  (Okla.)   5s,  1937 

Muskogee  Co.  (Okla.)  Sch.  6s,  1929 

Payne  Co.  (Okla.)  Ref.  41/oS,  1920-29 

Payne  Co.  (Okla.)  Sch.  6s,  1924 

Osage  Co.  (Okla.)   Sch.  6s,  1932 

Osage  Co.  (Okla.)   Sch.  6s,  1932 

Osage  Co.  (Okla.)  6s,  1938 

Oklahoma  City  (Okla.)  Sch.  D.  6s,  1914 

Oklahoma  City  (Okla.)  4s,  1933 

Oklahoma  Co.  (Okla.)  41/28,  1924-33 ^..^ 

Oklahoma  City  (Okla.)  6s,  1915 

Oklahoma  City  (Okla.)  5s,  1937 

Oklahoma  City  (Okla.)  Wtr.  5s,  1936 

Oklahoma  City  (Okla.)  Fdg.  5s,  1936 

Oklahoma  City  (Okla.)   Fire  53,  1934 

Oklahoma  City  (Okla.)  Swr.  41/2S,  1936 

Oklahoma  City  (Okla.)  5s,  1935 

Ponca  City  (Okla.)  58,  1932 

Pond  Creek  (Okla.)  5s,  1931 

Porum  (Okla.)  Wtr.  &  Elec.  Lt.  68,  1937 

Shawnee    (Okla.)    5s,  Serially 

Shawnee   (Okla.)   6s,  1918 

Sapulpa   (Okla.)   Sch.  5s,  1928 

'Sapulpa  (Okla.)  Wtr.  &  Sewer  5s,  1933 

Skiatook    (Okla.)    6s,   1937 

Stillwater  (Okla.)   Wtr.  5s,  1933 

Strike  Axe  (Okla.)   6s,  1921-36 

Tonkawa  (Okla.)  Wtr.  6s,  1937 

Tulsa  (Okla.)  5s,  12  to  I41/2  yrs 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1188 


High    Low        Bid    Asked 

—  *110.38 
„  '107.72 
-_    *109.22 

*4%%  basis 

—  *102.89 
-_     *106 

__       *5%%  basis 
__     *106i/2 

__      *1133/8 

__     *100 

__       *5i/2%  basis 

-_     *103l^ 

__    *103.29 

*6%  basis 

_-      •514%  basis 

__    *108.18 
*6%  basis 
__    *108.59 
__     "4.80%  basis 
-_      *5i/4%  basis 
*5%  basis 
__     *100 
__      109.23 
414%  basis 
478%  basis 
4y8%  basis 
._         _.  __       *98i/2 

__      *4.80%  basis 


__    *104.36 

*5l^%  basis 

41/4%  basis 

*5i/8%  basis 

•51/8%  basis 

•514%  basis 

*4.90%  basis 

101 

98.26    — 

414%  basis 

101 

4%%  basis 

478%  basis 

434%  basis 

4%%  basis 

41/0%  basis 

I-     '10478 

*5%  basis 

*5%  basis 

__     '106 

•4.80%  basis 

__     "100 

*5%  basis 

-_     *98.60 

__    *103.29 

*5  %basis 

•514%  basis 

*5i/2%  basis 

•100 


I 


OKLAHOMA  (Continued). 

High 

Tulsa    (Okla.)    5s,   1930 

Tulsa  (Okla.)    Sch.  1932 

Coatesville   (Pa.)   4s,  1926-41 

Tulsa  (Okla.)   58,  1932 

Tulsa   (Okla.)   5s,  1931-36 

Wagoner  (Okla.)  5s,  1937 

Willow    (Okla.)    6s,  1932 

Wellston  (Okla.)  Wtr.  68,  1936 

Wellston  (Okla.)   6s,  1936 

OREGON 

Dallas  City  (Ore.)  5s,  1917-26 

Dallas  City  (Ore.)   Sewer  5s,  1932-37 

Albany    (Ore.)    5s,  1931 

Butte  Falls  (Ore.)  Wtr.  6s,  1932 

Coos  Bay  (Ore.)   Port  58,  1933-44 

Glendale  (Ore.)   6s 

Eugene    (Ore.)    58,   1942 

Portland  (Ore.)  C.  H.,  5s,  1922 

Portland  (Ore.)  Wtr.,  5s,  1923 

Portland  (Ore.)  Bdge.,  5s,  1925 

Portland  (Ore.)   Bdge.,  4s,  1934 

Portland  (Ore.)   Wtr.,  48,  1937 

Portland  (Ore.)    S.  D.,  5s,  1914 

Hermiston  (Ore.)  Sch.,  5s,  10  to  20  yrs 

La  Grande  (Ore.)  6s,  1  to  10  yrs 

La  Grande  (Ore.)  6s,  1913-22 

Medford    (Ore.)    5s,   1921 

Milwaukee   (Ore.)   6s,  1921 

Pendleton  (Ore.)   6s,  1923 

Pilot  Rock  (Ore.)  Wtr.,  6s,  1932 

Port  of  Portland  (Ore.)   5s,  1922 

Port  of  Portland  (Ore.)  Dry  Dk.,  4s,  1934 

St.  Johns  (Ore.)   St.,  6s,  1  to  10  yrs 

St.  Johns  (Ore.)  6s,  1922 

Union  Co.   (Ore.)  Sch.,  6s,  1923-33 


Low 


Bid    Asked 
__    *101.12 

*4.70%  basis 
*4%  basis 
__    *103.86 

*4%%  basis 
_-     *100 
__    *103.29 
__     *106 
__    *103.29 


4.60%  basis 

*4%%  basis 

4.70%  basis 

*5.75%  basis 

*4.90%  basis 

*95 

__       104 

4y2-.35%  basis 

4y2-.35%  basis 

4y2-.35%  basis 

4y2-.35%  basis 

94        9514 
4i4-.35%  basis 
*99 

*100.802  — 

♦514%  basis 

__     *102ya 

__     *101 

*5%  basis 

__    *102.90 

4y2-y4%  basis 

4y2-y4%  basis 

♦100.972  __ 

•514%  basis 

_-     *102 


PENNSYLVANIA 

Pennsylvania  Agr.  College  5s,  1922 

Allegheny  (Pa.)   4s,  1913-19 

Allegheny  (Pa.)   4s,  1917-27 

Allegheny  (Pa.)  St.  Imp.,  4s,  1937 

Allegheny  (Pa.)   3y2S,  1913-31 

Allegheny  Co.  (Pa.)  4s,  1934 

Allegheny  Co.  (Pa.)   Rd.,  4s,  1937 

Allegheny  Co.  (Pa.)  Rd.,  4s,  1938 

Allegheny  (Pa.)  Bdge.,  4s,  1942 

Allegheny  Co.  (Pa.)   3y2S,  1932 

Allegheny  Co.  (Pa.)   Rd.,  4s,  1936 

Allegheny  Co.  (Pa.)   Rd.,  48,  1936 

Allegheny  Co.  (Pa.)   4s,  1941 

Altoona  (Pa.)    48,   1934 

Altoona  (Pa.)    Ref.,  4s,1936 

Altoona  (Pa.)  Highw.,  48,  1937 

Altoona  (Pa.)  S.  D.  48,  1913-35 

Braddock   (Pa.)    48,  1913-35 

'Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1189 


4% 

4.10% 

4.20% 

4% 

4% 

4.10-.05% 

4.10-.05% 

4.10-.05% 

4-3,95% 

3.95% 


basis 
basis 
basis 
basis 
basis 
basis 
basis 
basis 
basis 


__     *98y, 

*4.10%  basis 
_-  *101 
basis 
basis 
basis 
basis 
basis 


4% 

4% 

4% 

4.20% 

4.30% 


PENNSYLVANIA  (Continued). 

High 

Bridgeville  (Pa.)  Sch.,  41/28,  1933 

Canoasburg  (Pa.)  4s,  12  yrs 

Chester  (Pa.)   SVgS,  1939 

Chester  (Pa.)   4s,  1937 

Chester  (Pa.)   S.  D.,  SVzS,  1931 

Coatesville   (Pa.)   4s,  1926-41 

College  Hill  (Pa.)  41/38,  1919-42 

East  McKeesport  (Pa.)  Sch.,  41/2S,  1934-41 

Easton  (Pa.)  31/38,  1938 

Easton  (Pa.)    S.  D.,  4s,  1924 

Erie  (Pa.)    Ref.,  4s,   1914 

Erie  (Pa.)    St.,   4s,   1921 

Edgewood  (Pa.)  41/38,  1928-34 

Exeter  (Pa.)   Sewer,  5s,  1913-17 

Freedom   (Pa.)   41/38,  1935-42 

Harrisburg  (Pa.)   4s,  1920 

Harrisburg  (Pa.)    48,    1921 

Hazleton  (Pa.)  4s,  1936 

Homestead   (Pa.)    5.40s,  1915 

Houston  (Pa.)    41/3S,   1930-40 

Houston  (Pa.)    41/38,   1938 

Ingram  (Pa.)  St.  &  Sewer,  41/38,  1940-42 

Johnstown  (Pa.)    5s,    1921 

Johnstown  (Pa.)   41/38,  1923 

Johnstown  (Pa.)  Bldg.,  48,  1930 

Knoxville  (Pa.)  St.,  4iA8,  1936 

Lancaster  (Pa.)  Wtr.,  4s,  1913-20 

Lancaster  (Pa.)   St.,  48,  1938 

Lancaster  (Pa.)  4s,  1925 

Lansdowne  (Pa.)  4l^8,  Ser.  1  to  30  yrs 

Ligonier  (Pa.)  41/38,  1927-42 

McDonald   (Pa.)   41/38,  1922-2^ 

Midland    (Pa.)    41/38,  1913-32 

Monongahela   (Pa.)  41/3S,  1937-38 

New  Castle  (Pa.)  414s,  1927-33 

Norwood  (Pa.)   Sch.,  41/38,  1933-43 

Old  Forge  (Pa.)  5s,  1938-43 

Parnassus   (Pa.)    Sch.,  41/38,  1933-43 

Patton  (Pa.)  41/38,  1931-31 

Philadelphia  (Pa.)  31/3S,  1919 

Philadelphia  (Pa.)  31/3S,  1930 

Philadelphia  (Pa.)  31/oS,  1931 

Philadelphia  (Pa.)  31/38,  1932 

Philadelphia  (Pa.)  31/3S,  1925 

Philadelphia  (Pa.)  31/3S,  1926 

Philadelphia  (Pa.)  31/38,  1937 

Philadelphia  (Pa.)  38,  1931__^ 

Philadelphia  (Pa.)    38,   1930 

Philadelphia  (Pa.)  4s,  1937 

Philadelphia  (Pa.)   4s,  Jan.  1938 

Philadelphia  (Pa.)   48,  July  1938 

Philadelphia  (Pa.)    48,    1940 

Philadelphia  (Pa.)    4s,   1941 

Philadelphia  (Pa.)  4s,  1943 

Philadelphia  (Pa.)  Wtr.,  31/38,  1931 

Philadelphia  (Pa.)  31/3S,  1933 

Philadelphia  (Pa.)    31/38,    1934 

'Quotation  nearest  March  1,  1913.    No  quotation  on  tliat  date. 

1190 


Low        Bid    Asked 

__  *4.15%  basis 
*100.55  -_ 
4.05%  basis 
4.10%  basis 

__  4.10-4%  basis 
*4%  basis 

-_     *4.30%  basis 

—  *4l^%  basis 

4%  basis 

4%  basis 

4.10%  basis 

4.10  %basi3 

__      *4i/8%  basis 

__     *101i/i 

__      *4.30%  basis 

4%  basis 

__       *97i/4 

4.40%  basis 

4.10%  basis 

*4%  basis 

*104.73    — 

__      *4.10%  basis 

4.10%  basis 

4%  basis 

4.10%  basis 

—    ,*103.i4 

3.90%  basis 

3.90%  basis 

_-      *99 

*101.60    _- 

__      *4.30%  basis 

*4i/8%  basis 

__      *4.30%  basis 

*4.15%  basis 

—  *4.10%  basis 
-_  *4i/4%  basis 
__  *4.35%  basis 
__      *4.15%  basis 

—  *4.30%  basis 

951/0     ._ 

95 

943/4     „ 

941/2     __ 

94 

94 

.-         931/3  , 

901/3     -_ 

871/2  - 
__  3.96-.94%  basis 
__  3.96-.94%  basis 
__  3.96-.94%  basis 
__  3.96-.94%  basis 

-_      101 

10034  101 

__     4-3.95%  basis 

__    4-3.95%  basis 

4-3.95%  basis 


PENNSYLVANIA  (Continued). 

High  Low        Bid    Asked 

Philadelphia  (Pa.)  S.  D.,  4s,  1923-42 __  __  3.98%  basis 

Philadelphia  (Pa.)  31/2S,  &  3s ^ __  __  *4.10%  basis 

Philadelphia  (Pa.)   Sch.,  4s,  Ser.  1924 __  __  *3.95%  basis 

Pittsburgh  (Pa.)   41/4 s,  1913-40 __  __  4.10-4%  basis 

Pittsburgh  (Pa.)  4s,  1925 „  __  4.10-4%  basis 

Pittsburgh  (Pa.)   4s,  1913-27 __  __  4.10-4%  basis 

Pittsburgh  (Pa.)   4s,  1914-39 __  __  4.10-4%  basis 

Pittsburgh  (Pa.)   4s,  1913-36 __  __  4.10-4%  basis 

Pittsburgh  (Pa.)   41/28,  1913-38 __  __  4.10-4%  basis 

Pittsburgh  (Pa.)    414s,  1913-30 __  __  4.05%  basis 

Pittsburgh  (Pa.)    4l^s,   Ser.   1913-42 __  __  *4.05%  basis 

Pittsburgh  (Pa.)    Sch.,   4s,   1922-42 __  __  *4.10%  basis 

Plymouth  (Pa.)  Sch.,  58,  1934-36 _>  __  *4i^%  basis 

Reading  (Pa.)  4s,  Apr.  1913-28 __  __  4-3.90%  basis 

Reading  (Pa.)  4s,  Sep.  1913-28 __  __  4-3.90%  basis 

Reading  (Pa.)    4s,  1918 __  —  4-3.90%  basis 

Schylkill  Co.  (Pa.)   4s,  1916 __  __  4%  basis 

Schylkill  Co.  (Pa.)    3s,    1921 __  __  4%  basis 

Scranton  (Pa.)   41/4S,  1914-41 __  __  4.05%  basis 

Scranton  (Pa.)   4s,  1914-37 __  —  4.05%  basis 

Scranton  (Pa.)   4s,  1915-35 __  __  4.05%  basis 

Scranton  (Pa.)    31/28,    1915 __  —  41/2%  basis 

Scranton  (Pa.)   S.  D.,  4s,  1915-33 __  __  4.10%  basis 

Scranton  (Pa.)   S.  D.,  31/2S,  1914-32 __  __  4.10%  basis 

Turtle  Creek  (Pa.)  41/2S,  1941 __  __  *4.20%  basis 

Uniontown  (Pa.)  Imp.,  4s,  1928 __  __  4.40%  basis 

Washington  Co.  (Pa.)  Rd.,  41/2S,  Ser.  1913-27—  __  —  *4.20%  basis 

Waynesboro  (Pa.)  Sch.,  41/2S,  1927-42 __  __  *4i/i%  basis 

Williamsport  (Pa.)  31/2S,  1929 __  __  41/2%  basis 

Wilkesbarre  (Pa.)    31/2S,    1914-29 _.  __  4.10%  basis 

Wilkesbarre  (Pa.)    4s,    1914-35 _*—  __  __  4.10%  basis 

Wilkesbarre  (Pa.)  4s,  1931 __  __  —     *100 

Woodlawn  (Pa.)  Sch.,  41/2S,  1941 >_  __  *4.30%  basis 

RHODE  ISLAND 

Rhode  Island  S.  H.,  31/2S,  1934 __  »_  99 

Rhode  Island  S.  H.,  3s,  1938 __  __  89 

Bristol  (R.  L)  31/2S,  1930 __  __  90 

Burrillville  (R.  L)    3i/.s,  1939 __  __  90 

Burrillville  (R.  L)  31/38,  1942 „  —  —       *90% 

Cranston  (R.  L)  4s,  1939 __  __  98 

East  Prov.   (R.  I.)  Fdg.,  4s,  1947 —  —  98 

East  Prov.(R.  L)  41/38,  1917 —  —  —     *100 

East  Prov  (R.  I.)   41/38,  1932 —  —  —     *100 

East  Prov.  (R.  L)  4s,  1933 __  —  —       *95 

East  Prov.  (R.  L)    4s,  1948 __  —  —      *94 

Jamestown  (R.  L)  41/38,  1931 __  >_  —    *103.83 

Johnstown  (R.  L)   Sch.,  48,  1915-33 _-  ♦4.35  to  41/2%  basis 

Johnstown  (R.   L)    4s,   1925-33 __  «_  ♦4.40%,  basis 

Lincoln   (R.  L)   4s,  1928 -_  __  97 

Newport  (R.  L)  4s,  1927 __  __  98 

Newport  (R.  L)  48,  1948 >_  __  99 

Newport  (R.  L)    Sch.,  31/38,  1954 __  __  88 

Newport  (R.  L)  48,  1915-18 __  __  *4.15%  basis 

Newport  (R.  L)    4s,   1918 __  —  —       *99% 

Pawtucket  (R.  L)  Wtr.,  4s,  1937 98 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1191 


RHODE  ISLAND  (Continued). 


Pawtucket  (R.  I.)  Si/jS,  1922 

Pawtucket  (R.  I.)  48,  1944 

Providence  (R.  I.)    48,  1921 

Providence  (R.  I.)  4s,  1927 

Providence  (R.  I.)  Wtr.,  SVgS,  1916 

Providence  (R.  I.)  Sch.,  SVgS,  1929 

Providence  (R.  I.)   Swr.,  3s,  1929 

Providence  (R.  I.)  SVgS,  1933 

Tiverton  (R.  I.)  4s,  1924-29 

Warren  (R.  I.)  4s,  1913-22 

Westerly  (R.  I.)   4s,  1927 

Westerly  (R.  I.)    Wtr.,  31/28,   1929 

Woonsocket  (R.  I.)  Fdg.,  41/28,  1941 

Woonsocket  (R.  I.)    Fdg.,  48,  1941 

Woonsocket  (R.  I.)  Wtr.,  31/28,  1931 

SOUTH  CAROLINA 

South  Carolina  Blue,  41/28,  1928 

South  Carolina  Ref.,  41/2S,  1933 

Anderson  (So.  Car.)  5s,  1933 

Barnwell  Co.  (So.  Car.)  Sch.,  6s,  1932 

Barnwell  (So.  Car.)  5s,  1932-52-_-. 

Charleston  (So.  Car.)    5s,  1922 

Charleston  (So.  Car.)  4i/s«,  1928 

Charleston  (Co.  Car.)  Swr.,  4s,  1929 

Charleston  (So.  Car.)    4a,  1937 

Charleston  (So.  Car.)  Ref.,  4s,  1938 

Cheran  (S.  C.)  6s,  1952 

Columbia  (So.  Car.)  6s,  1921 

Columbia  (So.  Car.)  Ref.,  58,  1941 

Columbia  (So.  Car.)  Wtr.,  41/28,  1945 

Darlington   (So.  Car.)    5s,  1932 

Edgefield  (So.  Car.)  58,  1932-52 

Greenville  (So.  Car.)  5s,  1940 

Greenville  (So.  Car.)  St.,  58,  1942 

Lawrence  (So.  Car.)   5s,  1942 

Marion  Co.  (So.  Car.)  Sch.,  5s,  1931-51 

Orangeburg  Co.  (So.  Car.)  Sch.,  51/2 s,  1932 

Rock  Hill  (So.  Car.)  58,  1951 

Spartanburg   (So.  Car.)   41/2S,  1935 

Sumter  Co.  (So.  Car.)  41/2S,  1932 


High    Low 


Bid    Asked 

414%  basis 

__       *96 

98 

98 

97 

93 

87 

-       *92% 
^4.30%  basis 

99 

98 

90 
4.35%  basis 
4.30%  basis 

91         92 


105       107 
99 

__     *105 

^5.20%  basis 

__     *101 


104 

102 

96 

97 

97 

100 

108 

107 

101 


106 
106 


105 

104 

97 

98 

98 

102 

109 

108 

102 

*105 

»101 

108 

108 


-_     *105i/a 
»4.65%)  basis 
•51/4%  basis 
1021/2  1031/a 
100      102 

__   noiy. 


SOUTH  DAKOTA 

Aberdeen  (S.  D.)   Cs,  1915 

Aberdeen  (S.  D.)  5s,  1913-21 

Aberdeen  (S.  D.)    Swr.,  41/38,  1932 

Aberdeen  (S.  D.)  Swr.,  41/2S,  1926 

Fall  River  Co.  (S.  D.)  58,  1932 

Faulk  Co.  (S.  D.)  68,  1915 

Marshall  Co.  (S.  D.)  68,  1915 

Garretson  (S.  D.)  Elec.  Lt.,  5s,  1922 

Lisseton   (S.  D.)    Ss,  1926-31 

Lyman  Co.  (S.  D.)  Sch.,  6s,  1928 

Madison  (S.  D.)   Sewer,  6s,  1921-31 

Mitchell  (S.  D.)  5s,  1924 

^Quotation  nearest  March  1,  1913.    No  quotatiou  od  that  date. 

1193 


4%% 
4%% 
48/4% 
43/4% 

4.60% 
4.60% 

•43/1% 
•51/4% 


basis 

basis 

basis 

basis 

♦104.45 

basis 

basis 

•100 
basis 
basis 

•101 


4%%  basis 


SOUTH  DAKOTA  (Continued). 

High 
Pierre  (S.  D.)  3s,  1922 

Redfield  (S.  D.)   Sewer,  5s,  1933 

Selby  (S.  D.)  Wtr.,  Ss,  1924-29 

Sioux  Falls  (S.  D.)  5s,  1931 _' 

Watertown  (S.  D.)   5s,  1918-24 

Yankton  Co.  (S.  D.)  4s,  1919 

TENNESSEE 

Tennessee  Penitentiary,  4y^s,  1913 

Tennessee  Redemption  4l^s,  1913 

Tennessee  Settlement  3s,  1913 

Blount  Co.  (Tenn.)  5s,  1921-51 

Chattannoga  (Tenn.)    5s,   1920 

Chattanooga  (Tenn.)  Pub.  Imp.,  41/28,  1937— 

Chattanooga  (Tenn.)  Ref.,  41/28,  1939 

Chattanooga  (Tenn.)  Sr.  &  Fd.,  41/28,  1941 

Chattanooga  (Tenn.)  Park,  41/2S,  1942 

Cock  Co.  (Tenn.)  Rd.  &  Edge.,  1919-39 

Davidson  Co.  (Tenn.)    5s,  1913 

Davidson  Co.  (Tenn.)  Edge.,  41/38,  1937— 

Davidson  Co.   (Tenn.)   Trnpk.,  4s,  1922 

Dickson   (Tenn.)   Sch.,  5s,  1943 

Grainger  Co.   (Tenn.)    5s,  1940 

Greene  Co.   (Tenn.)   5s,  1920 

Hamblen  Co.    (Tenn.)    5s,  1939 

Hamilton  Co.  (Tenn.)   41/38,  1941 

Hamilton  Co.  (Tenn.)  41/38,  1942 

Hamilton  Co.  (Tenn.)   Rd.,  5s,  1917-22 

Jackson  Co.  (Tenn.)  5s,  1942 

Knoxville  (Tenn.)  6s,  1917 

Knoxville  (Tenn.)  Imp.,  5s,  1921 

Knoxville  (Tenn.)   Ref.,  58,  1940 

Knoxville  (Tenn.)   Fd.,  41/2*,  1937 

Knoxville  (Tenn.)  Wtr.,  41/28,  1949 

Knoxville  (Tenn.)  48,  1929 

Lenoir   (Tenn.)  Wtr.,  6s,  30  yrs 

London  Co.   (Tenn.)   53,  1942 

Memphis  (Tenn.)    Comp.,    6s,    1915 

Memphis  (Tenn.)    Ref.,  41/2S,  1926 

Memphis  (Tenn.)  Ref.,  41/38,  1939 

Memphis  (Tenn.)  Str.,  41/2S,  1946 

Memphis  (Tenn.)   Pk.,  41/3S,  1947 

Memphis  (Tenn.)    41/08,  1950 

Memphis  (Tenn.)  Pk.,  41/2S,  1959 

Memphis  (Tenn.)   Wtr.,  4s,  1933 

Memphis  (Tenn.)    St.,  6s,  1916 

Memphis  (Tenn.)    4s,   1929 

Nashville  (Tenn.)    'Sewer,   48,   1929 

Nashville  (Tenn.)   Swr.,  41/28,  1923 

Nashville  (Tenn.)    Str.,  41/38,   1935 

Nashville  (Tenn.)   Swr.,  41/3S,  1940 

Nashville  (Tenn.)  Sch.,  41/28,  1940 

Nashville  (Tenn.)  Wtr.,  4s,  1919 

Nashville  (Tenn.)  T.  C.  R.  R.,  4s,  1924 

Nashville  (Tenn.)   Swr.,  4s,  1927 

Nashville  (Tenn.)  Wtr.,  4s,  1928 

•Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1193 


Low        Bid    Asked 

*88 

II  II    •103.20 

—     *100 

4.70%  basis 

__     *4.70%  basis 

4.60%  basis 


991/2  lOOi/g 
991/2  1001/3 
981/2     991/3 
4.70%  basis 

—  48/4-1/2%  basis 

—  48/4-1/2%  basis 

—  48/4-1/2%  basis 

99      101 

99      101 

41/2%  basis 

4.40%  basis 

4.40%  basis 

4.40%  basis 

__     *100 

4.70%  basis 

4.65%  basis 

4.70%  basis 

4.40%  basis 

__  4.60-.40%  basis 

_-      *4i/2%,  basis 

__     *103i/4 
~    48^-1/2%  basis 
__    4%-i/3%  basis 

—  43/4.1/2%  basis 
__  4.60-.40%  basis 
--  434.1/2%  basis 
__  4.60-.45%  basis 

__  ^106.275 
__     •1038/4 

102      104 

__  4.60.1/0%  basis 
__  4.60-1/0%,  basis 
__  4.60-1/2%  basis 
99  101 
__  4.60-1/2%  basis 
__  4.60-1/2%  basis 
__  4.60-1/2%  basis 
__      •41/2%  basis 

—  •41/2%)  basis 

_.  ^95 
__  4.60-1/2%  basis 
__  4.60-1/2%  basis 
__  4.60-1/2%  basis 
__  4.60-1/2%  basis 
__  4.60-1/3%  basis 
__  4.60-1/3%  basis 
_-  4.60-1/2%  basis 
>-  4.60-1/3%  basis 


TENNESSEE  (Continued). 

High 

Putnam  Co.  (Tenn.)    41/28,  1939 

Putnam  Co.  (Tenn.)  Rd.,  41/28,  1941 

Robertson  Co.  (Tenn.)  4s,  1941 

Shelby  Co.  (Tenn.)   Sch.,  41/28,  1941 

Shelby  Co.  (T^nn.)  C.  H.,  4s,  1955 

Sumner  Co.  (Tenn.)  4s,  1917-42 


Low 


Bid    Asked 

99      100 

99       100 

4.40%  basis 

4.40%  basis 

4.40%  basis 

-  4%-.60%  basis 


TEXAS 

Amarillo  (Tex.)  Sewer  &  Rd.,  5s,  1951 

Austin  (Tex.)    6s,   1913-42 

Austin  (Tex.)  5s,  1932 

Austin  (Tex.)    Ref.,  4-5s,   1931 

Austin  (Tex.)    St.,  5s,   1913-42 

Austin  (Tex.)    5s,    1930-42 

Austin  (Tex.)    Sewer,   5s,   1933-42 

Austin  (Tex.)   5s,  1921-52 \ 

Austin  (Tex.)    58,  1924-32-52 

Austin  (Eex.)    5s,-4s,   1931 

Beaumont  (Tex.)    5s,    1952 

Beaumont  (Tex.)    48,   1942 

Beeville  (Tex.)   Sewer,  5s,  1920-30 

Bosque  Co.  (Tex.)  58,  1952 

Bryan  (Tex.)    4s,   1929-49 

Bryan  (Tex.)    5s,  1951 

Calhoun  Co.  (Tex.)  Rd.  Dis.,  No.  2,  5s,  40  yra. 

Calhoun  Co.  (Tex.)  5s,  1922-52 

Calvert  (Tex.)   Sewer,  5s,  1953 

Cameron  Co.  (Tex.)  5s,  1922-38 

Cleburne  (Tex.)  Wtr.,  5s,  1952 

Corpus  Christi  (Tex.)  5s,  1922-52 

Corpus  Christi  (Tex.)  41/28 

Corpus  Christi  (Tex.)  Sewer,  5s,  1920 

Corpus  Christi  (Tex.)    Sch.,  41/3S,  1921-22 

Corpus  Christi  (Tex.)    Wtr.,  4s,  1919-26 

Corpus  Christi  (Tex.)  Sh.  &  Sr.,  41/2S,  1916-45 

Corpus  Christi  (Tex.)    414s,   1950 

Corpus  Christi  (Tex.)    Sch.,  41/2S,  1913-52 

Dallas  (Tex.)  Fd.,  6s,  1917 

Dallas  (Tex.)  Wtr.,  5s,  1917 

Dallas  (Tex.)  5s,  1931 

Dallas  (Tex.)   5s,  1928 

Dallas  (Tex.)   Wtr.,  4s,  1940 

Dallas  (Tex.)    Wtr.,  4s,  1913-49 

Dallas  (Tex.)  Sch.,  5s,  1913-51 

Dallas  Co.   (Tex.)   41/2S,  1951 

Dallas  Co.  (Tex.)  41/2S,  1921-31 

Dallas  Co.   (Tex.)   41/38,  1951 

El  Paso  (Tex.)    Wtr.   Purch..    1950 

El  Paso  (Tex.)  Fund.,  5s,  1951 

El  Paso  (Tex.    1932-52 

El  Paso  (Tex.)  Wtr.,  Swr.  &  Lt.,  5s,  1932-52 

Fort  Bend  Co.  (Tex.)  Rd.,  58,  10  to  40  yrs 

Fort  Worth  (Tex.)    6s,    1922 

Fort  Worth  (Tex.)    Ref.,  5s,  1920 

Fort  Worth  (Tex.)    58,    1951 

Fort  Worth  (Tex.)  Str.,  41/2S,  1948 

*QuotatiOD  nearest  March  1,  1913.    No  quotation  on  that  date. 

1194 


__  "loa.os 

__  4.85-.70%  basis 

__  4.85-.70%  basis 

951/2     98 

—  *4.70%  basis 
__  *4.70%  basis 
__  *4.70%  basis 
__  *4.70%  basis 
__      *4.70%  basis 

*98 
II  1031/4  103% 

94         96V« 
__    *101.56 
__    *103.06 
-_       *89 
*4%%  basis 
__     *100 
*5%  basis 
*5%  basis 
__     *5.20%  basis 
4.70%  basis 
__    *102.28 
__      *4.40%  basis 
„     *103i4 
__     *100 
__      *4.35%  basis 
__      *4%%  basis 
__       *99 
__      *4.38%  basis 
__  4%-.40%  basis 
~    43^-l/4%  basis 

—  43/4-14%  basis 
~   43^-l^%  basis 

961/2     981/3 
93        95 
__  4i/2-.40%  basis 

100     1011/3 

__     MOI1/3 
__     *100 

100     1021/3 

102  104 
__  *103.85 
-_  ♦103.85 

*100.08  „ 

1041/2  107 

99   101 

103  105 
98   100 


TEXAS  (Continued). 


Fort  Worth  (Tex.)   Sch.,  4i/oS,  1948 

Fort  Worth  (Tex.)  Sch.,  41/2S,  1949 , 

Fort  Worth  (Tex.)    Ref.,  4s,  1941 

Fort  Worth  (Tex.)   5s,  1921 

Frio  Co.  (Tex.)  Rd.,  5s,  40  yrs 

Harris  Co.    (Tex.)    5s,   Serially 

Harris  Co.  (Tex.)  5s,  1939-39 

Hidalgo  Co.  (Tex.)  5s,  1948 

Galveston  (Tex.)   5s,  1915 

Galveston  (Tex.  Wtr.,  5s,  1928 

Galveston  (Tex.)   5s,  1921 

Galveston  (Tex.)   5s,  1923 

Galveston  (Tex.)   5s,  1927 

Galveston  (Tex.)   5s,  1944 

Galveston  (Tex.)    41/33,    1948 

Galveston  (Tex.)  41/28,  1949 

Galveston  Co.  (Tex.)   5s,  1951 

Harris  Co.   (Tex.)   4s,  1947 

Houston  (Tex.)  Comp.,  5s,  1918 

Houston  (Tex.)    Swr.,  5s,   1939 

Houston  (Tex.)   Ref.,  5s,  1941 

Houston  (Tex.)    4i/oS,  1938 

Houston  (Tex.)  41/2S,  1931-41 

Houston  (Tex.)  43^3,  1913-52 

Humboldt    (Tex.)    41/2S,   1931 

Johnson   (Tex.)   Wtr.,  5s,  1940 

Liberty  Co.  (Tex.)   Rd.,  5s,  Serially 

Liberty  Co.  (Tex.)  Rd.,  5s,  1921-51 

Longview  (Tex.)  Sewer,  5s,  1932-52 

Longview  (Tex.)  Sch.,  5s,  1932-52 

Medina  Co.   (Tex.)  Rd.,  5s,  1917-52 

New  Braunfels  (Tex.)  Wtr.,  41/2S,  1917-52 

Orange  Co.  (Tex.)  Rd.,  5s,  1932-52 

Port  Arthur   (T,ex.)   53,  1952 

Reagan   Co.    (Tex.)    4s,   1950 

Rockwall  Co.  Sch.,  5s,  1929-49 

San  Angelo   (Tex.)    5s,  1930-50 

San  Antonio  (Tex.)  6s,  1917 

San  Antonio  (Tex.)   5s,  1917 

San  Antonio  (Tex.)  41/2S,  1920 

San  Benito   (Tex.)   St.  &  Swr.,  6s,  1927-52___ 

Shonian    (Tex.)    41/2S,  1917 

Sweetwater   (Tex.)    5s,  1932-52 

Tarrant  Co.    (Tex.)    5s,  1952 

Victoria  (Tex.)  Rd.,  5s,  1917-52 

Waco  (Tex.)    5s,  1920 

Waco  (Tex.)    5s,    1934 

Waco  (Tex.)  Swr.,  5s,  1937 

Waco   (Tex.)    4s,    1931 

Waco  (Tex.)   Wtr.,  5s,  1942 

Washington  Co.  (Tex.)  5s,  Serially 

Yoakum   (Tex.)    Sewer,  5s,  1932-52 


High    Low 


971/2 


Bid    Asked 
95 

98  100 
91         921/3 
__    *102.52 

*100 

__  *100 
__  *100 
__  *100 
95  98 
95  98 
95  98 
95  98 
95  98 
95  100 
91  95 
921/2  951/3 
__  4.90-.70%  basis 
95        96 

101     1021/3 

99  102 
IO6I/3 
100 

__   ■'*101i/3 
4.55%  basis 

._  *4.90%  basis 
__  *102 
__     *100 

._       *4y8%  hasis 

—  *103.20 
__    *103.20 

*4%  to  5%  basis 

__     *95.58 
__     *102i/3 
*4%%  basis 

—  *92 
__    *102.87 
__     *103i/3 

_  4.70-1/2%  basis 
-  4.70-1/2%  basis 
_  4.70-1/2%  basis 
.-       *5i/4%  basis 

__      *99.15 

.-       *4%%  basis 

4.55%  basis 

*434%  basis 

100       101 

100       101 

-_       101 

90         93 

1021/2  106 

*5.15%  basis 

__    *103.20 


UTAH 


Utah  State,  4s,  1916. 
Utah  Ref.,  31/38,  1918. 


"Quotation  nearest  March  1,  1913.    No  Quotation  on  that  date. 

1195 


4iA%  basis 
414%  basil 


UTAH  (Continued). 


Utah  Ref.,  314s,  1920 

Green  River  (Utah)  Irr.,  68,  11  to  20  yrs 

Logan  (Utah)  5s,  1933 

Box  Elder  Co,   (Utah)  41/33,  1932 

Ogden  (Utah)  5s,  1913 

Ogden  (Utah)    Wtr.,   5s,   1914-15 

Ogden  (Utah)  Wtr.,  41/2S,  1929 

Ogden  (Utah)   Ref.,  41/28,  1932 

Ogden  (Utah)   Ref.,  4s,  1911 

Ogden  (Utah)  S.  D.,  4s,  1922 

Ogden  (Utah)   Seh.,  41/3S,  10  to  20  yrs 

Ogden  (Utah)  41/2S,  1933 

Salt  Lake  City  (Utah)    5s,   1914 

Salt  Lake  City  (Utah)  Ref.,  5s,  1924 

Salt  Lake  City  (Utah)  Ref.,  4s,  1921 

Salt  Lake  City  (Utah)  Wtr.,  4s,  1920 

Salt  Lake  City  (Utah)  S.  &  W.,  4s,  1925 

Salt  Lake  City  (Utah)    S.  D.,  4s,  1930 

Salt  Lake  City  (Utah)  S.  D.,  41/2S,  1932 

Salt  Lake   Co.   (Utah)    41/2S,   1926 

Sevier  Co.  (Utah)  Sch.,  5s,  1922-32 


High    Low 


Bid    Asked 
414%  basis 

"  *102i/2 
-_  100 
4.60%  basis 
4.60%  basis 
4.60%  basis 
4.60%  basis 
4.60%  basis 
4.60%  basis 
__       ♦99 


4.60%  basis 
4.60%  basis 
4.60%  basis 
4.60%  basis 
4.60%  basis 
4.60%  basis 
4.60%  basis 
4.55%  basis 
__    *102.18 


VERMONT 

Barre  (Vt.)  Wtr.,  4s,  1914 

Barre  (Vt.)   31/2S,  1922 

Bennington  (Vt.)    4s,   1917 

Brattleboro   (Vt.)    4s,  1918 

Burlington   (Vt.)   4s,  1919 

Middlebury   (Vt.)    4s,  1941 

Montpelier   (Vt.)   4s,  1919 

Rutland  (Vt.)  4s,  1924 

Rutland  (Vt.)    4s,    1937 

VIRGINIA 

Virginia,  Deferred  6%  Ctfs.,  1871 

Virginia,  Brown  Bros.,  6%  Ctfs 58 

Virginia,    Riddleberger,    5s,    1932 

Virginia,  Fund.  Debt,  3s,  1991 

Alexandria    (Va.)    4s,   1938 

Chase  City  (Va.)  Wtr.,  5s,  1942 

Chatham  (Va.)  Wtr.  Swr.  &  Lt.,  51/38,  1927-42 

Cheyenne  (Wis.)  5s,  1931 

Colonial  Beach  (Va.)  Wtr.  &  Swr.,  6s,  1937— 

Danville  (Va.)  Ref.,  4s,  1931 

Danville  (Va.)     5s,    1910 

Danville  (Va.)    41/2S,    1942 

Hampton   (Va.)    58,  1949 

Lee  Co.  (Va.)  5s,  1916-41 

Lunenburg  Co.  (Va.)  Rd.,  6s,  20  yrs 

Lynchburg  (Va.)  Perm.  Imp.,  5s,  1926 

Lynchburg  (Va.)    Ref.,  41/28,  1927 

Lynchburg  (Va.)  Pub.  Imp.,  41/38,  1939 

Lynchburg  (Va.)  Ref.,  43,  1934 

Lynchburg  (Va.)    4s,    1935 

Lynchburg  (Va.)    4s,    1936 

^Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1196 


58 


99 

95 
99 
99 
99 
99 
99 
99 


47 


100 


-  43/4 


85  851/2 
848/8  843/4 
__  *92.46 
._  *101.26 
__    *105.11 

4.60%  basis 
__    *106.62 

4.60%  basis 
__    *101.60 
__     *100i/o 
__    *106.6i 

4.70%  basis 

*108.60    — 
102 
98 

-.60%  basis 
911/0     .- 

-  "  *94i/2 

-  •941/2 


VIRGINIA  (Continued). 


Newport  News  (Va.)  41/28,  1948 

Newport  News  (Va.)    St.,  4s,   1941 

Newport  News  (Va.)    41/38,    1918-28 

Newport  News  (Va.)    41/38,    1943 

Newport  News  (Va.)    41/38,    1953 

Norfolk  (Va.)   Renw.,  6s,  1914 

Norfolk  (Va.)   Renw.,  6s,  1923 

Norfolk  (Va.)   Imp.,  41/38,  1942 

Norfolk  (Va.)  Renw.,  41/3S,  1941 

Norfolk  (Va.)  Imp.,  41/3S,  1940 

Norfolk  (Va.)    4s,    1963 

Norfolk  (Va.)  Wtr.,  4s,  1934 

Norfolk  (Va.)   Imp.,  4s,  1936 

Norfolk  (Va.)  5s,  1915 

Norfolk  (Va.)  5s,  1924 

Norfolk  (Va.)  4s,  1929 

Norton  (Va.)  Sewer  5s,  1940 

Portsmouth  (Va.)  41/38,  1940 

Portsmouth  (Va.)   Imp.,  41/38,  1942 

Richmond  (Va.)   5s,  1920-22 

Richmond  (Va.)    4s,    1920-30 

Richmond  (Va.)    4s,    1938-43 

Richmond  (Va.)    4s,    1926 

Richmond  (Va.)  48,  1938 

Richmond  (Va.)  4s,  1941 

Richmond  (Va.)  4s,  1942 

Richmond  (Va.)  4s,  1943 

Roanoke  (Va.)  Ref.,  41/3S,  1936 

Roanoke  (Va.)    St.,  41/38,  1940 

Roanoke  (Va.)    Imp.,   4s,    1936 

Tazewell  Co.   (Va.)   5s,  1923-46 

Smyth  Co.  (Va.)  Rd.,  5s,  30  yrs 

Suffolk  (Va.)    41/2S,  1936 

Suffolk  (Va.)    5s,  1942 

WASHINGTON 

Washington  7s,  5  to  10  yrs 

Washington  6s,  10  yrs 

Washington  Sch.,  38,  5  to  15  yrs 

Aberdeen  (Wash.)   51/3S,  1922-31 

Bellingham  (Wash.)  5s,  1926 

Clallam  Co.  (Wash.)  41/38,  1921 

Everett  (Wash.)  5s,  1931 

Everett  (Wash.)  7s,  1  to  10  yrs 

Ferndale  (Wash.)  Wtr.,  51/38,  1926-32 

Franklin  Co.   (Wash.)    58,  1932 

Kennewich  (Wash.)  Sewer,  51/3S,  1921-31 

King  Co.  (Wash.)   5s,  1928 

King  Co.   (Wash.)  41/38,  1931 

Lewis  Co.   (Wash.)   5s,  1923-32 

Mansfield  (Wash.)  Wtr.,  6s,  1922-32 

North  Yakima  (Wash.)  6s,  10  yrs 

Olympia   (Wash.)    3%s,  1926 

Pasco  (Wash.)  7s,  1  to  10  yrs 

Pend  Orielle  Co.   (Wash.)  41/3S,  1922-32 

Pierce  Co.  (Wash.)   Ref.,  5s,  1925 

Pierce  Co.   (Wash.)  Ref.,  4s,  1926 

♦Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1197 


High    Low 


Bid  Asked 
97  100 
93  96I/3 
_-  *101i4 
-  *101i/3 
__     *100 

101 

100 
98 
98 


90 
90 
90 


101 

100 

100 

100 

92 

92 

92 

-_     *100i/3 

-  *103i/3 

-  *94i/8 
__     *100 

41/3%  basis 

100 
41/0%  basis 
96        97 


97 
97 
97 
97 
97 
97 
100 
100 


/2      -- 


96 

96 

96 

96 

96 

96 

98 

98 

921/3 
4.70%  basis 

__    *100.05 

__       *98 
^4.70%  basis 


*102  to  103 

-     *100i/3 

__       *95 

4%%ba8ia 

4.60%  basis 

4.80%  basis 

4^8%  basis 

*103.837  — 

__     *10O 

__    *104.30 

__     *104i/3 

41/3%  basis 

41/2%  basis 

4.60%  basis 

__    •103.66 

__     *100 

4%%  basis 

*6i/8%  basis 

*4.40%  basis 

4.55%  basis 

4.55%  basii 


WASHINGTON  (Continued). 


Seattle  (Wash.)    5s,   1913-20 

Seattle  (Wash.)   Swr.,  41/28,  1927 

Seattle  (Wash.)  Wtr.,  41/28,  1931 

Seattle  (Wash.)  Pk.,  41/oS,  1931 

Seattle  (Wash.)  St.,  41/2S,  1932 

Seattle  (Wash.)  4s,  1929 

Seattle  (Wash.)  Lib.,  4s,  1922 

Seattle  (Wash.)  S.  D.,  No.  1,  41/2S,  1924 

Seattle  (Wash.)  S.  D.,  No.  1,  41/2S,  1931 

Seattle  (Wash.)    Sch.,  41/2S,  1918 

Seattle  (Wash.)  41/2S,  1932 

Seattle  (Wash.)   Port,  41/2S,  1945 

Seattle  (Wash.)   Port,  41/2S,  1926-48 

Seattle  (Wash.)    Port,  41/2S,  1948-51 

Skagit  Co.   (Wash.)    41/2S,  1921-31 

Snohomish  Co.   (Wash.)   5s,  1931 

Spokane  (Wash.)  Fd.,  51/2S,  1918 

Spokane  (Wash.)  Pk.,  5s,  1927 

Spokane  (Wash.)  Edge.,  41/2S,  1931 

Spokane  (Wash.)    Wtr.,  41/28,  1935 

Spokane  (Wash.)  Pk.,  41/2S,  1962 

Spokane  (Wash.)   Wtr.,  4s,  1925 

Spokane  (Wash.)  S.  D.,  No.  81  41/2S,  1929 

Spokane  (Wash.)  S.  D.  No.  81  41/2S,  1931 

Spokane  (Wash.)  S.  D.  No.  81  4s,  1922 

Spokane  Co.    (Wash.)   4s,  1921 

Spokane  (Wash.)   6s,  10  yrs 

Spokane   (Wash.)   Wtr.  5s,  1910-31 

Sprague  (Wash.)  Wtr.  &  Lt.  51/2S,  1932 

Sumas   (Wash.)   7s,  1914-23 

Stevens  Co.   (Wash.)  41/oS,  1929 

Tacoma  (Wash.)  41/2S 

Tacoma  (Wash.)     73,  1914-18 

Tacoma  (Wash.)  Wtr.  41/28,  1930-32 

Tacoma  (Wash.)   41/2S,  1932 

Tacoma  (Wash.)  Wtr.  5s,  1933 

Tacoma  (Wash.)  5s,  1920 

Tacoma  (Wash.)  Lt.  &  Pr.  41/2S,  1929 

Tacoma  (Wash.)  Ref.  41/2S,  1931 L 

Tacoma  (Wash.)  S.  D.  No.  10,  41/38,  1920 

Whatcom  Co.  (Wash.)  41/2S,  1922 

WEST    VIRGINIA 

Oiarleston  (W.  Va.)  41/2S,  1941 

Clarksburg  (W.  Va.)  S.  D.  5s,  1941 

Fairmont  (W.  Va.)  Sch.  5s,  1927-42 

Grafton  (W.  Va.)  Wtr.  5s,  1934-45 

Hancock  (W.  Va.)  Grt.  Rd.  Dis.  5s,  1946 

Hancock  Co.  (W.  Va.)  Rd.  5s,  20  to  34  yrs___ 

Kenova   (W.  Va.)   5s,  1939 

Martensburg  (W.  Va.)    5s,  1943 

McDowell  Co.  (W.  Va.)  Sch.  5s,  1933-43 

Wheeling  (W.  Va.)  6s,  1924 

Wheeling   (W.  Va.)   City  5s,  1919 

Wheeling  (W.  Va.)  Edge.  41/2S,  1924 

Wheeling  (W.  Va.)  Ref.  4s,  1936 

Union  (W.  Va.)   5s,  1923-34 

'Quotation  nearest  March  1,  1913.    No  quotAtlon  on  that  date. 

1198 


High    Low 


Bid  Asked 
4.55%  basis 
4.55%  basis 
4.55%  basis 
4.55%  basis 
4.55%  basis 
4.55%  basis 
4.55%  basis 
4.55%  basis 
4.55%  basis 
__  *99.83 
._     *100V4 


*4.70% 
*97.33  to 

4.70% 

4%% 

4y8% 

4.55%j 
4.55% 
4.55% 
4.55% 
4.55% 
4.55% 
4.55% 
4%% 

*4%% 

*5i/4% 

*6%% 

100 

*4.40% 
*6i/8% 

*4.40% 
*4i/2% 

41/2% 
41/2% 
41/2% 
41/2% 
4.70%> 


basis 
97.41 
*100.90 
basis 
basis 
basis 
basis 
basis 
basis 
basis 
basis 
basis 
basis 
basis 
*100 
basis 
basis 
basis 

basis 
basis 
basis 
basis 
*101% 
basis 
basis 
basis 
basis 
basis 


._  4.60-1/2%  basis 
__      103.80 
*4i/2%  basis 
_-      *4.60%  basis 
-_       103 
-_     *100 
__       *4%%,  basis 
4.60%  basis 
__     *4.70%  basis 
103 
101 
100 
98       101 
—     *4.70%  basis 


I 


WISCONSIN 

Appleton    (Wis.)    41/28,  1914-32 __  __  4.30%  basis 

Bayfield  Co.  (Wis.)  5s,  1918 —  __  4.35%  basis 

Eagle  River  (Wis.)  5s,  1916-18 __  —  *5%  basis 

Green  Bay  (Wis.)   5s,  1914-17 —  —  4.30%  basis 

Green  Bay  (Wis.)  Ref.  4s,  1913-20 __  __  4.30%  basis 

Junean  Co.   (Wis.)   6s,  Ser.  1917-31 __  __  *5l^%  basis 

Kenosha  (Wis.)  SVaS,  1919 „  —  4^4%  basis 

La  Crosse  (Wis.)  5s,  1915 „  _.  4l^%  basis 

La  Crosse  (Wis.)    Wtr.   41/28,   1932 —  —  4.30%  basis 

La  Crosse  (Wis.)  Wtr.  4s,  1931 __  __  97        98 

La  Crosse  (Wis.)  Ref.  31/38,  1919 __  —  4.30%  basis 

Langlade  Co.  (Wis.)  4s,  1914-23 __  „  4.30%  basis 

Madison  (Wis.)  4s,  1925 „  __  4l^%  basis 

Marshfield  (Wis.)  41/3S,  1922-32 __  __  4.35%  basis 

Milwaukee  (Wis.)  Lib.  &  Mun.  5s,  1917 —  —  4.15%  basis 

Milwaukee  (Wis.)  Wtr.  41/2S,  1932 —  —  4.20%  basis 

Milwaukee  (Wis.)  Viad.  4s,  1926 —  __  4.15%  basis 

Milwaukee  (Wis.)  31/38,  1921 —  —  4.15%  basis 

Milwaukee  Co.  (Wis.)  4s,  1925 __  —  4.15%  basis 

Milwaukee  Co.   (Wis.)   St.  4s,  1927 —  —  —       *97% 

Monticello  (Wis.)  Wtr.  53,  1922-31 __  „  *4.75%  basis 

New  London  (Wis.)  41/2S,  1917-27 —  __  *4i/2%  basis 

Oakfield  (Wis.)  4s,  1914-32 __  __  *4.40%  basis 

Owen  (Wis.)  Sewer  6s,  1917-21 __  —  *5%  basis 

Racine  (Wis.)  Ref.  41/2S,  1930 „  —  4l^%  basis 

Racine  (Wis.)   Sch.  4s,  1923 >_  —  4i/4%  basis 

Racine  (Wis.)   Sch.  31/2S,  1919 __  —  4.30%  basis 

Racine  Co.  (Wis.)  4s,  1923 __  —  4.15%  basis 

Racine  Co.   (Wis.)   41/3S,  1913-26 —  —  *4i4%  basis 

Racine  Co.  (Wis.)  41/38,  1913-27 —  __  *4.30%  basis 

Racine  Co.   (Wis.)  41/38,  1924-27 —  —  *4.20%  basis 

Rhinelander   (Wis.)    1913-19 __  —  4%%  basis 

Richland  Center  (Wis.)  Elec.  Lt.  4s,  1914-24__  __  __  *4.30%  basis 

So.  Milwaukee  (Wis.)  6s,  1913 __  —  4.40%  basis 

Stoughton  (Wis.)  Sch.  5s,  1916 —  —  —    *102.10 

Wausan    (Wis.)   4s,  1913-25 __  —  4.35%  basis 

Uinta  Co.  (Wis.)  41/3S,  1913-18 __  —  4.70%  basis 

West  AUis  (Wis.)  Sch.  6s -_  —  *4.40%  basis 


WYOMING 

GreybuU   (Wyo.)  Wtr.  6s,  1926-41 

Guernsey   (Wyo.)   Wtr.  6s,  1925-40 

Riverton  (Wyo.)  Wtr.  6s,  1925-40 

Worland  (Wyo.)  Wtr.  6s,  1925-40 


101 
1011/2 
101 
101 


FOREIGN  COUNTRIES,  CITIES,  ETC. 

Amsterdam  (Holland)  4s  of  1900-01 __  __  100      101 

Amsterdam  (Holland)  48  of  1904 __  __  100      101 

Argentine  Republic  Interm.  5s  of  1909 „  __  98        991/3 

Augsburg  (Ger.)   4s __  —  96        97iA 

Austrian  Government,  Perpet.  4s __  __  107      108 

Austrian  Government  Treas.  41/2S,  1914-15 __  „  971/2     98 

Baden  (Grd.  Duchy)  48,  1909 __  —  99       100 

Bavaria  (Ger.)  4s __  —  981/3     99% 

Berlin   (Ger.)    31/2S __  —  89l^     901/3 

Brazil  (U.  S.  of)  5s  of  1903 —  —  99      101 

Chinese  Government  5s —  100      101 

^Quotation  nearest  March  1,  1913.    No  quotation  on  that  date. 

1199 


FOREIGN  COUNTRIES,  CITIES,  ETC.  (Continuea). 

High  Low  Bid  Asked 

Chinese  Government  Hukuang  Ry.  5s,  1951 —  __  __  __  88 

Cologne  (Ger.)  4s „  __  99  100 

Copenhagen  (Denmark)  4s  of  1901 —  —  96  971/2 

Copenhagen  (Denmark)   SVgS __  —  881/2    891/2 

Cuba  (Republic  of)   Extern  5s,  1944 lOli/g  __ 

Cuba  (Republic  of)  Intern.  5s,  1913 „  __  96        97 

Cuba  (Republic  of)  Extern.  41/2S,  1949 —  __  __        97 

Dominican  Republic  Cus.  Adm.  5s,  1958 __  __  100l^ 

France  (Republic  of)  Perpet.  3s __  „  88%    89% 

Frankfort  (Ger.)  31/28  of  1901 __  __  89        90iA 

Galisco    (Mex.)    6s   1918-28 __  __  95  100 

Galisco    (Mex.)    6s,  1921-30 __  __  95  100 

Galisco  (Mex.)   Sil.  6s,  1933 __  __  __  45 

German  Government  31/2S __  »_  86        87 

German  Government  Perpet.  31/2S __  __  86        87 

German  Government  Perpet.  3s __  __  75%    76% 

German  Government  New  4s 98  100 

Great  Britain  Cons.  21/2S,  op.  1923 „  __  731/2     74% 

Hamburg  (Ger.)   4s __  __  981/2  98% 

Hamburg   (Ger.)   3s  of  1902 __  __  7778     79 

Havana  (Cuba)  1st  6s,  1939 —  —  106  108 

Havana  (Cuba)  2d  6s __  __  103  105 

Hawaii  (Terr,  of)  Imp.  41/2S,  1921 __  __  10014     __ 

Hawaii  (Terr,  of)  Imp.  4%s,  1920 __  __  IOO1/4  »_ 

Hawaii  (Terr,     of)  Imp.,  4s,  1941 __  _.  1021/9  — 

Hawaii  (Terr,  of)  Imp.  48,  1942 __  —  1021/3     — 

Hawaii  (Terr,  of)  Imp.  31/2S,  1921 __  __  95%     „ 

Italian  Government  Perpet.  31/2S __  __  97  98 

Japanese  Government  41/2S,  1925 __  87%  89 

Japanese  Government  Second  Series  1925 __  __  86%  871/3 

Japanese  Government  4s,  1931 __  __  80%  8O1/3 

Japanese  Government  41/2S,  1925 8778     89 

Japanese  Government  2d  41/2S,  1925 __  __  86%  871/2 

Japanese  Government  4s,  1931 80%  8O1/2 

Mexico  (U.  'S.  of)  Ref.  5s,  1944 __  __  __  96% 

Mexico  (U.  S.  of)  Cons.  5s  of  1894 __  __  40  45 

Mexico  (U.  S.  of)  4s,  1954 _.  __  __  84 

Mexico  (U.  S.  of)  Internal  3s __  __  25  35 

Munich   (Switz.)   4s __  __  97%  981/2 

Philippine  Islands  Ld.  Pur.  4s,  1934 >_  __  1021/3  103% 

Philippine  Islands  Wtr.  &  Imp.  4s,  1935 _.  __  101%  103 

Philippine  Islands  Man.  R.  R.  So.    L.  4s,  1939  —  __  —  86 

Philippine  Islands  Phil.  Ry.  4s,  1937 —  __  —  80% 

Porto  Rico  4s,  1914-33 __  __  3.80%  basis 

Porto  Rico,  4s,  1937 _.  _.  103%  __ 

Prussian  Government  Perpetual  38 75% 

Prussian   (Ger.)   3s,  1902 „  „  76  77 

Prussian    (Ger.)    New  4s __  _.  98  991/3 

Russian  Government  4s  of  1903 __  __  891/2  91 

Sao  Paulo  (Brazil)  Treas.  5s,  1919 __  __  961/3  97 

Saxony  (Ger.)   3s __  __  77%  79 

Stockholm    (Switz.)    4s,  1941 __  __  98  99 

Swedish  Government  4-31/2S,  1920 __  __  85  88 

Tokyo  (Jap.)   5s  of  1912 __  __  86 

Vera  Cruz.    (Mex.)    5s,  1930 __  __  80  90 

Vienna  (Aus.)   4s _»  __  85  87 

Wladikawkas  (Russia)  4s,  1957 —  __  84  87 

*Quotatlon  nearest  March  1,  1913.    No  quotation  on  that  date. 

1200 


Treasury  Decisions,  etc. 

The  following  Treasury  Decisions,  Court  De- 
cisions and  other  Income  and  Excess  Profits  Tax 
data  promulgated  under  the  Act  of  September  8th, 
1916,  as  amended,  and  the  Act  of  October  3rd,  1917, 
have  been  issued  since  the  publication  of  the  Stand- 
ard Manual  of  Income  Tax  for  1917,  and  although 
some  of  these  Decisions  have  no  direct  bearing  on 
the  Revenue  Bill  of  1918,  they  are  published  for  the 
guidance  and  benefit  of  those  who  may  be  required  to 
file  amended  returns  for  the  year  1917  and  also  for 
information  where  the  subject  matter  pertains  to 
the  Revenue  Act  of  1918. 


1201 


(T.  D.  2649.) 

Returns  made  by  Dealers  in  Merchandise  or  Securities  on  the 
Basis  of  Inventories  taken  at  "Cost  or  Market  Value, 
which  is  Lower"  will,  Pending  a  Decision  as  to  the  Legality 
of  this  Basis,  be  Accepted  Subject  to  Amendment.  "A 
Dealer"  Defined. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  January  30,  1918. 

To  Collectors  of  Internal  Revenue: 

T.  D.  2609,  issued  under  date  of  December  19,  1917,  author- 
izes dealers  in  merchandise  and  dealers  in  securities  to  make 
their  income-tax  and  excess -profits  tax  returns  upon  the  basis 
of  inventories  taken  "at  cost  or  at  market  price,  whichever 
is  lower." 

The  legality  of  this  authorization  having  been  questioned, 
the  matter  was  referred  to  the  Attorney  General,  who  advises 
that  the  general  principle  at  issue  is  involved  in  cases  pending 
in  the  Supreme  Court  of  the  United  States  and  that  an 
early  decision  may  be  reasonably  expected.  Pending  this  deci- 
sion returns  macie  upon  the  basis  of  T.  D.  2609  will  be  tenta- 
tively accepted. 

If  the  ruling  of  the  Attorney  General  should  be  adverse  to 
the  principle  enunciated  in  the  Treasury  decision  referred  to, 
dealers  in  merchandise  or  in  securities  who  shall  have  made 
returns  on  the  basis  of  inventories  taken  at  a  value  other 
than  cost  will  be  required  to  make  amended  returns  upon  the 
basis  of  inventories  taken  at  cost.  In  making  their  returns 
in  the  first  instance,  for  the  taxable  year  1917,  dealers  in  mer- 
chandise or  in  securities  will  be  required  to  indorse  upon  or 
attach  to  such  returns  a  statement  specifying  the  basis  upon 
which  the  inventories  were  taken,  whether  at  cost  or  market 
price. 

For  the  purposes  of  T.  D.  2609  and  this  decision,  a  dealer  in 
securities  is  a  merchant  of  securities,  whether  an  individual, 
partnership,  or  corporation,  with  an  established  place  of  busi- 
ness and  whose  principal  business  is  the  purchase  of  securities 
and  their  resale  to  customers,  that  is,  one  who,  as  a  merchant, 
buy*  securities  and  sells  them  to  customers  with  a  Adew  to  the 
gains  and  profits  that  may  be  derived  therefrom.  Taxpayers 
who  buy  and  sell  or  hold  securities  for  investment  or  specu- 
lation, and  not  in  the  course  of  an  established  business,  officers 
of  corporations  or  members  of  partnerships  who  in  their 
individual  capacities  buy  and  sell  securities  are  not  "dealers 
in  securities"  within  the  meaning  and  purpose  of  T.  D.  2609 
or  this  decision,  and  in  all  such  latter  cases  inventories,  if 
taken,  must  be  taken  at  cost  and  the  gain  or  loss  will  be 
determined  and  taken  into  account  as  the  securities  are  sold 
and  the  transactions  closed. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 
Approved : 

W.  G.  McADOO, 

Secretary  of  the  Treasury. 

1203 


(T.  D.  2652.) 

Interest  on  Bank  Deposits  Paid  to  Non-Resident  Alien  Indi- 
viduals Is  Subject  to  Withholding  Provisions  of  Act  of 
October  3,  1917. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  February  6,  1918. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

Interest  received  from  deposits  in  banks  located  within  the 
United  States  constitutes  income  received  from  sources  within 
the  United  States  and  is  subject  to  the  withholding  provisions 
of  the  Act  of  September  8,  1916,  as  amended  by  the  Act  of 
October  3,  1917,  as  to  non-resident  alien  individuals.  Banks 
are,  therefore,  required  to  withhold  the  normal  tax  of  two  per 
cent  on  such  interest  paid  to  non-resident  alien  individuals. 

Though  non-resident  alien  corporations  are  liable  to  income 
tax  on  interest  received  from  deposits  in  banks  located  within 
the  United  States,  that  portion  of  Treasury  Decision  2623 
authorizing  withholding  of  such  tax  against  such  corporations 
is  hereby  revoked. 

DANIEL  C.  ROPER, 

Commissioner. 
Approved : 

W.  G.  McADOO, 

Secretary  of  the  Treasury. 


(T.  D.  2654.) 

Internal  Revenue  Claims. 
Modified  Procedure  for  Claims  for  Refund  and  Abatement. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C,  February  19, 1918. 

To  Collectors  of  Internal  Revenue: 

The  following  modifications  in  the  procedure  with  regard  t« 
claims  on  Forms  46,  47,  53  and  488  is  prescribed. 

1.  Claims  on  Form  46  and  Form  47  will  not  hereafter  be 
referred  to  division  deputies  for  investigation,  and  the  divi- 
sion deputy's  certificate  on  page  2  of  the  claims  need  not  be 
executed.  Where  an  investigation  is  necessary  it  will  be 
directed  by  the  commissioner  to  be  made. 

2.  All  claims  on  Forms  46  and  47  are  to  be  stamped  with 
the  date  of  receipt  immediately  on  presentation  to  the  collec- 
tor or  division  deputy,  and  thereafter  are  to  be  forwarded, 
without  further  recording  or  certification,  immediately  to  the 
commissioner. 

Two  Exceptions  to  this  Rule  Are  to  be  Especially  Noted. 

(a)  The  certificate  on  page  2  of  the  claim  is  to  be  executed 
in  the  case  of  claims  for  taxes  paid  by  special  tax  stamp,  since 
there  is  no  data  in  the  commissioner's  office  which  will  per- 
mit the  verification  of  these  claims  without  the  collector's 
certificate. 

(b)  When  a  claim  is  filed  for  abatement  such  notation  is  to 
be  made  on  the  collector's  assessment  list  on  Form  23,  as  will 

1204 


the  issuance  of  collection  notices  until  after  the  abatement 
claim  has  been  acted  upon,  unless  of  course  the  collector 
deems  the  interests  of  the  Government  insufficiently  protected 
to  justify  suspension  of  the  collection. 

3.  The  use  of  Record  No.  22  is  to  be  abandoned.  Record 
No.  23  will  continue  to  be  used,  as  at  present. 

4.  Form  No.  7213,  notification  of  allowance  of  refunding 
claim,  will  not  longer  be  forwarded  to  collectors. 

5.  Hereafter  where  an  abatement  claim  is  acted  upon,  the 
collector  will  receive  an  original  letter  addressed  to  the  claim- 
ant and  a  carbon  copy  for  the  collector's  files.  The  original 
is  to  be  mailed  the  claimant  immediately  with  notice  and 
demand  for  the  payment  of  any  tax  shown  by  the  letter  and 
the  assessment  list  to  be  due. 

6.  Where  the  claim  is  allowed  in  full,  credit  for  the  abated 
tax  is  not  to  be  taken  by  the  collector  until  the  receipt  of 
schedule  on  Form  3220.  This  schedule  will  be  prepared  and 
mailed  to  the  collector  monthly,  as  heretofore. 

7.  Because  of  the  distribution  of  the  claims  work  to  the 
various  divisions  of  the  bureau,  it  is  no  longer  practicable  to 
consider  a  claim  on  Form  46  or  47,  5^  or  488,  covering  taxes 
assessed  upon  more  than  one  of  the  lists  of  the  various  classi- 
fications. In  presenting  their  own  claims  on  Forms  53  and 
488,  therefore,  collectors  will  hereafter  group  in  their  claims 
the  items  which  are  upon  the  list,  or  lists,  of  a  given  class, 
and  if  a  claimant  makes  claim  on  Form  46  or  47  for  the  re- 
mission or  refund  of  taxes  assessed  upon  more  than  one  kind 
of  list,  the  collector  will  assist  the  claimant  in  formulating 
new  claims  correctly  prepared. 

Regulations  Nos.  2,  14  and  33  (Art.  247-273)  are  modified 
accordingly. 

The  purposes  of  the  modification  of  the  former  procedure 
with  regard  to  claims  are  to  eliminate  a  duplication  of  detail 
in  the  collector's  and  the  commissioner's  office,  and  the  accom- 
modation of  the  taxpayer  by  making  it  possible  for  him  to 
secure  a  much  more  prompt  consideration  of  his  claims  than 
has  been  possible  heretofore. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 
Approved : 

W.  G.  McADOO, 

Secretary. 


(T.  D.  2659.) 
Basis  of  taxation  of  dividends. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.   C,   February  28,   1918. 

To  Collectors,  Internal  Revenue  Agents  and  others  concerned: 
From  inquiries  reaching  this  office,  it  is  apparent  that  there 
is  confusion  in  the  minds  of  the  public  as  to  the  effect  and 
application  of  the  provisions  of  Section  31  of  the  Act  of  Sep- 
tember 8,  1916,  added  by  the  Act  of  October  3,  1917,  Section 
1211,  relative  to  the  basis  of  taxation  of  certain  dividends. 
That  section,  after  defining  dividends,  provided  that  "any  dis- 
tribution made  to  the  shareholders  or  members  of  a  corpora- 

1205 


tion  *  *  *  in  the  year  1917,  or  subsequent  tax  years,  shall 
be  deemed  to  have  been  made  from  the  most  recently  accumu- 
lated undivided  profits  or  surplus,  and  shall  constitute  a  part 
of  the  annual  income  of  the  distributee  for  the  year  in  which 
received,  and  shall  be  taxed  to  the  distributee  at  the  rates 
prescribed  by  law  for  the  years  in  which  such  profits  or  sur- 
plus were  accumulated  *  *  *." 

Regulations  No.  33  (Revised),  Article  107,  paragraph  375, 
provide  as  follows: 

"Thus,  if  a  corporation  distributed  dividends  in  1917,  such 
dividends  will  be  deemed  to  have  been  paid  from  the  earnings 
of  1917,  and  the  recipient,  if  an  individual,  will  be  liable  to 
additional  tax,  if  any,  and  if  a  corporation,  to  income  tax,  at 
the  rates  for  the  year  1917,  unless  it  is  shown  to  the  satis- 
faction of  the  Commissioner  of  Internal  Revenue  that  at  the 
time  such  dividends  were  paid,  the  earnings  up  to  that  time 
were  not  sufficient  to  cover  the  distribution,  in  which  case  the 
excess  over  the  earnings  of  the  taxable  year  will  be  deemed 
to  have  been  paid  from  the  most  recently  accumulated  surplus 
of  prior  years,  and  will  be  taxed  at  the  rate  or  rates  for  the 
year  or  years  in  which  earned." 

The  rule  may  be  applied  as  follows:  Assume  that  a  cor- 
poration with  a  capital  stock  of  $10,000,000  had  surplus  earn- 
ings of  $500,000  a  year  in  excess  of  the  amount  of  dividends 
paid,  making  its  total  surplus  on 

December  31,  1915,  $500,000,  and  on 
December  31,  1916,  $1,000,000. 

On  December  31,  1916,  it  declared  a  dividend  of  2%  payable 
February  15,  1917.  Unless  it  is  shown  to  the  satisfaction  of 
the  Commissioner  of  Internal  Revenue  that  its  earnings  from 
January  1  to  February  15  were  insufficient  for  the  payment  of 
the  $200,000  distributed  as  a  dividend  on  February  15,  the 
entire  amount  so  distributed  will  be  deemed  to  have  been  paid 
from  earnings  of  1917,  and  will  be  taxable  in  the  hands  of  the 
stockholders  at  the  1917  rate.  If,  however,  it  is  established 
to  the  satisfaction  of  the  Commissioner  of  Internal  Revenue 
that  its  earnings  up  to  February  15  were  but  $100,000,  then 
$100,000  or  half  of  the  total  dividend  paid  by  the  corporation 
on  February  15th  would  be  taxable  in  the  hands  of  the  stock- 
holders at  the  1917  rates,  and  the  other  half  would  be  deemed 
to  have  been  paid  from  the  surplus  of  the  corporation  of  1916 
and  would  be  taxable  to  the  stockholders  at  the  1916  rate.  If 
the  dividend  paid  on  February  15  were  of  such  amount  as  to 
exceed  the  ascertained  1917  earnings  up  to  the  date  of  pay- 
ment and  also  the  1916  surplus  of  the  corporation,  the  amount 
of  such  excess  would  be  deemed  to  have  been  paid  from  the 
surplus  of  1915  and  would  be  taxable  in  the  nands  of  the 
stockholders  at  the  1915  rate. 

All  dividends  received  in  1917,  even  though  paid  by  corpora- 
tions from  earnings  of  previous  years,  constitute  income  to 
the  recipients  for  1917.  The  method  of  ascertaining  the  pre- 
cise rate  applicable  to  such  portions  of  dividends  received  in 
1917,  as  within  the  above  rules,  are  to  be  taxable  at  rates  pre- 
vailing for  previous  years,  is  as  follows:.  The  amoimt  of  the 
income  of  the  recipient  to  which  the  1917  rates  are  applicable 
is  first  ascertained.  To  such  amount  is  then  added  the  amount 
of  income  of  the  recipient  liable  to  tax  at  the  1916  rates  and 
the  table  of  1916  rates  applied  to  see  in  which  brackets  such 
income  falls;  the  income  liable  to  1915  rates  then  added  and 
the  table  of  1915  rates  applied  to  it.     For  instance,  an  indi- 

1800 


vidual  has  $20,000  of  income  liable  to  1917  rates  and  $25,000 
of  dividends  liable  to  1916  rates.  The  total  would  be  $45,000, 
of  which  $20,000  would  be  taxable  at  the  1917  rates,  $20,000 
to  $40,000  at  the  1%  additional  tax  rate  under  the  1916  table 
and  $5,000  at  the  2%  additional  tax  rate  under  the  same  table. 
If  he  had  another  $25,000  dividend  liable  at  1915  rates,  the 
first  $5,000  would  fall  in  the  bracket  between  $20,000  and 
$50,000  at  the  1%  additional  tax  rate,  and  the  other  $20,000 
in  the  second  bracket  of  $50,000  to  $75,000  at  the  2%  addi- 
tional tax  rate  under  the  1915  table. 

In  order  that  this  office  may  verify  the  correctness  of  the 
rates,  taxpayers  reporting  dividends  received  at  other  than 
1917  rates,  under  the  various  columns  in  Block  F  of  Form 
1040,  will  be  required  to  render  a  statement  at  the  time  of 
filing  the  return,  or  at  a  subsequent  date,  showing  the  cor- 
porations from  which  dividends  taking  other  than  1917  rates 
were  received,  with  the  amount  of  dividend  received  from  each. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 
Approved : 
W.  G.  McADOO, 

Secretary  of  the  Treasury. 


(T.  D.  2660.) 

Corporations,  partnerships,  or  individuals  paying  officers  or 
business  employees  a  portion  or  all  of  their  salaries  and 
wages  during  the  war  period  in  which  they  are  in  the 
service  of  the  United  States  may  deduct  the  amounts  so 
paid  as  ordinary  and  necessary  expenses  of  doing  business. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  March  1,  1918. 

To  Collectors  of  Internal  Revenue  and  others  concerned: 

Many  corporations,  partnerships  and  also  individuals  who 
are  engaged  in  business  continue  to  pay  all  or  portions  of  the 
regular  compensation  of  officers  or  employees  who  have  for  all 
or  part  of  the  period  of  the  war  joined  the  naval  or  military 
forces  of  the  United  States  or  have  undertaken  service  for 
the  Government  at  Washington  or  elsewhere  at  reduced  or 
nominal  compensation.  The  business  purpose  of  the  continu- 
ance of  such  compensation,  under  such  circumstances,  is  to 
preserve  the  organization  and  secure  the  return  after  the  war 
of  such  officers  or  employees.  You  are  advised  that  amounts 
so  expended  by  corporations,  partnerships  or  individuals  en- 
gaged in  business  constitute  during  the  continuance  of  the  war, 
ordinary  and  necessary  expenses  of  doing  business  and  are 
allowable  as  deductions  in  computing  net  income  for  purposes 
of  the  income,  war  income  and  excess  profits  taxes. 

DANIEL  C.  ROPER, 

Commissioner. 
Approved : 
W.  G.  McADOO, 

Secretary  of  the  Treasury. 

1807 


(T.  D.  2661.) 
CORPORATION  TAX— DECISION  OF  COURT. 

1.  Section  3225,  Revised  Statutes. 

The  plaintiff  having  understated  in  its  original  return 
the  amount  for  which  it  was  subject  to  tax  is  not  entitled 
to  recover  any  part  of  a  second  assessment  paid,  although 
the  original  return  was  made  in  good  faith  and  without 
any  intention  to  escape  lawful  tax. 

2.  Amendment  to  Section  3225,  Revised  Statutes. 

The  amendment  to  Section  3225,  Revised  Statutes  (Sec. 
14,  Act  of  September  8,  1916),  providing  that  it  shall  not 
apply  to  statements  or  returns  made  or  to  be  made  in 
good  faith  regarding  annual  depreciation  of  oil  or  gas  wells 
and  mines,  does  not  purport  to  be  retroactive  in  its  opera- 
tion. 

3.  Judgment  Aflfirmed. 

The  judgment  of  the  United  States  District  Court     (T.  D. 
2366)  is  affirmed. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  March  5,  1918. 

The  appended  decision  of  the  United  States  Circuit  Court 
of  Appeals  for  the  Eighth  Circuit,  in  the  case  of  Camp  Bird 
(Ltd.)  V.  Frank  W.  Howbert,  collector  of  internal  revenue,  is 
published  for  the  information  of  internal  revenue  officers  and 
others  concerned. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 
Approved : 

W.  G.  McADOO, 

Secretary  of  the  Treasury. 
United  States  Circuit  Court  of  Appeals,  Eigrhth  Circuit. 

No.  4939— December  Term,  1917. 
Camp    Bird    (Ltd.),    a   corporation,    plaintiff   in    error,    v. 

Frank    W.    Howbert,    as    collector    of    internal    revenue 

within   and  for  the  district  of  Colorado,   defendant   in 

error. 
In  error  to  the  District  Court  of  the  United  States  for  the 

district  of  Colorado. 
Before  Garland,  Circuit  Judge,  and  Amidon  and  Munger, 

District  Judges. 

Munger,  District  Judge,  delivered  the  opinion  of  th» 
court : 

This  action  was  brought  by  plaintiff  In  error,  hereafter 
called  plaintiff,  against  defendant  In  error,  as  collector  of 
Internal  revenue  of  the  United  States  for  the  district  of 
Colorado,  hereafter  called  defendant.  The  object  of  the 
action  was  to  recover  sums  of  money  that  plaintiff  had 
paid  to  defendant  as  an  internal  revenue  tax.  A  jury  was 
waived  and  the  trial  court  entered  judgment  upon  special 
findings  of  facts,  dismissing  plaintiff's  action. 

Briefly  stated,  the  court  found  that  the  plaintiff  was  the 
owner  of  valuable  and  productive  mining  property  In  Col- 
ado,  after  the  year  1902,  and  that  it  made  a  return  for  each 
of  the  years  1909,  1910  and  1911  to  the  collector  of  internal 
revenue,  purporting  to  set  forth  its  income  for  each  of 
those  years,  under  the  provisions  of  the  act  of  Congress 
approved  August  5,  1909  (36  Stat.,  112),  relating  to  an 
excise  tax  on  corporations.  In  these  returns  the  plaintiff 
stated  the  items  of  charge  and  credit  and  the  net  annual 
Income  which  it  considered  subject  to  tax.  The  Commia- 
sioner  of  Internal  Revenue  found  that  deductions  claimed 
In  each  of  these  returns  had  been  overstated,  and  that  th« 

1208 


amount  subject  to  tax  had  been  understated,  and  made 
additional  assessments  against  the  plaintiff  and  notified 
it  of  his  action.  The  plaintiff,  under  protest,  paid  the 
additional  taxes  levied.  An  application  to  the  Commis- 
sioner of  Internal  Revenue  for  an  abatement  of  the  addi- 
tional tax  was  denied  by  the  commissioner,  and  this  action 
waa  then  begun.  While  the  court  found  that  the  plaintiff 
had  understated  its  net  income  upon  which  it  was  re- 
quired to  pay  the  excise  tax,  it  was  further  found  that  the 
understatement  was  not  made  fradulently,  knowingly, 
wilfully,  nor  for  the  purpose  of  defrauding  the  United 
States,  but  was  made  in  good  faith  and  with  the  belief 
that  the  figures  presented  stated  the  facts.  The  only 
question  in  the  case  is  whether  the  Judgment  is  supported 
by  these  findings. 

Section  3225  of  the  Revised  Statutes  as  it  existed  at  the 
time  these  taxes  were  levied  and  collected  was  as  follows: 

When  a  second  assessment  is  made  in  case  of 
any  list,  statement,  or  return,  which  in  the  opinion 
of  the  collector  or  deputy  collector  was  false  and 
fraudulent,  or  contained  any  understatement  or 
undervaluation,  no  taxes  collected  under  such  as- 
sessment shall  be  recovered  by  any  suit,  unless  it 
is  proved  that  the  said  list,  statement,  or  return 
was  not  false  nor  fraudulent,  and  did  not  contain 
any  understatement  or  undervaluation. 

It  is  contended  that  this  section  was  meant  to  be  ap- 
plied only  to  those  who  intentionally  made  false  state- 
ments or  undervaluations,  because  when  this  act  was 
passed  an  accurate  statement  of  the  facts  required  in 
returns  by  taxpayers  could  be  made,  whereas  returns 
under  the  corporation  tax  law  necessarily  must  be  esti- 
mates. 

By  the  acts  of  Congress  approved  June  30,  1864  (13  Stat., 
223),  as  amended  and  supplemented  by  the  acts  of  Con- 
gress of  March  3,  1865  (13  Stat.,  469),  of  July  13,  1866  (14 
Stat.,  98),  and  March  2,  1867  (14  Stat.,  471),  a  general 
system  of  internal  revenue  was  provided  to  meet  the 
financial  burdens  imposed  by  the  Civil  War.  Taxes  were 
imposed  generally  upon  property,  occupations,  industries 
and  incomes.  Many  classes  of  persons  subject  to  taxation 
were  required  to  make  sworn  lists  or  returns  of  property 
subject  to  tax.  The  values  of  property  were  to  be  re- 
ported and  amounts  of  net  income,  and  the  accurate  state- 
ment of  many  of  the  items  required  were  quite  as  difficult 
as  the  ascertainment  of  the  required  items  under  the 
present  corporation  tax.  Section  14  gave  the  assessor 
power  to  summon  a  declarant  and  to  examine  him  and  hi« 
books,  if  in  his  opinion  the  return  was  either  false  or 
fraudulent  or  contained  any  understatement  or  under- 
valuation. If  the  return  was  false  or  fraudulent,  the 
assessor  was  required  to  increase  the  tax  by  100  per  cent. 
An  unexcused  neglect  or  refusal  to  make  or  to  verify 
a  list  was  penalized  by  the  addition  of  50  per  cent  to  the 
tax.  By  Section  20  the  assessor  was  empowered  to  fix  the 
amount  of  additional  tax  to  be  paid,  when  there  had  been 
an  omission,  understatement,  undervaluation  or  false  oi 
fraudulent  statement.  Section  44  authorized  the  Commis^ 
sioner  of  Internal  Revenue  to  refund  excessive  taxes  col- 
lected and  to  repay  to  collectors  amounts  recovered  in  court 
against  them  for  taxes  collected  by  them,  but  provided 
that  no  taxes  should  be  recovered,  refunded  or  paid  back, 
where  a  second  assessment  had  been  made  because  the 
first  list  had  been,  in  the  opinion  of  the  assessor,  either 
false,  fraudulent,  or  contained  any  understatement  or 
undervaluation,  unless  it  was  proved  that  the  return  was 
not  false  or  fraudulent,  or  did  not  contain  any  understate- 
ment or  undervaluation.  The  substance  of  these  enact- 
ments has  continued  in  force  ever  since.  (See  Rev.  Stats., 
Sees.  3173,  3176,  3182,  3220,  8225;  U.  S.  Comp.  Stats.  Ann., 
Sees.  5896,  5899,  5904,  5944,  5048).  They  evince  a  discrimi- 
nating use  of  terms  as  between  false  and  fraudulent  re- 
turns and  those  that  contain  only  an  understatement  or 
valuation,  and  provide  remedies  and  penalties  apportioned 
to  the  several  delinquencies.  The  mere  undervaluation  or 
understatement  in  a  return  is  made  a  basis  for  sum- 
moning the  delinquent  to  appear  and  be  examined 
and  a  basis  also  for  imposing  an  additional-  as- 
sessment,   and    prevents    the    Commissioner    of    Internal 

1209 


Revenue  from  making  a  refund  or  remission  of  taxes.  The 
further  provision  found  In  Section  3225  of  the  Revised 
Statutes,  denying  recovery  by  suit  of  any  tax  imposed 
under  a  second  assessment,  because  In  the  opinion  of  the 
collector  or  his  deputy,  the  former  return  was  false  or 
fraudulent  or  contained  an  understatement  or  undervalua- 
tion, unless  It  is  proved  that  the  prior  list  was  not  false 
nor  fraudulent  nor  contained  any  understatement  nor 
undervaluation,  Is  in  harmony  with  these  provisions,  and 
manifest  the  intention  of  Congress  that  no  recovery  may 
be  had  although  the  undervaluation  or  understatement  was 
made  unintentionally.  See  Bergdoll  r.  Pollock  (95  U.  S., 
837). 

The  proposition  Is  advanced  that  this  construction  of  Sec- 
tion 3225  renders  It  violative  of  the  Constitution,  as  it 
would  result  in  the  confiscation  of  plaintiff's  property. 
It  is  well  settled  that  "this  corporation  tax  act  imposed 
an  excise  tax  and  the  only  limitation  on  the  power  of 
Congress  in  the  imposition  of  excise  taxejs  is  that  they 
shall  be  uniform  throughout  the  United  States."  United 
States  V.  Singer  (15  Wall.,  Ill,  121) :  Pacific  Insurance  Co. 
V.  Soule  (7  Wall.,  433,  446).  By  this  a  geographical  uni- 
formity is  meant.  Flint  v.  Stone  Tracy  Co.  (220  U.  S.,  107). 
The  provisions  laying  an  additional  tax  proportionate  to 
the  pi-operty  omitted  from  the  list  on  all  who  make  any 
understatement  or  undervaluation  operates  uniformly 
on  all  of  that  class  of  persons  wherever  found 
and  hence  was  within  the  power  of  Congress.  The  re- 
fusal of  a  right  of  action  to  recover  such  taxes,  unlesi 
proof  is  made  that  there  was  no  understatement  or  under- 
valuation is  likewise  within  the  scope  of  the  legislative 
power.  It  is  claimed  that  "Section  3225,  Revised  Statutes, 
does  not  apply  to  the  suit  for  the  recovery  of  taxes  col- 
lected under  the  corporation  tax  of  1909.  This  section  ap- 
plies to  internal  revenue  taxes  generally"  and  the  corpora- 
tion tax  is  one  embraced  in  that  class.  In  addition  the 
corporation  tax  law  contained  a  clause  as  follows  (p.  951 
Bupp.  to  U.  S.  Comp.  Stats.,  1911): 

All  laws  relating  to  the  collection,  remission,  and 
refund  of  internal  revenue  taxes,  so  far  as  ap- 
plicable to  and  not  inconsistent  with  the  provisions 
of  this  section,  are  hereby  extended  and  made  ap- 
plicable to  the  tax  imposed  by  this  section. 

We  think  that  Section  3225,  Revised  Statutes,  Is  a  part 
of  the  laws  relating  to  the  refund  of  internal  revenue 
taxes,  as  Section  3220,  Revised  Statutes,  provides  that  the 
Commissioner  of  Internal  Revenue  is  authorized  to  refimd 
to  the  collector  any  amount  that  may  be  recovered  against 
him  in  any  court  for  any  internal  taxes  collected  by  him. 

Plaintiff  also  contends  that  the  Judgment  is  erroneous, 
because  after  final  Judgment  was  entered  in  this  case  Con- 
gress enacted  an  amendment  to  Section  3225,  Revised  Stat- 
utes, which  reads  (p.  6984,  6  U.  3.  Comp.  Stats.,  Ann.) : 
"♦  ♦  •  But  this  section  shall  not  apply  to  statements  or 
returns  made  or  to  be  made  in  good  faith  under  the  laws 
of  the  United  States  regarding  annual  depreciation  of  oil 
or  gas  wells  and  mines." 

This  statute  does  not  purport  to  be  retroactive  in  Its 
operation  and  hence  can  not  affect  the  Judgment  in  this 
case.  This  disposes  of  all  questions  that  require  con- 
sideration. 

The  Judgment  will  be  affirmed. 


(T.  D.  2662.) 


When  consolidated  returns  are  to  be  made  for  purposes  of  the 
excess  profits  tax. 

Treasury .  Department, 
Washington,  D.  C,  March   6,   1918. 

To  Collectors  of  Internal  Revenue,  Rerenue  Agents  and  Others 
Concerned : 
Pursuant  to  Article  78  of  Regulations  41  relative  to  war 
excess  profits  tax,  afi'iliated  corporations  as  limited  and  de- 

1810 


fined  in  paragraphs  C  and  D  below  are  hereby  directed  to  make 
consolidated  returns  for  the  purpose  of  excess  profits  tax. 
Affiliated  corporations  other  than  those  falling  within  the 
provisions  of  paragraphs  C  and  D  may  make  a  consolidated 
return  only  after  having  secured  permission  in  writing  from 
the  Commissioner  of  Internal  Revenue.  Affiliated  corporations 
are  defined  in  Article  77  of  the  Regulations  as  follows: 

For  the  purpose  of  this  regulation  two  or  more  cor- 
porations will  be  deemed  to  be  afRliated  (1)  when  one 
such  corporation  owns  directly  or  controls  through 
closely  affiliated  interests  or  by  a  nominee  or  nom- 
inees, all  or  substantially  all  of  the  stock  of  the  other 
or  others,  or  when  substantially  all  of  the  stock  of 
two  or  more  corporations  is  owned  by  the  same  indi- 
dividual  or  partnership,  and  both  or  all  of  such  cor- 
porations are  engaged  in  the  same  or  a  closely  re- 
lated business;  or  (2)  when  one  such  corporation 
(a)  buys  from  or  sells  to  another  products  or  serv- 
ices at  prices  above  or  below  the  current  market,  thus 
effecting  an  artificial  distribution  of  profits,  or  (b)  in 
any  way  so  arranges  its  financial  relationships  with 
another  corporation  as  to  assign  to  it  a  disproportion- 
ate share  of  net  income  or  invested  capital. 

A.  Two  or  more  corporations  are  not  "affiliated"  merely  be- 
cause all  or  substantially  all  of  the  stock  therein  is  owned  by 
the  same  corporation,  individual  or  partnership;  they  must 
also  be  engaged  in  the  same  or  a  closely-related  business. 

B.  For  purposes  of  regulation  by  public  service  commissions 
or  similar  authorities  the  identity  of  public  service  corpora- 
tions, when  not  grouped  into  one  operating  unit,  must  be  main- 
tained, even  though  they  are  owned  by  the  same  corporation 
or  taxpayer;  and  under  such  regulation  the  accounts  of  such 
public  service  corporations  are  deemed  to  reflect  the  true  in- 
vested capital  and  income  of  each  operating  unit.  Accordingly 
railroads,  gas,  electric,  water  and  other  public  service  corpora- 
tions when  operated  independently  and  not  physically  con- 
nected or  merged — particularly  when  situated  in  different  juris- 
dictions and  subject  to  regulation  by  public  service  commis- 
sions— will  not  be  required  or  permitted  without  special  per- 
mission obtained  in  advance  to  make  a  consolidated  return. 
When,  however,  a  railroad  or  other  public  utility  is  owned  by 
an  industrial  corporation  and  is  operated  as  a  plant  facility  or 
as  an  integral  part  of  a  group  organization  of  affiliated  cor- 
porations, and  such  affiliated  corporations  are  required  to  file  a 
consolidated  return,. the  return  of  such  railroad  or  other  public 
utility  shall  be  included  therein. 

C.  The  words  "all  or  substantially  all  of  the  stock"  as  used 
in  the  above  definition  (Article  77)  will  until  further  notice 
be  interpreted  as  meaning  an  ownership  of  95  per  cent  or  more 
of  such  stock  by  the  same  taxpayer  during  the  taxable  year. 

D.  In  case  of  affiliated  corporations  among  which  there 
exist  contracts  or  trade  or  financial  practices  which  arbitrarily 
or  artificially  influence  or  determine  the  amount  of  the  invested 
capital  or  net  income  of  one  or  more  of  the  corporations  so 
affiliated  and  where  95  per  cent  or  more  of  the  stock  of  the 
subsidiary  afliliated  corporations  is  owned  by  a  parent  or  con- 
trolling corporation  or  by  an  individual  or  partnership,  a  con- 
solidated return  will  be  required. 

E.  A  consolidated  return  shall  be  filed  by  the  parent  or 
principal  corporation  in  the  office  of  the  collector  of  the  district 
in  which  it  has  its  principal  office.  Each  of  the  other  affiliated 
corporations  shall  file  in  the  office  of  the  collector  of  its  re- 

12X1 


spective  district  a  return,  entering  thereon  its  name  and 
address  and  replying  to  the  questions  in  Schedule  I,  and  to 
questions  1,  2,  3,  4  and  11  on  page  4  of  Form  1103;  and  stating 
also  (1)  that  the  corporation  is  affiliated  with  a  designated 
parent  or  principal  corporation,  (2)  that  its  return  is  included 
in  the  consolidated  return  of  such  parent  or  principal  corpora- 
tion, and  (3)  the  district  in  which  the  consolidated  return  is 
filed. 

F.  Assets  of  affiliated  or  subsidiary  corporations  which  have 
to  be  adjusted  to  meet  the  statutory  limitation  prescribed  by 
Section  207  shall  be  valued  as  of  conditions  existing  at  the 
dates  when  such  assets  were  acquired  by  the  respective  affi- 
liated or  subsidiary  corporations  and  not  as  of  the  date  when 
the  stock  in  such  affiliated  or  subsidiary  corporations  was 
acquired  by  the  parent  or  controlling  corporation. 

G.  Affiliated  corporations  filing  a  consolidated  return  shad 
include  in  such  return  (1)  a  specific  statement  of  the  number 
or  proportion  of  the  shares  in  the  affiliated  corporations  held 
by  the  parent  or  controlling  corporation  during  the  taxable 
year,  and  (2)  a  schedule  showing  the  proportionate  amount  of 
the  total  tax  which  it  is  agreed  among  them  is  to  be  assessed 
upon  each  affiliated  corporation. 

H.  If  the  Commissioner  of  Internal  Revenue  upon  examina- 
tion of  any  consolidated  return  finds  that  the  tax  can  not  in  hii 
judgment  be  properly  assessed  upon  the  basis  of  such  return, 
the  affiliated  corporations  covered  by  such  consolidated  return 
shall,  upon  notice  from  the  Commissioner  of  Internal  Revenue, 
file  separate  returns. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue, 


(T.  D.  2663.) 

Method  to  be  followed  in  crediting  an  overpayment  of  the  two 
per  cent  income  tax  by  a  corporation  filing  supplemental 
return  for  a  fiscal  year  ended  on  the  last  day  of  some 
month  during  the  year  1917,  or  a  "fiscal"  return  for  a 
period  ended  during  such  year. 

Treasury  J)epartment, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  March  8,  1918. 

To  Collectors  of  Internal  Revenue: 

Under  the  Act  of  September  8,  1916,  as  originally  passed, 
corporations  were  entitled  to  take  as  a  deduction  all  taxes 
paid.  Under  the  same  Act  as  amended  by  the  Act  of  October 
3,  1917,  they  are  not  entitled  to  any  deduction  for  income  tax 
paid,  but  are  entitled  to  a  credit  of  the  amount  of  excess 
profits  tax  for  which  they  are  liable.  They  are  also  liable 
for  the  war  income  tax  of  4%  imposed  by  the  Act  of  October 
3,  1917. 

It  follows,  therefore,  that  a  corporation  which  has  filed  re- 
turn for  a  fiscal  year  ended  on  the  last  day  of  some  month 
during  the  year  1917,  or  a  "final"  return  for  a  period  ended 
during  such  year  showing  its  liability  computed  under  the  Act 
of  September  8,  1916,  as  originally  passed,  must  make  an 
amended  return  showing  additional  net  income  (in  an  amount 

1213 


I 


equal  at  least  to  the  amount  of  income  tax  deducted  in  its 
original  return).  It  will  also  take  credit  for  the  amount  of 
excess  profits  tax,  if  any,  for  which  it  is  liable.  This  will 
ordinarily  result  in  showing  an  overpayment  of  income  tax 
at  the  2%  rate,  and  the  amount  of  such  overpayment  may  be 
credited  against  the  war  income  tax  of  4%  for  which  liable, 
to  ascertain  the  total  amount  of  income  tax  due.  In  no  case 
will  a  credit  for  overpayment  of  income  tax  be  taken  against 
the  excess  profits  tax  due. 

The  adjustment  should  be  made  under  items  13  to  15,  in- 
elusive,  and  the  exact  amount  of  tax  due  from  the  corpora- 
tion must  be  shown  under  item  16  of  return,  Form  1031,  re- 
vised. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 
Approved : 

W.  G.  McADOO, 

Secretary  of  the  Treasury. 


(T.  D.  2665.) 
Amending  T.  D.  2153. 

Instructions  governing  the  preparation  of  income  tax  returns 
by  farmers. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  March  8,  1918. 

To  Collectors  of  Internal  Revenue: 

The  term  "farm"  as  herein  used  embraces  the  farm  in  the 
ordinarily  accepted  sense  and  includes  plantations,  ranches, 
stock  farms,  dairy  farms,  poultry  farms,  fruit  farms,  truck 
farms,  and  all  land  used  for  similar  purposes;  and  for  the 
purposes  of  this  decision  all  corporations,  partnerships,  or  in- 
dividuals who  cultivate,  operate,  or  manage  such  farms  for 
gain  or  profit,  either  as  owners  or  tenants,  are  designated  as 
"farmers." 

All  gains,  profits  and  income  derived  from  the  sale  or  ex- 
change of  farm  products,  whether  produced  on  the  farm  or 
purchased  and  resold  by  the  farmer,  shall  be  included  in  the 
return  of  income  for  the  year  in  which  the  products  were 
actually  marketed  and  sold. 

All  items  of  expense  connected  with  the  planting,  cultivat- 
ing, harvesting  and  marketing  of  a  crop,  or  the  care,  feeding 
and  marketing  of  live  stock  may  be  claimed  as  deductions 
only  in  the  return  rendered  for  the  year  during  which  such 
expenditures  were  made.  This  ruling  applies  even  though  the 
crops  or  stock  in  connection  with  which  the  expenses  were  in- 
curred may  not  have  been  sold  or  exchanged  for  money  or  a 
money  equivalent  during  the  year  for  which  the  return  is 
rendered. 

That  portion  of  Treasury  Decision  2153  and  paragraph  32 
of  Regulations  No.  33  (Revised)  which  provides  "cost  of  stock 
purchased  for  resale  is  an  allowable  deduction  under  the  item 
of  expense,"  is  hereby  annulled.  It  is  held  that  the  amount 
expended  in  purchasing  stock  for  resale  is  an  investment  of 
capital  and  is  not  to  be  taken  as  an  item  of  expense  for  the 
year  in  which  the  stock  was  purchased,  or  for  any  subsequent 

1213 


year;  but  when  the  stock  so  purchased  is  sold  its  cost  it  to 
be  deducted  from  the  sales  price  in  ascertaining  the  amount 
of  gain  or  profit  returnable  for  tax  purposes. 

Where  the  cost  of  stock  or  farm  products  purchased  in  1916, 
or  any  previous  year,  for  resale,  or  the  expense  of  producing 
stock  or  products  on  the  farm,  has  been  claimed  as  a  de- 
duction or  taken  into  consideration  in  ascertaining  the  farmer's 
liability  to  income  tax  for  some  year  prior  to  1917,  and  the 
stock  or  farm  products  so  purchased  or  produced  were  sold 
during  the  latter  year,  the  entire  proceeds  of  the  sale  are  to 
be  returned  as  income  for  the  year  in  which  the  sale  was 
made,  for  the  reason  that  the  farmer,  having  once  received 
the  benefit  of  the  deduction,  is  not  again  entitled  to  it.  If, 
however,  such  cost  or  expense  had  not  been  claimed  as  a  de- 
duction, or  had  not  been  taken  into  consideration  in  ascertain- 
ing the  farmer's  liability  to  income  tax  for  a  previous  year, 
the  amount  of  such  cost  or  expense  may  be  deducted  from  the 
selling  price  of  the  stock  or  farm  products  and  the  difference 
only  returned  as  income. 

Farmers  who  keep  books  according  to  some  approved  method 
of  accounting  which  clearly  show  the  net  income,  and  take 
annual  inventories,  may,  if  the  same  method  is  consistently 
followed  from  year  to  year,  prepare  their  returns  in  accordance 
with  the  showing  made  by  the  books  and  inventories.  If  the 
inventory  method  is  adopted  the  farmer  should,  in  order  to 
ascertain  gross  income,  add  to  the  amount  received  from  sales 
made  during  the  year  the  inventory  of  the  live  stock  and 
products  on  hand  at  the  close  of  the  year  and  from  this  sum 
deduct  the  amount  expended  in  purchasing  live  stock  and 
products  plus  the  inventory  of  the  live  stock  and  products 
at  the  beginning  of  the  year. 

The  inventory  at  the  beginning  of  a  tax  year  must  be  the 
same  figure  as  at  the  close  of  the  next  preceding  year  and  must 
include  the  cost  price  of  live  stock  or  products  purchased  for 
resale,  and  may  include  the  live  stock  and  products  produced 
on  the  farm  and  still  on  hand.  Where  gross  income  is  ascer- 
tained by  inventories,  no  deduction  can  be  made  for  live  stock 
or  products  lost  during  the  year,  whether  purchased  for  resale 
or  produced  on  the  farm,  as  such  losses  will  be  reflected  in  the 
inventory  by  reducing  the  amount  of  live  stock  or  products 
on  hand  at  the  close  of  the  year. 

Live  stock  purchased  for  draft,  breeding  or  dairy  purposes, 
or  for  any  purpose  other  than  resale,  may  be  included  in  the 
inventory  for  each  year  at  a  figure  which  will  reflect  the 
reduction  in  value  estimated  to  have  occurred  during  the  year 
through  increase  of  age  or  other  causes.  Such  a  reduction  in 
value  should  be  based  on  the  cost  and  estimated  life  of  the 
live  stock.  In  the  case  of  the  loss  of  such  live  stock  no 
deduction  can  be  made,  as  this  loss  will  be  reflected  in  the  in- 
ventory at  the  end  of  the  year.  "Wliere  the  inventory  method 
is  used,  the  cost  price  of  the  article  sold  must  not  be  taken 
as  an  additional  deduction  in  the  return  of  income  as  it  is 
reflected  in  the  inventory. 

In  view  of  the  foregoing,  all  corporations,  partnerships,  and 
individuals  engaged  in  the  live  stock  or  farming  business,  which 
do  not  keep  books  of  account  and  ascertain  their  gross  income 
by  inventory,  should  prepare  their  returns  of  annual  net  in- 
come on  the  basis  of  actual  receipts  and  disbursements  in 
order  that  their  returns  of  income  may  be  susceptible  of  audit 
for  purposes  of  verification.  Treasury  Decision  2433  contains 
additional  information  relative  to  the  rendering  of  returns 

1214 


of  income  by  corporations  keeping  books  in  accordance  with 
standard  systems  of  accounting,  or  in  conformity  with  the 
requirements  of  some  Federal,  State  or  municipal  authority, 
having  supervision  over  such  corporations. 

The  foregoing  relates  only  to  income  derived  from  the  opera- 
tion of  a  farm  and  has  no  relation  to  the  gain  or  profit  which 
may  result  from  the  sale  of  the  farm. 

Where  a  farmer  exchanges  farm  produce  for  merchandise, 
groceries,  or  mill  products,  the  market  value  of  the  article  or 
product  received  in  exchange  is  to  be  returned  as  income. 

A  farmer  is  not  required  to  include  in  his  income  tax  return 
the  value  of  farm  produce  consumed  by  himself  and  family. 

DANIEL  (J.  ROPER, 
Commissioner  of  Internal  Revenue. 
Approved : 
W.  G.  McADOO, 

Secretary  of  the  Treasury. 


(T.  D.  2666.) 

Handling  remittances  received  in  payment  of  income  and  excess 
profits  taxes. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  March  8,  1918. 

To  Collectors  of  Internal  Revenue: 

Instructions  to  public: 

1.  Collectors  should  give  the  widest  possible  publicity, 
through  newspapers  and  by  all  other  available  means,  to  the 
fact  that  all  checks  in  payment  of  income  and  excess  profits 
taxes  must  be  collectible  at  par  (without  any  deduction). 
Taxpayers  who  are  not  sure  that  their  checks  will  be  paid  at 
par  should  be  advised  to  write  beneath  the  amount  "without 
deduction  for  exchange,"  or  "with  exchange." 

Indorsement  of  checks: 

2.  The  collector  need  not,  however,  examine  all  checks  to  see 
whether  or  not  they  are  collectible  at  par,  but  should  stamp 
on  the  face  of  each  the  words  "This  check  is  in  payment  of  an 
obligation  to  the  United  States  and  must  be  paid  at  par.  No 
protest,"  with  his  name  and  title.  If  the  bank  on  which  a 
check  is  drawn  should  refuse  to  pay  it  at  par,  it  will  be  re- 
turned through  the  depositary  bank  and  should  be  treated  in 
the  same  manner  as  a  bad  check  (see  paragraphs  4  and  5). 

Obtaining  certificates  of  deposit  for  out-of-town  checks. 

3.  All  out-of-town  checks  for  which  the  depositary  bank  is 
unwilling  to  issue  an  immediate  certificate  of  deposit  to  the 
credit  of  the  Treasurer  of  the  United  States  should  be  de- 
posited separately  in  a  collection  account  as  provided  in  T.  D. 
2627,  dated  December  28,  1917.  The  collection  account  will  be 
charged  and  the  Treasurer's  general  account  credited  by  the 
issuance  of  a  certificate  of  deposit  on  Form  15,  either  (a)  as 
the  checks  are  collected  or  (b)  after  a  number  of  days  as 
agreed  upon  with  the  depositary,  subject  to  the  Secretary's 
approval,  not  exceeding  five  days,  depending  upon  the  average 
time  of  collection. 

1215 


Redeeming  bad  checks  deposited  to  the  credit  of  the  Treasurer. 

4.  If  any  check  for  which  a  certificate  of  deposit  to  the 
credit  of  the  Treasurer  of  the  United  States  has  been  issued 
should  be  returned  to  the  depositary  bank  unpaid,  the  col- 
lector will  be  promptly  notified  and  the  check  will  be  held 
in  suspense  for  a  few  days,  during  which  the  collector  should 
make  an  effort  to  recover  the  amount  from  the  taxpayer.  If 
the  amount  of  the  check  is  recovered*  from  the  taxpayer,  the 
collector  should  immediately  turn  it  over  to  the  depositary 
in  exchange  for  the  bad  check,  which  should  be  returned  to 
the  drawer.  If  he  fails  to  obtain  the  amount  from  the  tax- 
payer within  a  reasonable  time,  the  depositary  will  return 
the  check  with  a  letter  of  transmittal  and  ask  a  receipt  from 
the  collector.  The  collector  should  give  such  a  receipt  in  dupli- 
cate, retaining  one  copy.  The  depositary  will  charge  the 
amount  to  the  Treasurer's  account  in  its  next  daily  transcript. 

Redeeming  bad  check  deposited  in  collection  account. 

5.  If  a  check  deposited  in  the  collection  account  should  be 
returned  unpaid,  and  no  certificate  of  deposit  on  Form  15  cov- 
ering the  amount  thereof  has  been  issued,  the  amount  of  the 
check  will  be  charged  by  the  depositary  to  the  collection  ac- 
count, after  being  held  in  a  suspense  account  for  a  few  days 
while  an  effort  is  made  to  recover  the  amount  from  the  tax- 
payer. 

Collecting  taxes  for  which  bad  checks  have  been  tendered. 

6.  Taxpayers  whose  checks  have  been  returned  uncollected 
by  the  depositary  bank  should  be  immediately  notified,  as  in- 
dicated in  paragraph  4,  to  make  the  checks  good.  If  any  tax- 
payer should  fail  to  do  so,  the  collector  should  proceed  to  col- 
lect the  taxes  by  the  usual  methods,  as  though  no  check  had 
been  given. 

Correcting  assessment  list. 

7.  If  the  recapitulation  of  the  assessment  list  for  the  month 
has  not  yet  been  sent  to  the  Commissioner,  cancel  the  original 
entry  of  the  payment,  at  the  same  time  noting  in  the  "Re- 
marks" column  "Check  returned  unpaid ;  transferred  to  p. , 

1  ,"  with  the  date,  and  re-enter  the  item  in  the  unpaid 

section  of  the  list,  with  the  notation  "Transferred  from  p. , 

1  ."     Submit  in  support  of  a  new  entry  a  copy  of  the 

collector's  letter  to  the  taxpayer  with  regard  to  the  non-pay- 
ment of  the  check.  Be  careful  not  to  duplicate  the  charge  in 
the  monthly  recapitulation  of  the  list. 

8.  If  the  monthly  recapitulation  has  gone  forward  make  a 
note  in  the  *Tlemarks"  column,  opposite  the  original  entry, 
"Check  returned  unpaid,"  with  the  date,  and  let  the  item  stand 
as  an  unpaid  item  to  be  cleared  by  an  entry  of  the  date  on 
which  the  amount  is  finally  paid. 

Posting  Records  1  and  9. 

9.  Record  1  for  income  tax  collections  should  be  posted  m 
accordance  with  previous  instructions  and  the  daily  totals 
should  be  transferred  to  line  1  of  Record  9.  As  the  daily  total 
in  Record  9  will  not  agree  with  the  total  deposit  for  the  day 
in  the  Treasurer's  general  account,  the  certificate  of  deposit 
numbers  should  not  be  entered  on  line  48  of  Record  9. 

10.  The  balance  in  the  collection  accoimt  at  the  close  of 
each  month  should  be  subtracted  from  the  balance  at  the 
close  of  the  preceding  month  (or  vice  versa).    If  the  balance  in 

1216 


the  collection  account  shows  an  increase  for  the  month,  such 
increase  should  be  added  to  the  amount  of  returned  checks 
(if  any)  charged  back  to  the  Treasurer's  general  account  dur- 
ing the  month  and  the  total  should  be  entered  on  line  8  in  the 
total  column  of  Record  9  in  red  ink,  to  be  deducted  from  the 
other  entries  in  the  same  column. 

11.  If  the  balance  in  the  collection  account  shows  a  decrease 
for  the  month,  and  the  amount  of  returned  checks  charged 
back  to  the  Treasurer's  general  account  for  the  month  is  less 
than  the  decrease  in  the  balance,  the  amount  of  such  returned 
cheeks  should  be  subtracted  from  the  decrease  in  the  balance 
and  the  difference  entered  in  black  ink  on  line  8  in  the  total 
column  of  Record  9,  to  be  added  to  the  other  entries  in  the 
same  column. 

12.  If  the  amount  of  returned  checks  charged  back  to  the 
Treasurer's  general  account  for  the  month  should  exceed  the 
decrease  in  the  balance  for  the  month,  such  decrease  should 
be  subtracted  from  the  amount  of  such  returned  checks  and 
the  difference  entered  in  red  ink  on  line  8  in  the  total  column 
of  Record  9. 

13.  The  net  total  for  each  month  entered  on  line  9  of 
Record  9  will  thus  agree  with  the  amount  deposited  that 
month  on  accountof  collections  on  lists. 

Monthly  accounts. 

14.  Form  325  should  be  prepared  from  Record  1  in  accord- 
ance with  previous  instructions. 

At  the  close  of  the  month  the  entry  on  line  8  in  the  total 
column  of  Record  9  (black  or  red  ink)  should  be  entered  in 
column  8  of  the  second  table  on  Form  51B,  on  the  blank  line 
following  the  line  for  "Old  regular"  lists.  If  the  amount  en- 
tered in  column  8  is  in  black  ink  the  same  amount  should  be 
entered  in  red  ink  on  the  same  line  in  column  11.  If  the 
amount  entered  in  column  8  is  in  red  ink  the  same  amount 
should  be  entered  in  black  ink  on  the  same  line  in  column  11. 

15.  The  amount  of  returned  checks  charged  to  the  Treas- 
urer's general  account  each  month  should  be  deducted  on  Form 
49  from  the  total  of  the  certificates  of  deposit  for  the  month 
in  which  the  checks  are  returned.  The  entry  making  the  de- 
duction should  be  supported  by  the  banks'  letters  returning 
the  checks. 

16.  The  collector  should  submit  with  his  monthly  account 
on  Form  5113  a  monthly  statement  signed  by  the  cashier  of 
the  depositary  bank  in  the  following  form: 

Total  Amount    trans-  Checks 

amount  ferred  each  day  charged 

deposited  to     Treasurer's  back   each 

Day        each  day.  general  account.  day.          Balance 

Balance  from  last  month's  account 

1         

2  

Etc. 

Quarterly  account. 

17.  On  Form  79  the  balance  in  the  collection  account  should 
be  included  in  item  9  as  part  of  the  balance  due  the  United 

1217 


states  and  interlined  in  the  analysis  of  the  balance  (at  the 
foot  of  the  account)  as  "Uncollected  checks." 

DANIEL  C.  ROPER, 
Approved :  Commissioner. 

W.  G.  McADOO, 

Secretary. 


(T.  D.  2668.) 


Salaries  received  under  funds  of  Smith-Lever  Act  of  May  8, 
1914,  as  taxable  income. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  March  9,  1918. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

Section  1200  of  the  Act  of  October  3,  1917,  amending  Section 
4  of  the  Act  of  September  8,  1916,  provides,  in  part,  that  the 
following  income  shall  be  exempt  from  tax: 

"The  compensation  of  all  officers  and  employes  of  a 
State,  or  any  political  subdivision  thereof,  except  when 
such  compensation  is  paid  by  the  United  States  Govern- 
ment." 

The  Smith-Lever  Act  of  May  8,  1914,  makes  provision  for 
extending  the  benefits  of  the  Act  of  Congress  approved  July 
2,  1862  (12  Stat.  503),  and  the  Act  approved  August  30,  1890 
(26  Stat.  417).  Under  the  aforesaid  Act  certain  colleges  were 
established  in  the  several  States  and  supported  by  the  income 
from  lands  deeded  to  the  States  for  that  purpose.  The  colleges 
receiving  the  benefits  of  the  two  earlier  Acts  and  of  the  Smith- 
Lever  Act  are  controlled  by  States.  The  funds  available  under 
the  Smith-Lever  Act  are  appropriated  by  State  legislatures  to 
the  colleges  to  be  benefited  thereby.  The  funds  appropriated 
by  the  Federal  Government  are  paid  directly  into  the  State 
treasuries  as  any  other  subventions  by  the  Federal  Govern- 
ment. They  lose  their  identity  as  funds  of  the  United  States 
by  being  paid  to  the  States. 

There  may  be  considerable  difference  between  the  different 
States  in  the  control  and  government  of  the  colleges  receiving 
the  benefits  of  the  Act.  If  the  organization  of  the  college  is  one 
which  belongs  to  the  State  and  which  the  State  governs,  the 
legislature  may  vacate  offices,  elect  new  professors  and  do 
whatever  it  thinks  necessary  in  the  management  of  the  college. 
(Head  vs.  Univ.,  19  Wall.  526).  If,  however,  the  colleges  are 
governed  by  trustees  who  are  not  directly  responsible  to  the 
State  legislatures,  the  employes  of  the  college  receiving  sal- 
aries paid  in  part  from  Smith-Lever  funds  are  not  employes 
of  the  State,  and  accordingly  are  not  exempt  from  tax  on  the 
ground  that  they  are  employes  of  the  State. 

Where  the  employes  of  universities  receiving  salaries  paid  in 
part  or  in  whole  from  Smith  Lever  funds  are  officers  or  em- 
ployes of  a  State,  they  are  not  required  to  include  in  their 
income  tax  returns  as  taxable  income  the  salaries  so  received. 

DANIEL  C.  ROPER, 
Approved :  Commissioner. 

W.  G.  McADOO, 

Secretary  of  the  Treasury. 

1218 


(T.  D.  2669.) 

Revision  of  T.  D.  2386  requiring  Dutch  Administration  Offices 
as  the  registered  but  not  the  actual  owners  of  stock  of 
domestic  or  other  resident  corporations  in  the  United 
States  to  disclose  the  identity  of  the  actual  owners  of 
said  stock  for  the  purposes  of  the  withholding  provisions 
of  Section  13  (f),  Act  of  September  8,  1916,  as  amended 
by  the  Act  of  October  3,  1917. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  March  9,  1918. 

To  Collectors  of  Internal  Revenue: 

Dutch  Administration  Offices,  being  nonresident  alien  cor- 
porations not  engagged  in  business  or  trade  in  the  United  States 
and  not  having  an  office  or  place  of  business  therein,  and  be- 
ing the  registered  owners  of  stock  of  domestic  or  resident 
corporations  in  the  United  States,  are  prima  facie  liable  for 
the  normal  income  tax  on  income  derived  from  dividends  upon 
the  capital  stock  or  from  the  net  earnings  of  the  aforesaid 
domestic  or  other  resident  corporations  in  the  United  States 
and  to  having  the  tax  reducted  and  withheld  from  such  income 
under  Section  13  (f).  Act  of  September  8,  1916,  as  amended 
by  the  Act*  of  October  3,  1917. 

It  appearing  that  the  Dutch  Administration  Offices,  while 
the  registered  owners  of  stock  as  aforesaid,  are  not  the  actual 
owners  thereof,  but  that  they  have  issued  their  oearer  cer- 
tificates, with  coupons  attached,  against  said  stock  and  that 
the  dividends  on  said  stock  are  collected  for  the  account  of 
the  holders  of  said  bearer  certificates  and  that  the  relation  sus- 
tained by  said  Dutch  Administration  Offices  to  the  said  bearer 
certificate  holders  is  that  of  fiduciary;  for  the  purposes  of 
administration  under  the  withholding  provisions  of  Section 
13  (f).  Act  of  September  8,  1916,  as  amended  by  the  Act  of 
October  3,  1917,  the  respective  Dutch  Administration  Offices 
may  each  appoint  an  agent  or  agents  in  the  United  States  and 
give  notice  of  that  fact  by  filing,  in  duplicate,  with  each  cor- 
poration issuing  the  stock  so  held  by  said  Dutch  Administra- 
tion Office,  a  notice  in  substantially  the  following  form,  to  be 
signed  by  the  proper  executive  officer: 

You  are  hereby  advised  that 

(Name  and  address  of  the  Dutch  Administration  Office) 

the  registered  owner  of  stock  in has  appointed 

(Issuing  corporation) 

whose 

(Name  of  agent) 

address  is ,  as  its 

agent  in  the  United  States;  and  that  the  undersigned  and  said 
agent  will  not  pay  any  of  the  dividends  received  by  them  to 
or  for  the  benefit  of  any  enemy  or  ally  of  enemy  of  tne  United 
States  of  America  as  defined  in  the  Trading  with  the  Enemy 
Act  of  October  6,  1917. 


Upon  receipt  of  notice  as  aforesaid,  the  debtor  or  issuing 
corporation  in  the  United  States  shall  pay  over  to  said  Dutch 

1219 


Administration  Office  or  its  agent  in  the  United  States  all 
taxes  previously  withheld  from  dividends  and  all  subsequent 
dividends  without  withholding  any  tax,  and  shall  forward  to 
the  Commissioner  of  Interhal  Revenue  one  copy  of  the  said 
notice  of  the  appointment  of  the  agent  in  the  United  States. 
It  will  be  necessary  to  file  this  notice  but  once,  unless  there 
shall  be  a  change  of  agent,  when  a  similar  notification  should 
be  given. 

When  it  shall  appear  that  a  Dutch  Administration  Office 
has  an  agent  in  the  United  States  and  when,  because  of  that 
showing,  dividends  of  domestic  or  other  resident  corporations 
in  the  United  States  shall  have  been  paid  to  it  or  its  agent 
without  withholding  of  tax,  said  Dutch  Administration  Oltice 
through  its  agent  in  the  United  States  will  be  required  to  make 
annual  return  thereof  in  duplicate  and  pay  the  normal  tax 
found  by  such  return  to  be  due,  as  follows:  (1)  Where  it  shall 
be  disclosed  by  ownership  certificates,  as  hereinafter  provided, 
that  the  actual  owner  of  any  said  stock  on  which  such  divi- 
dends are  paid  is  a  nonresident  alien  corporation,  and  (2) 
Where  there  is  no  disclosure  of  the  actual  owners  of  any  of 
said  stock  by  such  ownership  certificates.  No  return  need  be 
made  nor  tax  withheld  and  paid  for  any  nonresident  alien 
individual,  firm  or  partnership  unless  and  until  the  agent  in 
the  United  States  shall  be  so  instructed  by  the  Commissioner 
of  Internal  Revenue. 

Required  returns  shall  be  made  in  duplicate  and  filed  with 
the  Collector  of  Internal  Revenue  for  the  district  in  which  the 
agent  has  its  office  or  principal  place  of  business,  and  shall  be 
in  the  following  form: 

Form — ,  United  States  Internal  Revenue. 

Dutch  Administration  Offices — Income  tax  return  on  dividends 

received  from  domestic  and  resident  alien  corporations. 

For  the  year  ended  December  31,  19 — . 

Filed    by 

(Name  and  adaress  of  Dutch  Administration  Office.) 

I    (We) of 

(Name  of  Agent).  (Address). 

duly  appointed  agent  in  the  United  States  of  said 

do  hereby  declare  that  herewith  are 

(Name  of  Dutch  Administration  Office). 

enclosed  all  ownership  certificates  received  during  the  year 
above  mentioned,  disclosing  the  actual  owners  of  the  stock 
registered  in  its  name  in  the  following  domestic  and  resident 
alien  corporations  and  covering  dividends  received  and  paid 
during  said  year: 

Name  of  Corporation  Address  in  full  Dividends  Received 


Balance  from 
last  return 


Total    

1220 


That  the  following  is  a  true  and  complete  return  of  all  pay- 
ments so  disclosed  of  said  dividends,  and  the  normal  tax  with- 
held and  to  be  paid  thereon: 

Dividends  received  and  balance  from  last  return  as  above  $ 

Dividends  paid  as  per  enclosed  certificates  Tax 

To  nonresident  alien  individuals  and  firms $ 

(On  which  no  tax  is  due  from  Dutch  Admin.  Office) 

To  nonresident  alien  corporations $ $ 

(On  which  tax  at  2%  is  to  be  paid). 

To  owners  not  disclosed $ $ 

(On  which  tax  at  2%  is  to  be  paid). 

Balance  unpaid  to  be  accounted  for  in  next  return 

Total  tax  to  be  paid $ 

I  certify  that  no  part  of  the  dividends  shown  in  the  above 
statement  was  paid  to  or  for  the  benefit  of  any  enemy  or  ally 
of  enemy  of  the  United  States  of  America  as  defined  in  the 
Trading  with  the  Enemy  Act  of  October  6,  1917. 


Agent. 

To 

(Collector). 

District  of 


This  item  refers  to  amount  of  dividends  received  but  not 
paid  over  to  actual  owners  at  time  last  return,  if  any,  was 
rendered. 

Said  returns  shall  be  printed  on  yellow  colored  paper  cor- 
responding in  weight  and  texture  to  white  writing  paper  21x32, 
about  40  pounds  to  the  ream  of  500  sheets,  and  shall  be  8Va 
inches  wide  and  14  inches  from  top  to  bottom. 

The  ownership  certificates  for  disclosing  the  actual  owners 
of  stock  shall  be  in  Form  1087  Revised,  prescribed  by  T.  D. 
2401;  provided,  however,  that  the  ownership  certificates  form- 
erly permitted  to  be  used  by  the  several  Dutch  Administra- 
tion Offices,  and  executed  prior  to  the  date  of  this  decision, 
may  be  filed  with  their  above  provided  returns  and  made  the 
basis  thereof.  This  certificate  shall  be  filed  with  the  Dutch 
Administration  Office  by  the  person,  firm  or  corporation,  etc., 
or  their  agent,  for  whom  and  in  whose  behalf  it  acts.  A  cer- 
tificate once  filed,  disclosing  said  actual  owner,  will  be  held  to 
answer  for  all  the  requirements  under  this  Regulation  until 
the  ownership  shall  change,  when  it  will  be  necessary  to  dis- 
close the  actual  owner  as  in  the  first  instance.  All  such  cer- 
tificates filed  with  the  several  Dutch  Administration  Offices 
shall  be  forwarded  to  their  respective  agents  in  the  United 
States  to  be  filed  with  their  return. 

T.  D.  2386  is  revised  accordingly  and  all  Treasury  Decisions 
in  conflict  herewith  are  hereby  superseded  and  repealed. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 
Approved: 
W.  G.  McADOO, 
Secretary  of  the  Treasury. 


1221 


(T.  D.  2670.) 
Information  at  source. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  March  11,  1918. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

Section  1211  of  the  War  Revenue  Act  amends  the  Act  of 
September  8,  1916,  by  adding  to  Part  III,  Section  No.  28,  which 
provides : 

"That  all  persons,  corporations,  partnerships,  associa- 
tions, and  insurance  companies,  in  whatever  capacity  act- 
ing, including  lessees  or  mortgagors  of  real  or  personal 
property,  trustees  acting  in  any  trust  capacity,  executors, 
administrators,  receivers,  conservators,  and  employers, 
makihg  payment  to  another  person,  corporation,  partner- 
ship, association,  or  insurance  company,  of  interest,  rent, 
salaries,  wages,  premiums,  annuities,  compensation,  re-  • 
muneration,  emoluments,  or  other  fixed  or  determinable 
gains,  profits,  and  income  *  *  *  of  $800  or  more  in 
any  taxable  year,  or,  in  the  case  of  such  payments  made 
by  the  United  States,  the  officers  or  employes  of  the 
United  States  having  information  as  to  such  payments 
and  required  to  make  returns  in  regard  thereto  by  the 
regulations  hereinafter  provided  for,  are  hereby  authorized 
and  required  to  render  a  true  and  accurate  return  to  the 
Commissioner  of  Internal  Revenue,  under  such  rules  and 
regulations  and  in  such  form  and  manner  as  may  be  pre- 
scribed by  him,  with  the  approval  of  the  Secretary  of  the 
Treasury,  setting  forth  the  amount  of  such  gains,  profits, 
and  income,  and  the  name  and  address  of  the  recipient  of 
such  payment:     *    *    *" 

This  section  makes  it  mandatory  for  all  persons,  corpora- 
tions, partnerships,  and  associations  or  insurance  companies, 
in  whatever  capacity  acting,  including  lessees  or  mortgagors 
of  real  or  personal  property,  trustees  acting  in  any  trust 
capacity,  executors,  administrators,  receivers,  conservators, 
and  employers,  making  payments  of  $800  or  more  of  income 
to  another  person,  corporation,  partnership,  association,  or  in- 
surance company,  in  the  calendar  year  1917,  to  file  information 
return  of  such  payments  in  accordance  with  rules  and  regula- 
tions prescribed  by  the  Commissioner  of  Internal  Revenue, 
with  the  approval  of  the  Secretary  of  the  Treasury,  or  become 
liable  for  a  penalty  of  not  less  than  $20  or  more  than  $1,000. 
To  this  end  certificate,  form  No.  1099,  and  letter  of  transmittal, 
form  No.  1096,  have  been  provided  for  use  in  reporting  such 
payments. 

Under  the  above  authority  the  following  instructions  are 
issued  for  the  guidance  of  all  concerned: 

PAYMENTS  MADE  WHICH  DO  NOT  REQUIRE  REPORTS 
OF  INFORMATION. 

Payments  made  to  corporations,  associations,  or  insurance 
companies  for  the  year  1917. 

Bills  paid  for  merchandise,  telegrams,  telephone,  freight, 
storage,  and  similar  charges. 

Bills  paid  to  employes  for  board  and  lodging  while  traveling 
xinder  orders  or  when  employe  is  employed  on  a  salary  basis. 


Payments  of  premiums  made  to  insurance  companies  for 
annual  protection. 

Annuities  representing  return  of  corpus  or  capital. 

Fees  to  lawyers,  doctors,  and  similar  payments,  aggregating 
less  than  $800  for  the  year. 

Interest  accrued  on  bank  deposits,  before  it  has  been  passed 
to  the  credit  of  the  individual  depositor. 

Salary,  wages,  and  other  compensations  for  services  rendered 
in  December,  1917,  but  paid  in  1918,  unless  the  amount  was 
fully  due  and  passed  to  the  credit  of  the  individual  in  Decem- 
ber, 1917. 

Payments  of  rent  made  to  real  estate  agents.  (But  agent 
must  report  payments  to  landlord,  if  the  same  amounts  to 
$800  or  more  during  1917.) 

.  Payments  made  to  employes  in  factories  where  the  brass 
check  or  number  system  was  in  use  during  1917,  and  a  record 
of  sufficient  detail  does  not  exist  and  cannot  be  obtained  be- 
cause employes  are  not  longer  in  the  employ  of  the  company. 
However,  in  all  such  cases  an  accounting  system  must  be  in- 
stalled that  will  enable  such  employers  to  keep  an  accurate 
check  so  that  full  information  can  be  given  in  the  future. 

"Living  quarters"  referred  to  in  paragraph  235,  Regulations 
No.  33  (revised)  are  quarters  furnished  for  the  benefit  and  con- 
venience of  employes  only.  When  living  quarters,  such  as 
camps,  are  furnished  for  the  convenience  of  the  employer  only, 
the  cost  need  not  be  added  to  the  compensation  of  the  em- 
ploye. 

In  the  case  of  an  employer  having  a  large  number  of  em- 
ployes who  are  moved  from  place  to  place  as  the  exigencies 
of  the  service  require,  and  who  consequently  has  no  complete 
record  of  annual  payments  to  them  at  any  one  place,  the  salary 
of  two  representative  months  may  be  taken  to  establish  a  fair 
monthly  wage,  and  unless  yearly  payment  based  on  this  esti- 
mate in  the  case  of  an  employe  amounts  to  $800  or  more  no 
return  of  payments  to  such  employe  is  required  for  1917. 

Payments  made  by  branches  of  business  houses  located  in 
foreign  countries  to  alien  employes  serving  in  forgein  countries 
need  not  be  reported. 

Returns  of  information  will  not  be  required  from  disbursing 
officers  of  payments  made  to  sailors,  soldiers,  or  civilian  em- 
ployes of  the  United  States  Government,  the  records  in  these 
cases  being  available  to  the  Treasury  Department  at  any  time. 

GENERAL  INSTRUCTIONS. 

Heads  of  branch  offices  and  sub -contractors  employing  labor 
and  keeping  the  only  complete  record  of  payments  snould  file 
the  returns  of  information  in  regard  to  such  pa-yments  direct 
with  the  Commissioner  of  Internal  Revenue,  Sorting  Division, 
Washington,  D.  C.  When  the  record  is  kept  of  payments  at 
both  the  main  office  and  the  branch  office  the  return  should  be 
filed  by  the  main  office. 

Where  no  address  is  available,  the  last  known  post  office 
address  must  be  given.  Street  and  number  should  be  given 
when  possible. 

Information  in  regard  to  whether  an  employe  is  single,  head 
of  a  family,  or  married,  should  be  given  when  possible. 

DANIEL  C.  ROPER, 
Approved :  Commissioner. 

W.  G.  McADOO, 

Secretary  of  the  Treasury. 


(T.  D.  2671.) 

Corporation  Tax  Act  of  August  5,  1909 — Decision  of  United 
States  Circuit  Court  of  Appeals — 

1.  Interest  on  Bonds — 

Interest  on  bonds  or  other  indebtedness  is  an  allowable  de- 
duction from  gross  income  only  to  an  amount  paid  upon 
bonded  or  other  indebtedness  not  exceeding  the  corporation's 
paid-up  capital  gtock. 

2.  Organized  for  Profit — 

The  plaintiff  was  incorporated  to  provide  and  operate  a 
terminal  for  certain  railroads;  profit  was  one  of  the  sub- 
stantial objects  of  its  organization  and  that  is  enough  to 
bring  it  within  the  statute. 

3.  Judgment    of   District   Court,    District    of    Massachusetts 

(T.  D.  2428),  is  afiirmed. 

Treasury  Department, 
Office  of  the  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

The  appended  opinion  of  the  United  States  Circuit  Court  of 
Appeals  for  the  First  Circuit  in  the  case  of  the  Boston  Termi- 
nal Company  vs.  James  D.  Gill,  Collector,  is  published  for  the 
information  of  internal  revenue  officers  and  others  concerned. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 


(T.  D.  2672.) 

Treasury  Department, 
Office  of  the  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

The  provisions  of  T.  D.  2581,  dated  November  10,  1917, 
shall  apply  to  returns  by  American  citizens  residing  or  travel- 
ing abroad,  including  persons  in  the  military  or  naval  estab- 
lishments of  the  United  States  stationed  or  on  duty  beyond 
the  limits  of  the  States  and  the  Territories  of  Hawaii  and 
Alaska. 

Any  such  person  filing  his  return  after  April  1,  1918,  but  on 
or  before  October  1,  1918,  embodying  therein  or  attaching 
thereto  a  written  statement  showing  that  he  comes  within  the 
classes  designated  by  T.  D.  2581,  is  relieved  of  the  necessity  of 
filing  the  supporting  affidavit  required  by  that  decision. 

The  above  ruling  also  applies  to  War  Excess  I^rofits  Tax 
returns. 

DANIEL  C.  KOPER, 
Commissioner  of  Internal  Revenue. 

Approved  March  16,  1918. 

1224 


(T.  D.  2673.) 

Extending  time  for  filing  returns  of  income  by  or  for  enemies 
and  allies  of  enemies  as  defined  in  the  Trading  with  the 
Enemy  Act. 

Treasury  Department, 
Office  of  the  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  March  18,  1918. 

To  Collectors  of  Internal  Revenue,  Internal  Revenue  Agents 
and  Others  Concerned: 
An  extension  of  time  is  hereby  granted  for  such  period  as 
may  be  necessary,  not  exceeding  ninety  days  after  proclama- 
tion by  the  President  of  the  United  States  of  the  end  of  the 
war  with  Germany,  for  filing  returns  of  income  for  1917  and 
subsequent  years  under  Section  6(c),  8(b)  (c)  and  13(b)  (c) 
of  the  Income  Tax  Act  of  September  8,  1916,  as  amended,  and 
under  the  War  Income  Tax  Act  of  October  3,  1917,  by  or  for 
enemies  or  allies  of  enemies,  as  defined  by  Section  2  of  the 
Trading  with  the  Enemy  Act  of  October  6,  1917,  not  holding 
a  license  granted  under  the  provisions  of  said  Act;  provided, 
however,  (1)  that  return  of  information  shall  be  made  in 
compliance  with  Section  28  of  the  Income  Tax  Act,  and  (2) 
that  all  persons  required  to  withhold  the  normal  tax  pur- 
suant to  Sections  9  (b)  and  13  (e)  (f)  of  the  Income  Tax 
Act  shall  make  due  return  and  payment  thereof  for  the  period 
ending  October  6,  1917,  in  respect  of  income  paid  over  before 
such  date  to  or  for  any  such  enemies  or  allies  of  enemies,  and 
further  (3)  that,  except  for  such  payment,  all  persons  who 
on  October  6,  1917,  had,  or  since  have  had,  or  may  hereafter 
have,  control  of  any  money  or  other  property  for  any  such 
enemy  or  ally  of  enemy,  or  who  on  October  6,  1917,  were,  or 
since  have  been,  or  may  hereafter  be,  indebted  to  any  such 
enemy  or  ally  of  enemy,  (a)  shall  hold  and  deliver  all  said 
money  and  property  in  all  respects  subject  to  said  Trading 
with  the  Enemy  Act  and  to  the  orders  of  the  President  of  the 
United  States  and  of  the  alien  property  custodian  thereunder, 
and  (b)  shall  in  due  course  file  returns  of  income  in  respect 
of  all  said  money  and  property  for  such  period  as  may  elapse 
or  have  elapsed  prior  to  the  actual  delivery  of  said  money  and 
property  to  said  alien  property  custodian. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 


(T.  D.  2674.) 

AMENDED  INSTRUCTIONS  RELATIVE  TO  THE  REPORT- 
ING OF  INTEREST  ALLOWED  ON  PAYMENTS  OF 
INCOME  AND  EXCESS  PROFITS  TAXES. 

Treasury  Department, 
Office  of  the  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 
To  Collectors  of  Internal  Revenue: 

T.  D.  No.  2622  is  amended  as  follows: 

The  amount  of  interest  allowed  on  income  and  excess  profits 
taxes  paid  in  advance  should  not  be  entered  on  the  receipt 
form,  but  only  ou  the  face  of  the  return.     The  date  from 

1225 


which  interest  is  allowed  should  also  be  entered  on  the  re- 
turn, if  different  from  the  date  of  deposit  of  the  remittance. 
The  amount  of  interest  allowed  must  be  entered  on  the  orig- 
inal notice  of  assessment  when  it  is  paid,  and  also  on  the 
filing  the  supporting  aflSdavit  by  that  decision. 

Interest  allowed  on  advance  payments  should  not  be  entered 
on  the  assessment  list.  Interest  allowed  on  assessed  taxes 
should  be  entered  in  the  "remarks"  column  of  the  list.  A 
schedule  of  interest  allowances  should  be  submitted  for  as- 
sessed taxes  only. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved  March  18,  1918. 


(T.  D.  2677.) 

Cases  in  which  partnerships  may  file  returns  on  basis  of  fiscal 

year. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

To  Collectors  of  Internal  Revenue,  Revenue  Agents  and  Others 
Concerned: 

In  any  case  where  a  partnership  keeps  its  books  upon  the 
basis  of  a  fiscal  year  ending  on  the  last  day  of  any  month, 
other  than  December  31,  and  where  as  a  result  it  is  imprac- 
ticable to  make  a  satisfactory  return  for  purposes  of  the 
excess  profits  tax  upon  the  basis  of  the  calendar  year,  the 
Collector  of  Internal  Revenue  may  accept  a  return  upon  the 
basis  of  its  fiscal  year  even  though  notice  was  not  given 
within  the  time  prescribed  in  T.  D.  2632,  dated  January  21, 
1918. 

If  in  any  such  case  a  partnership  has  already  filed  a  return 
upon  the  basis  of  the  calendar  year  the  collector  may  accept 
an  amended  return  upon  the  basis  of  its  fiscal  year. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  March  23,  1918. 
WM.  G.  McADOO, 

Secretary  of  the  Treasury. 


(T.  D.  2678.) 

Corporations  may  distribute  earnings  for  an  accounting  period 
ratably  over  the  period  for  the  purpose  of  ascertaining 
earnings  to  date  of  dividend  payment  within  such  period. 

Treasury  Department, 
Office  of  Commissioner'  of  Internal  Revenue, 
Washington,  D.  C. 
To  Collectors  of  Internal  Revenue: 

In  view  of  the  difficulty  which  many  corporations  are  hav- 
ing in  determining  whether  earnings  in  1917  up  to  the  date 
of  a  dividend  payment  in  that  year  were  sufficient  to  cover 

1226 


the  dividend  paid,  it  is  held  that  in  any  case  where  there 
is  doubt  upon  the  point,  corporations  may  distribute  the 
earnings  for  the  accounting  period  within  which  the  dividend, 
or  dividends,  in  question  were  paid,  ratably  over  the  period, 
for  the  purpose  of  determining  the  amount  of  the  earnings 
during  the  period  up  to  the  date  of  payment.  This  should 
be  read  in  connection  with  instructions  set  forth  in  T.  D.  2659. 

DANIEL  C.  ROPER, 
Commissioner. 
Approved:  March  23,  1918. 
WM.  G.  McADOO, 
Secretary  of  the  Treasury. 


(T.  D.  2679.) 

Income  Tax  Payments:    Five  Per  Cent  Penalty  and  Interest. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 
To  Collectors  of  Internal  Revenue: 

By  Section  9(a)  of  the  Act  of  September  8,  1916,  it  is  pro- 
vided with  respect  to  the  income  taxes  of  individuals,  as 
follows : 

"and  to  any  sum  or  sums  due  and  unpaid  after  the 
fifteenth  day  of  June  in  any  year,  and  for  ten  days 
after  notice  and  demand  thereof  by  the  collector, 
there  shall  be  added  the  sum  of  five  per  centum  on 
the  amount  of  tax  unpaid,  and  interest  at  the  rate  of 
one  per  centum  per  month  upon  said  tax  from  the 
time  the  same  became  due,  except  from  the  estates  of 
insane,  deceased,  or  insolvent  persons." 

By  Section  14(a)  of  said  Act  it  is  provided  with  respect  to 
the  income  taxes  of  corporations,  joint  stock  companies, 
associations  and  insurance  companies,  as  follows: 

"and  to  any  sum  or  sums  due  and  unpaid  after  the 
fifteenth  day  of  June  in  any  year,  or  after  one  hun- 
dred and  five  days  from  the  date  on  which  the  return 
of  income  is  required  to  be  made  by  the  taxpayer,  and 
after  ten  days'  notice  and  demand  thereof  by  the  col- 
lector, there  shall  be  added  the  sum  of  five  per  centum 
on  the  amount  of  tax  unpaid  and  interest  at  the  rate 
of  one  per  centum  per  month  upon  said  tax  from  the 
time  the  same  becomes  due." 

By  Section  212  of  the  Act  of  October  3,  1917,  it  is  provided 
with  respect  to  excess  profits  taxes  that 

"all  provisions  of  Title  I  of  such  Act  of  September 
eighth,  nineteen  hundred  and  sixteen,  as  amended  by 
this  Act,  relating  to  returns  and  payment  of  the  tax 
herein  imposed,  including  penalties,  are  hereby  made 
applicable  to  the  tax  imposed  by  this  title." 

By  reason  of  absence  in  foreign  countries  or  on  account  of 
traveling  abroad,  or  of  absence  from  their  homes  or  places  of 
business  in  the  military  or  other  service  of  the  country,  and 

1227 


the  consequent  delay  in  receiving  mail,  it  is  impossible  foi 
many  individuals  to  receive  notice  and  demand  on  Form  17 
and  make  payment  of  the  taxes  assessed  thereon  so  that  such 
taxes  can  be  received  by  the  collector  within  the  ten-day 
period  following  June  fifteenth,  or  within  the  ten-day  period 
following  the  service  of  notice. 

You  are  requested  therefore  to  enter  on  Form  17,  as  the 
date  on  which  such  assessed  tax  becomes  due  and  payable,  as 
near  as  possible,  a  date  ten  days  subsequent  to  the  time  that 
said  notice  should  be  received  in  the  ordinary  course  of  the 
mails  by  the  taxpayer,  and  where  it  appears  that  the  full 
amount  of  tax  assessed  was  placed  in  the  mails  within  the 
ten-day  period  after  the  receipt  of  Form  17,  or  in  case  notice 
so  sent  is  not  delivered  in  due  time  by  reason  of  delay  in  the 
mail  and  satisfactory  evidence  of  that  fact  is  furnished  the 
penalty  and  interest  in  such  cases  will  not  be  collected.  This 
ruling  applies  to  excess  profits  taxes  as  well  as  to  income 
taxes. 

Where  the  office  of  a  corporation,  joint  stock  company, 
association  or  insurance  company  to  which  the  collector  ad- 
dresses the  notice  and  demand  for  income  taxes  or  income  and 
excess  profits  taxes  is  situated  so  far  from  the  collector's 
office  that  normal  conditions  render  it  impossible  for  pay- 
ment to  reach  the  collector  within  ten  days  of  the  mailing  of 
notice  and  demand,  the  procedure  herein  outlined  with  respect 
to  individuals  will  govern  with  respect  to  corporations,  joint 
stock  companies,  associations  and  insurance  companies. 

Except  as  herein  indicated  the  five  per  cent  penalty  will  be 
imposed  where  there  is  a  failure  of  the  tax  payment  to  reach 
the  collector  within  ten  days  of  the  day  of  mailing  by  the 
collector  of  the  notice  and  demand. 

Treasury  Decision  2028  is  hereby  repealed. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  March  23,  1918. 
WM.  G.  McADOO, 

Secretary  of  the  Treasury. 


(T.  D.  2683.) 
Application  of  Articles  18,  23  and  24  of  Regulations  No.  41. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

To  Collectors  of  Internal  Revenue,  Revenue  Agents  and  Others 
Concerned : 

1.  Article  18  of  Regulations  No.  41  (which  provides  for  a 
constructive  capital  for  the  purpose  of  applying  the  graduated 
rates  prescribed  by  Section  201  of  the  Act  of  October  3,  1917, 
in  cases  in  which  the  deduction  is  determined  under  Section 
210)  applies  only  to  cases  in  which  the  Secretary  of  the  Treas- 
ury is  unable  satisfactorily  to  determine  the  invested  capital 
for  the  taxable  year  (including  cases  arising  under  Article  62 
of  Regulations  No.  41). 

If  the  deduction  is  so  determined  only  upon  the  ground  that 
the  Secretary  of  the  Treasury  is  unable  satisfactorily  to  deter- 

1228 


mine  the  amount  of  invested  capital  for  the  pre-war  period, 
but  the  invested  capital  for  the  taxable  year  can  be  satisfac- 
torily determined,  the  graduated  rates  prescribed  by  Section 
201  will  be  applied  upon  the  basis  of  such  actual  invested 
capital  for  the  taxable  year  and  not  upon  the  basis  of  a  con- 
structive capital. 

2.  If  neither  the  income  nor  the  invested  capital  for  the 
pre-war  period  can  be  satisfactorily  determined  by  the  Secre- 
tary of  the  Treasury,  the  deduction  will  be  computed  under 
Section  205  (Article  23  of  Regulations  No.  41)  if  the  invested 
capital  for  the  taxable  year  can  be  satisfactorily  determined, 
but  if  such  invested  capital  for  the  taxable  year  cannot  be 
satisfactorily  determined  the  deduction  will  be  computed  as 
provided  by  Section  210  (Article  24  of  Regulations  No.  41). 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  March  26,  1918. 
W.  G.  McADOO, 

Secretary  of  the  Treasury. 


(T.  D.  2686.) 

Corporation  Excise  Tax— Decision  of  Court — 

1.  Gross  Income. 

A  corporation  which  did  a  brokerage  business  and  bought 
securities  for  its  customers,  who  paid  only  a  part  of  the 
purchase  price,  paying  interest  on  balances,  the  corporation 
also  paying  for  the  securities  purchased  only  part  of  the 
purchase  price  and  owing  balances  on  which  it  paid  interest, 
including  in  return  of  gross  income  the  difference  between 
the  interest  received  and  the  interest  paid,  made  incorrect 
return. 

2.  Interest. 

The  interest  received  by  plaintiff  from  its  customers 
should  be  included  in  gross  income.  In  determining  net  in- 
come, interest  can  be  deducted  only  to  an  amount  not 
exceeding  the  paid-up  capital  stock  outstanding  at  the  close 
of  the  year. 

3.  Judgment  affirmed. 

The  judgment  of  the  United  States  District  Court  (246 
Fed.,  270;  T.  D.  2441)  is  affirmed. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

The  appended  decision  of  the  United  States  Circuit  Court  of 
Appeals,  in  the  case  of  Altheimer  and  Rawlings  Invesraent 
Company  v.  Allen,  collector,  is  published  for  the  information 
of  internal  revenue  officers  and  others  concerned. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved  April  1,  1918: 
W.  G.  McADOO, 

Secretary  of  the  Treasury. 

1229 


United   States   Circuit  Court  of  Appeals,  Elgrhth   Circuit. 
4918. 

December   term,   1917. 
In  error  to  the  District  Court  of  the  United  States  for  the 

Eastern  District  of  Missouri. 
Altheimer  and  Rawlings  Investment  Company,  plaintiff  in 
error,  v.  B.   B.  Allen,  United   States  Collector  of  In- 
ternal   Revenue   for   the    First   District    of   Missouri, 
defendant  in  error. 
Before   Hook    and    Smith,    Circuit   Judges,    and    Trieber, 
District  Judge. 
Hook,  Circuit  Judge,  delivered  the  opinion  of  the  court: 

This  is  an  action  by  the  Investment  company  to  recover 
from  the  collector  of  internal  revenue  an  alleged  excess  of 
taxes  assessed  for  the  years  1909,  1910  and  1911  under  the 
corporation  tax  act  of  August  5,  1909  (36  Stat.,  11,  sec.  38), 
and  paid  under  protest.  The  trial  court  decided  against 
the  plaintiff. 

The  facts  were  stipulated.  The  plaintiff  is  a  Missouri 
corporation  engaged  in  a  stock  and  bond  brokerage  busi- 
ness, with  a  paid-up  capital  of  $300,000.  The  tax  imposed 
by  the  statute  was  an  annual  excise  tax  equivalent  to 
1  per  cent  upon  the  entire  net  income  of  the  corporation 
in  excess  of  $5,000  received  by  it  from  all  sources  durinjf 
the  year.  See  Anderson  v.  Forty-two  Broadway  Co.  (2^ 
U.  S.,  60).  The  statute  provides  that  the  net  income  shall 
be  ascertained  by  deducting  from  the  gross  income  from 
all  sources  (1)  expenses,  (2)  losses,  and  (3)  Interest  ac- 
tually paid  on  indebtedness  not  exceeding  the  amount  of 
paid-up  capital  outstanding  at  the  close  of  the  year.  The 
controversy  is  over  the  deduction  under  the  third  clause 
for  interest  paid  on  indebtedness. 

The  stipulation  recites  that  plaintiff's  business  consisted 
In  part  of  the  purchase  for  customers  of  bonds  and  other 
securities  which  it  carried  for  them  on  margin  or  part 
payment.  It  charged  and  received  from  them  interest  on 
the  unpaid  balances.  In  buying  the  securities  for  its  cus- 
tomers plaintiff  itself  paid  but  part  of  the  price  "on  said 
purchases"  and  paid  interest  on  the  balances  it  owed.  In 
these  transactions  the  interest  received  by  plaintiff  from 
its  customers  exceeded  the  interest  it  paid.  In  making  its 
tax  returns  plaintiff  deducted  from  the  interest  it  received 
the  entire  amount  of  the  interest  it  paid  and  listed  the 
balance  as  gross  income.  The  Commissioner  of  Internal 
Revenue  in  reforming  the  returns  listed  all  interest  re- 
ceived as  gross  income  and  limited  the  amount  of  deduc- 
tion for  interest  paid  according  to  the  statutory  restric- 
tion in  respect  of  the  amount  of  plaintiff's  capital  stock. 

The  plaintiff  contends  that  when  it  borrowed  money  to 
carry  the  securities  for  its  customers  the  indebtedness  it 
incurred  was  theirs  and  that  the  interest  it  received  from 
them  on  their  own  unpaid  balances  was,  so  far  as  re- 
quired, paid  for  them  on  such  indebtedness.  In  other 
words,  it  is  urged  in  effect  that  plaintiff  was  a  mere  con- 
duit for  the  transmission  of  sufficient  of  the  interest  re- 
ceived from  Its  customers  to  discharge  the  Interest  accru- 
ing on  the  sums  it  borrowed,  and  hence  only  the  excess 
remaining  in  its  hands  was  Income.  It  is  recited  In  the 
stipulation  that  plaintiff  owed  and  paid  interest  on  part 
of  the  purchase  price  "on  said  purchases"  so  carried  by 
it  for  its  customers.  The  recital  is  ingeniously  framed, 
but  it  does  not  justify  the  assumption  that  plaintiff's 
extensive  business  was  conducted  otherwise  than  accord- 
ing to  the  familiar  customs  of  stock  and  bond  brokers. 
The  suggestion  upon  which  plaintiff's  contention  rests 
that  it  bought  the  stocks  and  bonds  on  time  and  that  the 
sellers  extended  credit  to  plaintiff  as  agent  for  its  cus- 
tomers and  received  interest  from  them  indirectly  is  quite 
Inadmissible.  In  the  usual  course  of  the  business  which  It 
should  be  assumed  the  plaintiff  followed,  the  seller  of 
securities  Is  paid  in  full  by  the  broker  and  is  not  there- 
after Interested  in  the  relation  between  the  latter  and  his 
customer.  Doubtless  if  the  broker's  capital  is  insufficient 
to  carry  his  customers  he  borrows  money  from  time  to 
time  for  the  purpose,  and  in  that  sense  he  may  be  said 
to  borrow  "on  the  purchases."  But  the  borrowing  is  from 
any  available  financial  source  and  is  not  for  the  customer 
personally  but  is  In  the  broker's  own  behalf.  A  recog- 
nized source  of  profit  to  the  broker  is  In  the  difference 
between  the  interest  rate  he  charges  his  customers  and 

31330 


that  which  he  pays  on  moneys  borrowed  to  carry  them. 
He  deals  In  debits  and  credits  for  a  profit.  The  borrowing 
by  the  broker  supplements  the  capital  employed  in  his 
business,  and  in  the  case  of  a  corporation  subject  to  the 
excise  tax  the  deduction  from  gross  income  for  interest 
paid  on  its  indebtedness  is  limited  to  interest  on  an 
amount  of  indebtedness  not  exceeding  its  paid-up  capital 
stock  outstanding  at  the  close  of  the  year.  In  this  par- 
ticular the  plaintiff's  borrowing  to  carry  its  customers 
was  not  unlike  that  of  a  mercantile  corporation  whose 
capital  is  insufficient  for  the  volume  of  its  business.  It 
should  be  noted  that  this  case  arose  before  the  amend- 
ment of  October  3,  1913  (38  Stat.,  166.  Sec.  II.,  G.  b). 
The  judgment  is  affirmed. 


(T.  D.  2687.) 

Providing  for  the  Transmittal  of  Ownership  Certificates  in 
Which  Exemption  is  Claimed  by  Means  of  Information 
Return,  Form  1096. 

Treasury    Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  others  concerned: 

Where  a  debtor  corporation,  or  its  duly  authorized  withhold- 
ing agent,  has  made  no  payments  of  interest  to  nonresident 
alien  individuals,  or  foreign  corporations,  having  no  office  or 
place  of  business  in  the  United  States,  or  has  withheld  no  tax 
from  citizens  or  residents  of  the  United  States,  whether  or  not 
the  bonds  upon  which  such  interest  accrued  contain  a  tax-free 
covenant  clause,  the  exemption  certificates  filed  in  connection 
with  such  interest  payments,  shall  not  hereafter  be  forwarded 
to  Collectors  of  Internal  Revenue,  accompanied  by  a  return  on 
Form  1012,  Revised,  but  shall  be  transmtited  direct  to  the  Com- 
missioner of  Internal  Revenue  (Sorting  Division),  Washington, 
D.  C,  accompanied  by  a  return  on  Form  1096.  When  used  in 
this  connection.  Form  1096  shall  be  filed  monthly,  and  in  such 
cases,  this  office  will  not  require  that  the  return  be  sworn  to. 
The  number  of  exemption  certificates  thus  transmitted,  and 
the  total  amount  of  interest  paid  shall  be  entered  on  line  1  of 
the  return. 

In  all  cases,  however,  where  a  debtor  corporation  or  its  duly 
authorized  withholding  agent  has  withheld  the  tax  and  is  there- 
fore required  to  render  a  return  on  Form  1013,  Revised,  all 
certificates  received  shall  be  accounted  for  on  such  monthly 
leturn,  as  directed  by  the  instructions  thereon. 

All  instructions  issued  by  this  office  in  conflict  herewith,  are 
hereby  superseded  and  repealed. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  April  1,  1918. 
W.  G.  McADOO, 

Secretary  of  the  Treasury. 


1231 


(T.  D.  2688.) 

Procedure  under  which  Collectors   are  authorized  to  refund 
excessive  payments  of  Internal  Revenue  tax — 

Treasury    Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

To  Collectors  of  Internal  Revenue: 

Beginning  April  1,  1918,  there  will  be  advanced  to  each  Col- 
lector of  Internal  Revenue,  at  the  beginning  of  each  quarter 
of  the  fiscal  year,  out  of  the  appropriation  for  the  refundment 
of  internal  revenue  taxes,  a  sum  estimated  to  be  sufficient  for 
the  repayment  to  taxpayers  of  certain  excessive  collections,  as 
follows : 

1.  Collections  exceeding  the  tax  shown  by  the  return  of  the 
taxpayer  to  be  due. 

2.  Collections  exceeding  the  amount  of  tax  shown  by  the 
assessment  list  to  be  due. 

3.  Duplicate  payments  where: 

(a)  Both  are  made  in  advance  of  assessment; 

(b)  Both  are  made  after  assessment; 

(c)  One  is  made  before,  and  one  after  assessment. 

1.  Procedure  where  a  collection  has  exceeded  the  tax  shown 
in  the  taxpayer's  return  as  due. 

The  Collector  will  enter  on  the  assessment  list  the  full 
amount  paid,  and  in  the  ''Remarks"  column  of  the  list  will 
note  the  amount  of  the  excess. 

The  complete  data  regarding  the  excessive  collection  Is  then 
to  be  entered  on  the  schedule  of  Claims  for  Authority  to  Re- 
fund, Form  751.  The  "Paid,"  "Due,"  and  "Refundable  Ex- 
cess" columns  on  the  Form  will  be  totaled. 

Form  751  is  to  be  made  in  triplicate,  one  copy  to  be  retained 
by  the  Collector,  and  two  to  be  forwarded  securely  attached  to 
the  proper  assessment  list.  A  single  Form  751  cannot  be  used 
for  items  on  lists  of  the  separate  classes. 

In  the  Provirg  Division  of  the  Bureau  the  amount  shown  on 
Form  751  as  due  will  be  checked  against  the  taxpayer's  return, 
and  the  amount  shown  on  the  assessment  list  as  paid  will  be 
checked  against  the  similar  item  on  Form  751. 

The  original  Form  751  will  remain  attached  to  the  assess- 
ment list  and  will  form  an  integral  part  thereof,  so  that  the 
Commissioner's  signature  of  approval  of  the  assessment  list 
will  be,  to  the  Collector,  sufficient  evidence  of  the  Commis- 
sioner's approval  of  the  claim.  To  effectuate  this,  there  should 
be  typewritten  on  the  first  page  of  Form  1110,  below  the  line 
reading,  "Total  Chargeable  to  Collector,"  the  words,  "Amount 
Refundable  on  Form  751." 

Upon  receipt  of  the  returned  claim,  thus  determined  as 
approved  by  the  Commissioner,  the  Collector  will  immediately 
make  refund  to  the  taxpayer,  clearly  designating  upon  the 
draft  the  nature  of  the  refund,  as,  for  instance,  "Refund 
under  claim  on  Form  751,  March  list,  1918."  The  list  to  be 
designated  is  the  list  on  which  the  claim  was  approved, 
rather  than  the  list  on  which  the  assessed  or  overpayment  was 
leported. 

1332 


2.  Procedure  where  a  collection  has  exceeded  the  tax. 

The  procedure  will  be  identical  with  that  outlined  under 
subheading  (1),  above,  except  that  in  the  "Remarks"  column 
on  the  assessment  list  the  exact  amount  paid  is  to  be  noted. 

3.  Procedure  where  a  tax  has  been  paid  wholly  or  in  part 
in  duplicate. 

(a)  Where  both  payments  are  in  advance,  there  shall  be  en- 
tered on  Form  751  a  notation  showing  both  lines  of  the  ad- 
vance payment  list  or  lists  on  which  payments  appear.  If  the 
amounts  of  the  two  payments  differ,  the  Collector  shall  claim 
aiithority  for  refund  of  the  lesser  payment. 

(b)  Where  the  assessment  has  been  made,  entries  will  be 
m.ade  on  the  assessment  list  to  show  both  dates  of  payment. 

A  similar  notation  should  be  made  under  the  item  claimed 
on  Form  751  as  refundable. 

The  total  amount  collected  is  to  be  reported  on  Forms  325 
and  51-B. 

(c)  Where  one  payment  has  been  made  before  and  one 
after  the  entry  of  assessment,  notations  will  be  made  on 
Form  751  showing  the  line  of  the  list  on  which  the  advance 
payment  was  reported  and  the  line  on  which  the  assessment 
was  entered. 

Except  as  indicated,  the  balance  of  procedure  under  sub- 
heading (3)  will  correspond  to  the  procedure  fully  outlined 
under  subheading  (1). 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  April  1,  1918. 
W.  G.  McADOO, 

Secretary  of  the  Treasury. 


(T.  D.  2689.) 


Computation  of  Excess-Profits  Tax  for  a  Period  of  Less  Than 
a  Full  Year  (Supplementing  Article  20  of  Regulations 
No.  41);  Filing  of  Excess-Profits  Tax  Return  for  Such  a 
Period  (Supplementing  Articles  10,  11  and  12  of  Regula- 
tions Wo.  41). 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

To  Collectors  of  Internal  Revenue,  Revenue  Agents,  and  Others 
Concerned : 
1.  If  a  taxpayer  who  is  engaged  in  a  trade  or  business  the 
Article  43  of  Regulations  No.  41  provides  that  the  average  in- 
net  income  from  which  is  subject  to  taxation  at  the  graduated 
rates  imposed  by  Section  201  of  the  Act  of  October  3,  1917, 
makes  a  return  for  a  period  of  less  than  twelve  months, 
vested  capital  shall  be  determined  by  monthly  average  based 
upon  the  number  ^f  months  in  the  period,  and  Article  20  pro- 
vides that  the  deduction  will  be  an  amount  which  bears  the 
same  ratio  to  the  deduction  allowable  for  a  full  year  as  the 
number  of  months  in  such  period  bears  to  twelve  months.  In 
applying  the  rates  of  tax,  however,  the  invested  capital  used 
will  be  an  amount  which  bears  the  same  ratio  to  such  full 

1333 


average   invested   capital   as   the   number   of   months   in   the 
period  for  which  the  return  is  made  bears  to  twelve  months. 

ILLUSTRATION: — A  corporation  makin-g  its  return  on 

a   calendar   year   basis   started   business   August   16,   1917, 

with  a  capital  of  $100,000.  which  remained  unchanged  for 

.  the  balance  of  the  year  1917.    Its  net  Income  for  that  period 

was  $8,000.  .  .  .   .,  , 

The  deduction  computed  under  the  provisions  of  Articles 
20  and  21  would,  as  this  corporation  was  not  in  existence 
during  the  whole  of  at  least  one  calendar  year  during  the 
pre-war  period,  be  8  per  cent  of  the  invested  capital,  or 
$8,000,  plus  $3,000,  a  total  of  $11,000.  But,  inasmuch  as 
the  return  is  being  made  only  for  a  period  of  four  and  one- 
half  months,  the  deduction  would  be  reduced  to  an  amount 
which  bears  the  same  ratio  to  $11,000  as  four  and  one- 
half  months  bears  to  a  full  year  of  twelve  months,  or,  in 
other  words,  the  deduction  would  be  reduced  to  $4,125. 

For  the  purpose  of  applying  the  rates  of  taxation  the 
invested  capital  of  $100,000  would  likewise  be  reduced  to 
an  amount  which  bears  the  same  ratio  to  the  full  invested 
capital  as  the  number  of  months  in  the  period  for  which 
the  return  is  made  bears  to  twelve  months,  or,  in  other 
words,  would  be  reduced  to  $37,500. 

The  amount  of  the  net  income  taxable  at  each  rate 
would  be  as  follows: 

In  excess  of  the  deduction  and  not  in  excess  of  15 

per  cent  of  the  capital  (rate  20%) $1,500.00 

In  excess  of  15  per  cent  of  the  capital  and  not  in 

excess  of  20  per  cent  thereof  (rate  25%) 1,875.00 

In  excess  of  20  per  cent  of  the  capital  and  not  in 

excess  of  25  per  cent  thereof   (rate  35%) 500.00 

The  Tax  would  then  be  computed  as  follows: 

20%  of  $1,500 $300.00 

25%  of  $1,875 468.75 

35%  of  $500 175.00 

Total  tax  $943.75 

The  same  result  would  be  reached  by  computing  both 
the  deduction  and  the  tax  on  the  basis  of  an  invested 
capital  averaged  over  twelve  months  (that  is,  by  dividing 
the  sum  of  the  average  capital  for  each  month  by  twelve 
instead  of  by  four  and  one-half,  the  number  of  months 
in  the  period),  and  by  reducing  the  specific  deduction  to 
an  amount  which  bears  the  same  ratio  to  $3,000  as  the 
number  of  months  in  the  period  bears  to  twelve  months. 
Thus,  in  this  case,  the  invested  capital  upon  this  basis 
would  be  $37,500,  8%  of  which  would  be  $3,000,  to  which 
would  be  added  four  and  one-half  twelfths  of  the  $3,000 
specific  deduction,  making  a  total  deduction  of  $4,125,  the 
•  same  result  as  reached  by  the  method  used  in  the  illus- 
tration. 

2.  If  a  taxpayer  who  is  engaged  in  a  trade  or  business  the 
net  income  from  which  is  subject  to  taxation  at  the  rate  of  8 
per  cent  imposed  by  Section  209  of  the  Act  of  October  3,  1917, 
makes  a  return  for  a  period  of  less  than  twelve  months,  the 
deduction  of  $3,000  or  $6,000  allowed  under  that  section  will 
be  reduced  to  an  amount  which  bears  the  same  ratio  to  such 
full  deduction  as  the  number  of  months  in  the  period  bears  to 
twelve  months. 

ILLUSTRATION :— A  Corporation  engaged  in  the  busi- 
ness of  real  estate  agents  taxable  under  Section  209  of  the 
Excess  Profits  Tax  Law  has,  up  to  and  Including  the  year 
1916.  made  its  income  tax  returns  upon  a  calendar  year 
basis.  It  has  since  given  notice,  however,  in  accordance 
with  the  provisions  of  the  Income  Tax  Regulations  (article 
211)  and  changed  to  the  basis  of  a  fiscal  year  ending  April 
30th.  As  a  result  its  first  excess-profits  tax  return  would 
be  made  for  a  period  of  four  months  ending  April  30,  1917. 

Its  net  income  for  such  period  was  $25,000.  In  com- 
puting the  excess-profits  tax  upon  this  amount,  however, 
the  deduction  of  $3,000  would  be  allowed  to  it  for  a  full 
year  would  be  reduced  to  an  amount  which  bears  the  same 
ratio  to  $3,000  as  the  number  of  months  for  which  the  re- 

1234 


turn  Is  made  bears  to  twelve  months;  In  other  words,  It 
would  be  reduced  to  $1,000. 

The  excess-profits  tax  in  this  case  would  be  8  per  cent 
on  the  amount  of  net  income  in  excess  of  $1,000;  in  other 
words,  8  per  cent  of  $24,000,  or  $1,920. 

3.  The  above  rulings  apply  only  in  the  case  of  a  taxpayer 
who  (because  of  having  just  established  a  fiscal  year  or  of 
having  just  organized  or  engaged  in  business,  or  for  other  like 
reasons)  is  entitled  to  make  a  return  for  a  period  of  less  than 
a  full  year,  and  are  not  to  be  construed  as  authorizing  a  cor- 
poration or  partnership  which  has  already  established  a  fiscal 
year  ending  in  1917,  but  part  of  which  falls  within  1916  to 
compute  its  tax  in  any  other  manner  than  as  prescribed  in 
Article  19  of  Regulations  No.  41. 

4.  A  domestic  corporation  or  partnership  or  a  citizen  or 
resident  of  the  United  States,  entitled  to  make  a  return  for  a 
period  of  less  than  a  full  year,  will  be  required  to  make  such 
return  if  the  net  income  for  such  period  is  at  the  rate  of  $3,000 
per  year  or  more  in  the  case  of  a  corporation,  or  of  $6,000 
per  year  or  more  in  the  case  of  a  partnership  or  individual. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  April  1,  1918. 
W.  G.  McADOO, 

Secretary  of  the  Treasury. 


(T.  D.  2691.) 

Returns  on  Form  706  for  the  estates  of  nonresident  decedents 
to  be  forwarded  direct  to  the  Commissioner  of  Internal 
Revenue  for  transmittal  to  the  Collector. 

Treasury  Department, 
Office  of  the  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

Hereafter  returns  on  Form  706  for  the  estates  of  nonresi- 
dent decedents  shall  be  forwarded  (in  duplicate)  by  the 
executor  direct  to  the  Commissioner  of  Internal  Revenue, 
Treasury  Department,  Washington,  D.  C,  who  will,  after 
reviewing  the  returns,  transmit  them  to  the  proper  Collector. 
The  date  on  which  the  return  is  received  by  the  Commissioner 
of  Internal  Revenue  will  be  considered  the  date  of  original 
filing  with  the  Collector  for  the  purpose  of  determining 
whether  the  return  is  filed  within  the  period  prescribed  by 
law. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  April  8,  1918. 
L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 

1235 


(T.  D.  2692.) 

Heads  of  familities  and  married  men  with  wives  living  with 
them  include  only  persons  whose  families  or  wives  actually 
reside  with  them. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

Section  7  of  the  Income  Tax  Act  of  September  8,  1916,  as 
amended  by  the  Act  of  October  3,  1917,  provides  that  for  the 
purpose  of  the  normal  tax  only  there  shall  be  allowed  as  an 
exemption  in  the  nature  of  a  deduction  from  the  amount  of 
the  net  income  of  each  citizen  or  resident  of  the  United  States 
the  sum  of  $3,000,  plus  $1,000  additional  if  the  person  making 
the  return  be  a  head  of  a  family  or  a  married  man  or  woman 
with  a  wife  or  husband  living  with  him  or  her,  except  that 
only  one  deduction  of  $4,000  shall  be  made  from  the  aggregate 
income  of  both  husband  and  wife  when  living  together,  and 
plus  $200  additional,  if  the  person  making  the  return  be  the 
head  of  a  family,  for  each  child  dependent  upon  such  person 
if  under  eighteen  years  of  age  or  if  incapable  of  self-support 
because  mentally  or  physically  defective.  Section  3  of  the 
War  Income  Tax  Act  of  October  3,  1917,  provides  that  in  the 
case  of  the  tax  imposed  by  the  later  Act  the  exemptions  of 
$3,000  and  $4,000  provided  in  Section  7  of  the  former  Act  shall 
be  respectively  $1,000  and  $2,000. 
Paragraph  153  of  the  Income  Tax  Regulations  provides: 

"A  head  of  a  family  is  a  person  who  actually  sup- 
ports and  maintains  one  or  more  individuals  who  are 
closely  connected  with  him  by  blood  relationship, 
relationship  by  marriage,  or  by  adoption,  and  whose 
right  to  exercise  family  control  and  provide  for  these 
dependent  individuals  is  based  upon  some  moral  or 
legal  obligation.'* 

Applying  only  to  citizens  and  residents  of  the  United  States, 
there  is  accordingly  an  individual  exemption  of  $3,000,  except 
that  if  husband  and  wife  live  together  a  joint  exemption  of 
$4,000  under  the  earlier  Act  and  $2,000  under  the  later  Act  is 
substituted  for  the  several  exemption  of  $3,000  each  under  the 
earlier  Act  and  $1,000  each  under  the  later  Act,  and  that  if  the 
taxpayer  be  a  head  of  a  family,  consisting  of  a  person  or 
persons  other  than  a  wife  or  husband  alone,  his  exemption 
is  $4,000  under  the  earlier  Act  and  $2,000  under  the  later  Act, 
plus  $200  for  each  dependent  child. 

In  the  case  of  a  married  man  or  married  woman,  the  joint 
exemption  replaces  the  individual  exemptions  only  if  his  wife 
lives  with  him  or  her  husband  lives  with  her.  In  the  absence 
of  continuous  actual  residence  together,  whether  or  not  a  man 
or  woman  has  a  wife  or  husband  living  with  him  or  her  within 
the  meaning  of  the  statute  must  depend  on  the  character  of 
the  separation.  If  merely  occasionally  and  temporarily  a  wife 
is  away  on  a  visit  or  a  husband  is  away  on  business,  the 
joint  home  being  maintained,  the  additional  exemption  applies. 
The  unavoidable  absence  of  a  wire  or  husband  at  a  sanatorium 
or  asylum  on  account  of  illness  does  not  preclude  claiming  the 
exemption.  If,  however,  the  husband  voluntarily  and  continu- 
ously makes  his  home  at  one  place  and  the  wife  hers  at 

1236 


another,  they  are  not  living  together  for  the  purpose  of  the 
statute,  irrespective  of  their  personal  relations. 

A  head  of  a  family  is  a  person  who  actually  supports  and 
maintains  one  or  more  of  the  individuals  described  in  para- 
graph 153  of  the  Regulations  in  one  household.  In  the  absence 
of  continuous  actual  residence  together,  whether  or  not  a 
person  with  dependents  is  a  head  of  a  family  within  the 
meaning  of  the  statute  must  depend  on  the  character  of  the 
separation.  If  a  child  or  other  dependent  is  away  only  tem- 
porarily at  school  or  on  a  visit,  the  common  home  being  still 
maintained,  the  additional  exemption  applies.  If,  however, 
the  dependent  continuously  makes  his  home  elsewhere,  his 
benefactor  is  not  the  head  of  a  family,  irrespective  of  the 
question  of  support. 

Resident  aliens  claiming  exemption  because  of  families  or 
wives  residing  abroad  are  not  heads  of  families  or  married 
men  or  women  with  wives  or  husbands  living  with  them  within 
the  meaning  of  the  statute,  and  they  are  in  no  case  entitled 
to  more  than  their  individual  exemptions  of  $3,000  under  the 
earlier  Act  and  $1,000  under  the  later  Act. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue, 

Approved  April  8,  1918. 
L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 


(T.  D.  2693.) 


Proof  necessary  to  be  filed  by  certain  organizations  to  establish 
the  fact  that  they  are  exempt  from  filing  income  tax 
returns  or  paying  an  income  tax. 

Treasury  Department, 
Office  of  the  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

The  exemption  from  filing  returns  and  paying  income  tax 
of  corporations  or  associations  organized  and  operated  ex- 
clusively for  religious,  charitable,  scientific  or  educational 
purposes,  business  leagues,  chambers  of  commerce,  boards  of 
trade,  civic  leagues,  cemetery  companies,  and  pleasure  and 
recreation  clubs,  under  the  Act  of  September  8,  1916,  as 
amended  by  the  Act  of  October  3,  1917,  is  conditional. 

In  order  to  establish  exemption  and  thus  be  relieved  of  the 
duty  of  filing  returns  and  paying  income  tax,  it  is  necessary 
that  such  organizations  as  are  specified  hereinbefore  file  an 
affidavit  with  the  Collector  of  Internal  Revenue  of  the  District 
in  which  they  are  located,  which  will  show  the  character  of 
the  organization,  the  purpose  for  which  organized,  the  source 
of  income  and  disposition  of  the  same,  and  whether  or  not 
any  of  its  income  is  credited  to  surplus  or  inures  or  may  inure 
to  the  benefit  of  any  private  stockholder  or  individual.  To 
such  affidavit  should  be  attached  a  copy  of  the  charter  or 
articles  of  incorporation  and  by-laws  of  the  organization. 

Upon  receipt  of  the  affidavit  accompanied  by  the  copies  of 
the  charter,  or  articles  of  incorporation  and  copy  of  the  by- 
laws by  the  Collector  he  will  advise  the  organization  whether 

1237 


or  not  it  is  exempt.  If,  however,  the  Collector  is  in  doubt  as 
to  the  taxable  status  of  the  organization  he  will  refer  the 
affidavit  and  accompanying  papers  to  the  Commissioner  of 
Internal  Revenue  for  decision. 

If  it  is  held  that  the  corporation  itself  is  exempt  from 
the  income  and  excess  profits  taxes,  it  is  not,  however,  exempt 
from  the  withholding  requirements  nor  from  furnishing  in- 
formation in  accordance  with  the  provisions  of  the  Act  of 
October  3,  1917. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  April  8,  1918. 
L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 


(T.  D.  2695.) 

Amending    Treasury    Decision    2622,    relative    to    advance 
payments  of  income  and  excess  profits  tax. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

Treasury  Decision  2622,  dated  December  26,  1917,  is  amended 
by  the  revocation  of  the  following  paragraph: 

"The  interest  at  the  rate  of  3  per  cent  per  annum 
(365  days),  allowed  to  a  taxpayer  on  advance  payments 
on  income  and  excess  profits  taxes,  must  be  considered 
income  and  accounted  for  as  income  by  the  taxpayer  in 
his  return  for  the  year  in  which  said  interest  is  allowed." 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  April  11,  1918. 
W.  G.  McADOO, 

Secretary  of  the  Treasury. 


(T.  D.  2696.) 


Treatment  for  taxation  purposes  of  amounts  ostensibly  paid 
as  compensation  for  services  of  officers  and  employes  of 
business  enterprises. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

Section  5(a)  of  the  Income  Tax  Act  of  September  8,  1916, 
as  amended,  provides,  as  to  the  income  of  individuals  and 
partnerships,  that  for  the  purpose  of  the  tax  there  shall  be 
allowed  as  deductions,  among  others,  "the  necessary  expenses 
actually  paid  in  carrying  on  any  business  or  trade,"  and  Sec- 
tion 12(a)  provides  that  the  net  income  of  a  corporation  shall 

1238 


be  ascertained  by  deducting  from  the  gross  amount  of  its  in- 
come received  within  tlie  year,  among  other  tilings,  "all  the 
ordinary  and  necessary  expenses  paid  within  the  year  in  the 
maintenance  and  operation  of  its  business  and  properties." 

Payments  for.  services  by  business  enterprises  (including 
individuals  in  business,  partnerships  and  corporations  may  oi 
course  be  deducted  under  this  general  language.  The  Govern- 
ment, entitled  to  taxes  based  on  the  net  income  of  each  enter- 
prise, is  interested  and  authorized,  however,  to  see  that  each 
specific  expenditure  sought  to  be  deducted  is  in  itself  "neces- 
sary." The  question  is  by  what  examination  and  what  test 
this  shall  be  determined.  The  subject  is  not  dealt  with  in 
any  general  way  in  the  Income  Tax  Regulations,  although 
Article  138  bears  on  special  payments  to  employes  of  cor- 
porations. 

The  test  of  deductibility  in  the  case  of  compensation  pay- 
ments is  whether  they  are  in  fact  payments  purely  for  services 
or  include  some  other  element.  But  in  the  case  of  any  com- 
pensation, however  determined,  which  exceeds  amounts  ordi- 
narily paid  for  like  services  in  like  enterprises  under  like  cir- 
cumstances, the  burden  is  upon  the  enterprise  to  show  that  the 
amount  paid  was  solely  the  purchase  price  of  services.  This 
test  and  its  practical  application  may  be  further  stated  and 
illustrated  as  follows: 

1.  Any  amount  paid  in  the  form  of  compensation,  but  not 
in  fact  as  the  purchase  price  of  services,  is  not  deductible. 

(a)  An  ostensible  salary  may  be  a  distribution  of  a  divi- 
dend on  stock.  This  is  likely  to  occur  in  the  case  of  a  cor- 
poration having  few  stockholders,  practically  all  of  whom 
draw  salaries.  If  in  such  a  case  the  salaries  are  based  upon 
or  bear  a  close  relationship  to  the  stockholdings  of  the  officers 
or  employes,  it  would  seem  likely  that  the  salaries,  if  in 
excess  of  those  ordinarily  paid  for  similar  services,  are  not 
paid  wholly  for  services  rendered,  but  in  part  as  a  distribu- 
tion of  earnings  upon  the  stock. 

(b)  An  ostensible  salary  paid  by  a  corporation  may  be  in 
part  a  waste  or  appropriation  of  assets  of  the  corporation. 
This  may  occur  where  salaried  employes  are  in  control  of  the 
corporation  through  holding  directly  or  indirectly  a  majority 
of  its  stock  or,  in  the  case  of  a  large  corporation  with  many 
stockholders,  o\^Tiing  a  substantial  minority  of  its  stock,  and 
the  tendency  of  the  officers  unduly  to  inflate  their  salaries 
must  be  taken  into  account.  If  a  compensation  contract  with 
the  majority  stockholder  or  stockholders  is  approved  by  all 
the  stockholders  as  well  as  by  the  directors,  it  might,  how- 
ever, be  dealt  with  like  any  other  contract. 

(c)  An  ostensible  salary  may  be  in  part  payment  for  prop- 
erty. This  may  occur,  for  example,  where  a  partnership  sells 
out  to  a  corporation,  the  former  partners  agreeing  to  con- 
tinue in  the  service  of  the  corporation.  In  such  a  case  it  may 
be  found  that  the  salaries  of  the  former  partners  are  not 
merely  for  services,  but  in  part  constitute  payment  for  the 
transfer  of  their  business. 

2.  The  form  or  method  of  fixing  compensation  is  not  de- 
cisive as  to  deductiblity. 

While  any  form  of  contingent  compensation  invites  scrutiny 
as  a  possible  distribution  of  earnings  of  the  enterprise,  it  does 
not  follow  that  payments  on  a  contingent  basis  are  to  be 
treated  fundamentally  on  any  basis  different  from  that  apply- 
ing to  compensation  at  a  flat  rate.     Generally  speaking,  if 

1239 


contingent  compensation  is  paid  pursuant  to  a  free  bargain 
between  the  enterprise  and  the  individual  made  before  the 
services  are  rendered,  not  influenced  by  any  consideration  on 
the  part  of  the  employer  other  than  that  of  securing  on  fair 
and  advantageous  terms  the  services  of  the  individual,  it 
should  be  allowed  as  a  deduction  even  though  in  the  actual 
working  out  of  the  contract  it  may  prove  to  be  greater  than 
the  amount  which  would  ordinarily  be  paid. 

3.  As  to  compensation  determined  after  services  have  been 
rendered,  reasonableness  is  ordinarily  the  controlling  test  of 
deductibility. 

In  certain  instances  apparently  of  this  sort  it  may  be 
shown  that  the  compensation  is  fixed  according  to  a  custom 
or  practice  having  virtually  the  force  of  a  contract.  Where, 
however,  such  is  not  the  case  and  it  is  for  the  management 
to  fix  compensation  such  as  is  deemed  fair,  it  is  just  to 
assume  that  true  compensation  is  only  such  amoimt  as  would 
ordinarily  be  paid  in  like  circumstances  by  -other  similar  enter- 
prises. 

4.  In  connection  with  the  questions  discussed  above,  the  fol- 
lowing rulings  as  to  the  treatment  of  amounts  ostensibly  paid 
as  compensation,  but  not  allowed  to  be  deducted  as  such, 
appear  to  be  warranted. 

(a)  In  the  case  of  excessive  payments  by  corporations,  if 
such  payments  correspond  to  or  bear  a  close  relationship  to 
stockholdings,  the  amount  of  the  excess  should  be  treated  as 
dividends  and  would  thus  be  exempt  from  the  normal  tax 
and  from  the  excess  profits  tax  in  the  hands  of  the  recipients; 
or  if  such  payments  represent  an  appropriation  of  assets  of 
the  corporation  by  officers  who  control  it  and  fix  their  com- 
pensation in  violation  of  the  rights  of  the  corporation,  the 
amount  of  the  excess,  while  disallowed  as  a  deduction  by  the 
corporation,  should  be  treated  as  compensation  of  the  in- 
dividuals subject  to  the  normal  and  the  excess  profits  taxes, 
compensation  illegally  secured  being  none  the  less  subject  to 
tax  in  all  respects;  or  if  such  payments  constitute  in  part 
payment  for  property,  the  amount  of  the  excess  should  be 
treated  by  the  corporation  as  a  capital  expenditure  and  by  the 
rtcipient  as  part  of  the  purchase  price. 

(b)  In  the  case  of  excessive  payments  by  individuals  or 
partnerships,  the  amounts  disallowed  should  ordinarily  be 
treated  as  partnership  shares  and  would  thus  be  free  from 
the  excess  profits  tax  to  the  recipient,  but,  of  course,  still 
subject  to  the  income  tax,  except  that  payments  for  property 
should  be  treated  by  the  individual  or  partnership  as  a  capital 
expenditure  and  by  the  recipient  as  part  of  the  purchase  price. 

The  foregoing  rules  naturally  do  not  permit  a  ready  deter- 
mination of  every  question  arising  as  to  compensation  pay- 
ments, but  applied  in  the  light  of  full  knowledge  of  the  facts 
In  the  particular  case  they  do,  however,  indicate  a  basis 
of  solution.    They  may  be  smnmed  up  as  follows: 

Compensation  on  whatever  basis  fixed,  representing  only  the 
price  paid  for  services  pursuant  to  a  fair  bargain  made  in 
advance  between  the  individual  and  tjtie  business  enterprise, 
is  deductible  in  determing  the  taxable  net  income  of  the  enter- 
prise. Payments  nominally  as  compensation  for  services, 
which  in  fact  include  amounts  paid  as  dividends,  waste  of 
corporate  assets,  payments  for  property  or  for  anything  other 
than  services,  are  deductible  only  to  an  amount  not  in  excess 
of  compensation  for  like  services  in  similar  enterprises. 

1240 


Compensation  greater  than  that  ordinarily  paid  for  like 
service*  in  similar  enterprises  must  be  shown  to  represent 
payment  for  services  only.  In  the  case  of  compensation  fixed 
after  services  are  rendered  and  not  in  accordance  with  any 
contract  or  any  custom  or  practice  amounting  virtually  to  a 
contract,  reasonableness  is  ordinarily  the  controlling  test  of 
deductibility. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  April  10,  1918, 
R.  C.  LEFFINGWELL, 

Acting  Secretary  of  the  Treasury. 


(T.  D.  2697.) 


Suit  for  Recovery  of  Taxes  by  the  Government — 
United  States  Circuit  Court  of  Appeals,   Sixth  District. 

United  'States,  plaintiff  in  error,  vs.  Nashville,  Chattanooga 
and  St.  Louis  Railway,  defendant  in  error. 

Error  to'  the  District   Court   of  the  United  States   for   the 

Middle  District  of  Tennessee. 

(Decided  April  3,  1918.) 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Reevnue, 

Washington,  D.  C. 

The  appended  decision  of  the  United  States  Circuit  Court 
of  Appeals  for  the  Sixth  Circuit,  in  the  case  of  the  United 
States  V.  Nashville,  Chattanooga  and  St.  Louis  Railway,  is 
published  for  the  information  of  internal  revenue  officers  and 
others  concerned. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved  April  16,  1918: 
J.  H.  MOYLE, 
Acting  Secretary  of  the  Treasury. 

1.  False  or  Incorrect  Returns. — The  w^ord  "false,"  as  used 
in  the  fifth  subdivision  of  Section  38,  of  the  Act  of  August  5, 
4.909,  providing  that  in  case  of  any  return  made  with  false 
or  fraudulent  intent  the  Commissioner  of  Internal  Revenue 
shall  add  100  per  centum  of  the  tax,  means  "untrue"  or 
"incorrect,"  and  does  not  necessarily  mean  intentionally  or 
fraudulently  false. 

2.  Common-Law  Action  of  Debt  for  Taxes. — A  common-law 
action  of  debt  lies  in  favor  of  the  Government  whenever  by 
accident,  mistake,  or  fraud,  taxes  have  not  been  paid;  thus 
the  Government  may  recover  a  personal  judgment  for  a  tax 
whenever  there  exists  a  duty  to  pay,  provided  another  remedy 
has  not  been  made  exclusive  by  clear  and  specific  declaration. 

3.  Reassessment  as  Prerequisite  to  Suit. — Act  of  August  5, 
1909,  Section  38,  does  not  make  the  remedy  by  way  of  a  re- 
assessment by  the  Commissioner  of  Internal  Revenue  exclusive 
of  all  other  remedies  for  collection  of  excise  tax  imposed  on 
corporations,  and  suit  may  be  brought  under  Revised  Statutes, 

1241 


Section  3213,  providing  that  taxes  may  be  sued  for  and  re- 
covered in  the  name  of  the  United  States,  in  any  proper  form 
of  action,  before  any  Circuit  or  District  Court  of  the  United 
States  for  the  district  within  which  liability  to  such  tax  is 
incurred,  or  where  the  party  from  whom  such  tax  is  due 
resides  at  the  time  of  the  commencement  of  the  action,  with- 
out any  such  reassessment. 

4.  Operating  Expenses  and  Depreciation. — Though  what  is  a 
necessary  expense  of  operation  and  what  is  a  reasonable  al- 
lowance for  property  depreciation  are  ultimately  questions  of 
fact,  so  far  as  they  involve  legal  questions  they  are  absolutely 
judicial  questions,  and  the  declaration  in  a  suit  to  recover 
excise  tax  imposed  on  corporations  by  the  Act  of  August  5, 
1909,  which  fails  to  show  the  making  of  a  new  assessment  by 
the  Commissioner  of  Internal  Revenue,  is  therefore  not  de- 
murrable. 

5.  Declaration  in  Suit  to  Recover  Tax— Evidence.— Evidence 
sustaining  allegations  of  incorrectness  in  returns  by  corpora- 
tion subject  to  excise  tax  imposed  by  Act  of  August  5,  1909, 
need  not  be  set  out  in  the  declaration  in  a  suit  to  recover 
such  tax;  declaration  here  sufficiently  averred  erroneous  or 
untrue  return  of  operating  expenses  and  deductions  for  de- 
preciation. 

6.  Declaration  in  Suit  to  Recover  Tax— Bill  of  Particulars. — 
Where  declaration  in  action  to  recover  of  a  corporation  the 
excise  tax  imposed  by  Act  of  August  5,  1909,  expressly  avers 
that  alleged  deductions  were  not  reasonable  allowances  for 
depreciation  within  the  meaning  of  such  act,  if  more  definite 
or  detailed  information  is  needed  to  enable  defendant  to  plead 
or  prepare  for  trial,  remedy  is  by  bill  of  particulars. 

7.  Judgment  Reversed. — Judgment  of  the  District  Court  is 
reversed. 


[DECISION  OF  COURT.] 
(November  7,  1917.) 

Northwestern  Mutual  Life  Insurance  Company  v.  Fink, 

collector. 

(District  Court,  E.  D.  Wisconsin.)     (248  Fed.,  568.) 

Recovery  of  excess  taxes  paid  on  erroneous  second  assessment. 
Section  3225,  Revised  Statutes. 
(Extracted  from  Judge  Geiger's  opinion  in  the  above  case 
In  which  judgment  was  rendered  for  plaintiff.) 


A  final  question,  one  not  suggested  in  the  pleadings,  briefly 
referred  to  in  oral  arguments,  but  later  elaborately  discussed 
in  briefs,  arises  on  these  facts:  In  making  its  return  for  the 
year  1910,  plaintiff  omitted  an  item  of  $77,000  from  the 
income  side.  It  is  an  aggregate  of  receipts  from  agencies, 
omitted  because  information  respecting  the  accounts  to  which 
individual  items  were  distributable  was  not  at  hand  at  the 
time  of  making  the  return,  and,  apparently,  was  in  good  faith 
treated  as  a  "suspense"  item  which  would  naturally,  upon 
later  ascertainment,  go  into  the  return  for  the  ensuing  year. 
There  is  no  suggestion  that  the  facts  are  not  consisteiit  with 
perfect  good  faith.  The  record  attests  fully  that  the  omission, 
if  it  involved  delinquency  at  all,  arose  as  stated— it  was  an 
erroneous  failure  to  include  the  items. 

1242 


The  Government  urges  that  such  failure  bars  the  right  to 
maintain  the  action,  and  bases  its  contention  upon  Section 
3225,  R.  S.  U.  S.  (Comp.  St.  1916,  Sec.  5948),  which  is  as- 
serted to  be  incorporated  into  the  excise  law  in  question: 

"When  a  second  assessment  is  made  in  case  of  any  list, 
statement,  or  return,  which  in  the  opinion  of  the  collector  or 
any  deputy  collector  was  false  or  fraudulent,  or  contained  any 
understatement  or  undervaluation,  no  tax  collected  under  such 
assessment  shall  be  recovered  by  any  suit  unless  it  is  proved 
that  the  said  list,  statement,  or  return  was  not  false  nor 
fraudulent,  and  did  not  contain  any  understatement  or  under- 
valuation." 

The  broad  proposition  is  that  any  and  every  error  of  under- 
statement or  undervaluation,  howsoever  innocently  made,  bars 
relief  against  a  reassessment,  howsoever  inaccurate,  or  unjust 
it  may  be.  It  may  be  said  confidently  that  so  drastic  a  rule 
should  not  be  accepted  unless  unmistakably  clear  language, 
disclosing  a  legislative  purpose  and  intent  viewed  in  the  light 
of  history  and  results  to  be  achieved,  leaves  no  alternative. 

I  shall  assume  that  Section  3225  is  brought  into  the  tax 
law  in  question;  and  it  necessitates  consideration  of  that 
section  as  part  of  a  chapter,  dealing  generally  with  practice, 
procedure,  rights  and  remedies  awarded  to  both  Government 
and  taxpayer  or  citizen,  in  the  matter  of  assessment,  collec- 
tion, remission  and  refund  of  public  dues.  These  laws  are  not 
of  recent  enactment.  The  times  and  conditions  at  and  under 
which  they  came  into  being  to  further  the  raising  of  revenue 
to  meet  a  situation  of  great  national  stress,  the  administra- 
tive recognition  and  application  accorded  them  for  over  fifty 
years,  may  safely  aid  in  throwing  light  upon  the  just  inter- 
pretation to  be  given.  Without  narrating  historically  the  ad- 
vent and  amendment  of  this  particular  Section  3225  and 
allied  provisos,  it  suffices  to  say  that  they  had  their  begin- 
nings in  the  Civil  War  Revenue  Act  of  June  30,  1864  (13 
U.  S.  Stat.,  p.  223,  c.  173),  as  amended  by  the  Act  of  July 
13,  1866  (14  U.  S.,  Stat.,  98,  c.  184).  They  exhibit  the  early 
recognition  by  the  Government  of  the  necessity  of  ways  and 
means  for  revising,  both  in  the  interest  of  the  Government 
and  the  taxpayer,  the  returns  or  assessments  made  or  levied, 
and  for  refunding  or  recovery  of  taxes  actually  paid;  and 
from  the  earliest  occasions  when  interpretation  of  these  stat- 
utes was  called  for  the  courts  here  have  uniformly  given  to 
the  results  accomplished  by  legislation  on  the  general  subject, 
this  broad  characterization: 

"The  revenue  measures  of  every  civilized  government  consti- 
tute a  system  which  provides  for  its  enforcement  by  officers 
commissioned  for  that  purpose.  In  this  country,  the  system 
for  each  State,  or  for  the  Federal  Government,  provides  safe- 
guards of  its  own  against  mistake,  injustice,  or  oppression,  in 
the  administration  of  its  revenue  laws.  Such  appeals  are  al- 
lowed to  specified  tribunals  as  the  lawmakers  deem  expedient. 
Such  remedies  also  for  recovering  back  taxes  illegally  exacted 
as  may  seem  wise  are  provided.  In  these  respects  the  United 
States  have,  as  was  said  by  the  court  in  Nichols  v.  United 
States,  7  Wall.,  122  (19  L.  Ed.  125),  enacted  a  system  of 
corrective  justice,  as  well  as  a  system  of  taxation  in  both 
its  customs  and  internal  revenue  branches.  That  system  is 
intended  to  be  complete.  *  *  *  So  also  in  the  internal 
revenue  department,  the  statute  allows  appeals  to  the  asses- 
sor to  the  Commissioner  of  Internal  Revenue;  and,  if  dis- 
satisfied with  his  decision,  on  paying  the  tax  the  party  can 

1243 


•lie  the  collector;  and  if  the  money  was  wrongfully  exacted, 
the  courts  will  give  him  relief  by  a  judgment,  which  the 
United  States  pledges  herself  to  pay,"  Per  Miller,  Justice, 
Cheatham  v.  U.  S.,  92  U.  S.  88,  23  L.  Ed.  561. 

A  careful  reading  of  adjudicated  cases — indeed,  all  legisla- 
tion upon  the  varied  phases  of  public  revenues — suggests  that 
at  no  time  has  there  been  a  purpose  to  cut  off  or  to  impair, 
either  as  against  the  Government  or  the  citizen,  this  "system 
of  corrective  justice"  attending  the  administration  of  revenue 
laws. 

At  the  outset,  the  proposition  advanced  by  the  defence  is 
repugnant,  utterly,  to  this  view,  and  the  broad  purpose  dis- 
closed. If  it  is  not  obviously,  it  is  easily  demonstrably  so. 
A  few  considerations  of  a  practical  nature — which  a  court 
may  entertain — will  be  helpful.  When  property  is  assessed 
for  taxation  upon  an  ad  valorem  basis,  the  taxing  officers 
frequently  must,  initially,  determine  values.  Even  in  such 
cases  the  taxpayer  is  not  left  wholly  remediless  to  review  or 
revise  the  finding  of  the  assessing  or  taxing  officer.  In  very 
rare  situations  is  it  possible  justly  to  ascribe  to  any  individual 
whether  he  be  the  interested  taxpayer  or  the  public  assessor, 
the  power  or  the  duty  to  make  an  initial  valuation  to  be 
accepted  by  the  one  adversely  interested  as  indubitably  fair; 
and,  as  indicated,  there  have  arisen  of  necessity  in  the  interest 
of  just  dealing  the  varying  methods  of  revision  and  correc- 
tion. Coming  to  the  particular  case  before  us,  where  assess- 
ments are  based  upon  retiims  exhibiting  great  magnitude  and 
complexity  of  business  operations,  the  possibility  and  the 
probability  of  errors — without  a  suggestion  of  attendant  bad 
faith — is  increasingly  present.  It  may  safely  be  said  that 
the  great  majority  of  returns  under  these  excise  and  income 
tax  laws  contain  items  involving  for  their  fixing  and  determi- 
nation, judgment,  honestly  and  conscientiously  exercised;  and 
it  is  equally  true  that,  no  matter  how  conscientiously  one 
man  may  fix  and  determine  an  item,  another,  with  equal 
probity  and  integrity/  may  fix  it  at  a  substantially  higher  or 
lower  figure.  The  very  purpose  is  to  enable  revision,  to  cor- 
rect the  mistake,  of  omission,  or  commission,  or  to  prevent 
frauds;  and  it  would  be  anomalous  to  assume  infallibility  on 
the  part  of  the  Government  in  its  efforts  at  revision,  where- 
fore mistakes  of  the  citizens  only  are  to  be  corrected.  Tliis 
is  said  because,  in  my  judgment,  the  drastic  construction  of 
Section  3225  now  insisted  upon  will,  if  adopted,  lead  to  that 
result  as  a  matter  of  practical  administration  and  application. 
It  means  that  the  taxpayer  cannot  prevail  imless  he  succeeds 
in  reinstating  his  own  return,  item  for  item,  against  the 
revision  or  reassessment.  Naturally  suits  to  recover  can 
rarely  be  brought  when  the  reassessment  is  more  favorable 
than  the  original  return,  though  even  such  result  can  con- 
ceivably come  through  an  entire  rearrangement  of  the  return 
through  the  exclusion  of  items  admitted  and  the  inclusion  of 
items  contested  by  the  taxpayer.  But  this  is  true  as  a  prac- 
tical matter:  Every  reassessment  which  results  in  an  in- 
creased tax  must  involve  expressly  or  by  necessary  implica- 
tion the  opinion  or  conviction  of  the  i^eviewing  officer  that  the 
original  return  contained,  somewhere  or  somehow,  an  under- 
statement or  undervaluation,  a  false  (erroneous,  or  fraudu- 
lent) item  or  items.  Therefore  unless  the  taxpayer  can  es- 
tablish that  his  original  return  was  right,  and  hence  that  the 
reassessment,  in  its  attempted  revision  or  additions,  is  wrong, 
in  every  particular,  he  must  fail  in  his  action.    If  this  is  pos- 

1244 


sible,  and  it  must  follow  so  strict  an  interpretation  of  the 
statute  (Section  3225),  then  there  is  little  left  that  can  com- 
mend itself — to  the  citizen  or  taxpayer — of  any  so-called  sys- 
tem of  "corrective  justice." 

The  present  case  furnishes  a  good  illustration:  Assuming 
that  the  exaction  of  1  per  cent  on  the  millions  of  dividends 
treated  as  income  is  illegal  and  unjust,  a  remedy  would  have 
to  be  denied  because  of  an  honest  error  respecting  an  item,  by 
comparison,  trifling.  I  am  unwilling  to  give  to  the  section  in 
question  any  such  interpretation;  and  no  matter  how  drastic 
an  application  may  be  compelled  in  cases  of  actual  fraud — 
whether  the  items  fraudulently  withhold  or  misstated  be  large 
or  small — the  view  that  the  section  aims  to  furnish  a  rule  of 
proof,  to  give  to  the  finding  of  executive  officers  a  status  or 
dignity  prima  facie  good,  to  cast  upon  the  citizen  the  burden 
of  overthrowing  it,  thereby  giving  the  section  a  distinct  place 
and  function  in  the  corrective  and  revisory  "system"  of  the 
revenue  laws,  is  far  more  reasonable  and  commendable.  It 
furthers  the  accomplishment,  by  the  Government  or  by  the 
taxpayer,  of  the  general  purpose  of  enabling  just  revision  or 
•ecovery;  whereas,  the  view  urged  by  the  defendant  makes 
he  statute  highly  penal,  and,  in  its  application,  one-sided, 
•esulting,  as  indicated,  in  foreclosure  of  recovery  in  every  case 
Adhere  the  original  return  cannot  be  established,  item  for  item, 
n  opposition  to  the  Government  revision. 


(T.  D. 

Authorizing  collectors  in  certain  cases  of  erroneous  assessment 
to  present  blanket  claims  monthly  on  Form  Wo.  47. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  0. 
To  Collectors  of  Internal  Revenue: 

Hereafter  collectors  will  present  once  a  month  a  blanket 
claim  on  Form  47  for  the  abatement  of  taxes  coming  within 
the  following  classes  of  taxes  erroneously  assessed: 

1.  Duplicate  assessments. 

2.  Cases    where    specific    exemption    has    not    been    taken 

on  the  taxpayer's  return  and  the  assessment  has  ac- 
cordingly been  excessive  to  the  extent  of  the  tax 
assessed   bcause  of  failure  to  take  exemption. 

3.  Cases    of   excessive    assessment    caused    by    mathemat- 

ically erroneous  calculations  of  tax  by  the  taxpayer 
upon  his  return. 

4.  Fifty  per  cent  additional  taxes  where  a  tentative  re- 

turn has  been  filed  within  the  time  required  by  law, 
but  where  the  fact  of  such  filing  has  been  overlooked 
in  the  collector's  oflace  and  an  assessment  of  50% 
additional  tax  has  accordingly  been  made,  and  is 
unquestionably  erroneous.  In  all  other  cases  of  50% 
additional  tax  assessments,  a  claim  must  be  presented 
by  the  taxpayer,  as  at  present. 

In  preparing  these  claims,  the  collector  will  paste  upon 
the  blank  space  on  Form  47  a  schedule  showing  the  name  and 
address  of  the  taxpayers;  the  month,  page,  and  line  of  the 
assessment  list;  amount  assessed,  amount  due,  amount  abate- 
able;  the  nature  of  the  erroneous  assessment,  as  classified 
above;  and  a  brief  and  clear  statement  of  the  ground  for 
abatement. 

These   claims   should   be   forwarded   so   as   to  be   received 

1245 


in  the  Commissioner's  office  by  the  5th  of  each  month,  in 
order  that  tlie  allowance  may  be  scheduled  on  the  Form  7220 
for  the  same  month. 

Where  amounts  abateable  have  been  assessed  upon  lists 
of  the  different  classes,  separate  claims  must,  of  course,  be 
presented,  each  to  cover  the  items  upon  the  list,  or  lists,  of 
a  given  class. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  April  16,  1918. 
J.  H.  MOYLE, 
Acting  Secretary  of  the  Treasury. 


(T.  D.  2700.) 

Additional  tax  on  undistributed  earnings  of  corporations — Sec- 
tion 10(b)  and  Section  31(b),  Act  of  September  8,  1916,  as 
amended;  Investment  of  such  earnings. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 
'  Inquiries  have  been  received  from  corporations  confronted 
with  liability  to  additional  tax  under  Section  10(b)  of  the 
Act  of  September  8,  1916,  as  amended,  upon  undistributed  net 
earnings  of  the  previous  taxable  year,  as  to  what  restrictions 
apply  to  investment  of  such  earnings  in  obligations  of  the 
United  States  issued  after  September  1,  1917. 

Section  10(b)  added  by  Section  1206  of  the  Act  of  October 
3,  1917,  provides  as  follows: 

In  addition  to  the  Income  tax  imposed  by  subdivision 
(a)  of  this  section,  tliere  shall  be  levied,  assessed,  collected, 
and  paid  annually  an  additional  tax  of  10  per  centum  upon 
the  amount,  remaining  undistributed  six  months  after  the 
end  of  each  calendar  or  fiscal  year,  of  the  total  net  In- 
come of  every  corporation,  Joint-stock  company  or  associa- 
tion, or  insurance  company,  received  during  the  year.  •  •  • 

The  tax  imposed  by  this  subdivision  shall  not  apply 
to  that  portion  of  such  undistributed  net  income  which 
is  actually  Invested  and  employed  in  the  business  or  is 
retained  for  employment  in  the  reasonable  requirements 
of  the  business  or  is  invested  in  obligations  of  the 
United  States  issued  after  September  first,  nineteen  hun- 
dred and  seventeen.  ♦  •  •  ." 

Section  31(b)  added  by  Section  1211  of  the  Act  of  October 
3,  1917,  provides  in  part  as  follows: 

Any  distribution  made  to  the  shareholders,  or  members 
of  a  corporation,  Joint-stock  company,  or  association,  or 
insurance  company.  In  the  year  nineteen  hundred  and  sev- 
eteen,  or  subsequent  tax  years,  shall  be  deemed  to  have 
been  made  from  the  most  recently  accumulated  undi- 
vided profits  or  surplus."  *  *  • 

The  effect  of  this  section  is  dealt  with  under  Regulations 
No.  33  Revised,  Article  107,  in  Treasury  Decision  2659  and 
Treasury  Decision  2678.  Under  these  rulings  the  burden  is 
upon  the  corporation  seeking  to  establish  a  distribution  in  the 
current  year  of  profits  of  the  preceding  taxable  year  to  show 
that  all  the  earnings  of  the  current  year  have  been  first  dis- 
tributed. 

1246 


In  determining  the  source  of  earnings  from  which  a  particu- 
lar distribution  is  made  a  corporation  is,  however,  permitted 
to  treat  the  undivided  profits  and  surplus  of  the  current  year 
as  reduced  by  payments  for  income  and  excess  profits  taxes  or 
if  keeping  its  accounts  upon  an  accrual  basis  by  proper  re- 
serves for  such  taxes,  although  such  payments  or  reserves  are 
not  deductible  in  computing  the  income  of  the  corporation  for 
income  and  excess  profits  taxes. 

The  restrictions  as  to  the  distribution  of  earnings  of  prev- 
ious taxable  years  resulting  from  the  presumption  that  all 
current  distributions  are  from  current  earnings  do  not  apply 
to  the  use  of  earnings  for  investments  by  corporations.  There 
is  in  the  statutes  no  limitation  or  restriction  as  to  the  source 
from  which  may  be  taken  earnings  used  for  this  purpose. 
Amounts  invested  in  obligations  of  the  United  States  issued 
after  September  1,  1917,  may  thus  be  treated  as  made  from 
such  earnings  as  the  corporation  may  designate. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  April  16,  1918. 
L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 


(T.  D.  2702.) 


Authorizing  debtor  corporations  and  withholding  agents  to 
accept,  until  June  1,  1918,  certificates  of  ownership,  on 
the  old  forms,  when  properly  executed. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

1.  This  office  has  received  since  the  issue  of  the  revised 
forms  of  ownership  certificates  and  monthly  returns,  a  number 
of  certificates  and  returns  executed  on  the  old  forms.  It 
appears  that  there  is  a  misunderstanding  among  banks,  col- 
lecting agents,  debtor  corporations  and  withholding  agents  as 
to  whether  the  old  forms  of  certificates  may  be  used  in  lieu 
of  the  revised  forms. 

2.  In  view  of  the  fact  that  the  revised  forms  were  placed 
at  the  disposal  of  the  public  over  three  months  ago,  this  office 
is  of  the  opinion  that  a  reasonable  period  of  time  has  elapsed 
in  which  to  permit  the  public  to  have  become  familiar  with 
them.  In  order,  however,  to  prevent  inconvenience  to  individ- 
uals and  organizations  required  to  use  such  forms,  this  office 
grants  an  extension  of  time  until  June  1,  1918,  during  which 
time  OAvnership  certificates,  properly  executed  on  the  old  forms, 
presented  by  individuals  or  organizations,  either  resident  or 
foreign  may  be  accepted  by  debtor  corporations  and  withhold- 
ing agents. 

3.  On  and  after  June  1,  1918,  the  use  of  the  old  forms  of 
certificates  will  be  discontinued  in  connection  with  coupons 
and  interest  orders,  whether  owned  by  citizens  or  residents, 
etc.,  of  the  United  States,  or  non-resident  alien  individuals, 
firms,  or  foreign  corporations.  Banks  and  collecting  agents, 
debtor  corporations,  and  withholding  agents  shall  refuse  to 

1247 


accept  the  old  forms  after  that  date,  and  collectors  of  internal 
revenue  hereafter  receiving  monthly  returns  accompanied  by 
certificates  on  the  old  forms,  when  it  shall  appear  that  such 
certificates  were  filed  with  debtor  corporations  or  withholding 
agents  subsequent  to  June  1,  1918,  shall  require  the  debtor 
corporation  or  withholding  agent  concerned  to  file  certificates 
on  the  revised  forms,  as  herein  provided. 

4.  Collectors  are  further  advised  that  monthly  returns  ren- 
dered on  the  old  forms  are  no  longer  acceptable  to  this  office, 
and  when  so  received  cause  a  needless  expenditure  of  time  in 
auditing.  All  monthly  returns  reporting  payments  of  interest 
on  bonds,  or  payments  of  dividends  on  stock  of  domestic  cor- 
porations registered  in  the  name  of  foreign  corporations,  not 
having  an  ofiice  or  place  of  business  in  the  United  States, 
should  be  prepared  on  Form  1013,  Revised  (1918). 

5.  In  order  that  the  fulfillment  of  the  requirements  herein 
provided  may  cause  as  little  hardship  as  possible  to  individ- 
uals, banks,  collecting  agents,  corporations,  etc.,  collectors 
should  satisfy  themselves  that  they  have  a  sufficient  supply 
of  the  revised  forms  on  hand  to  meet  anticipated  demands, 
and  where  the  supply  is  not  deemed  sufficient,  requisition 
should  be  made  without  delay  on  Form  16,  Revised,  for  such 
additional  quantity  as  may  be  necessary.  Collectors  are  re- 
quested to  disseminate  this  information  throughout  their  dis- 
tricts as  quickly  as  possible. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  April  18,  1918. 
L.  S.  ROWE, 

Acting  Secretary  of  the  Treasury. 


(T.  D.  2705.) 


United  States  Bonds  bearing  interest  at  a  higher  rate  than 
four  per  centum  to  be  accepted  at  par  and  accrued  interest 
in  payment  of  estate  tax. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C.  April    23,    1918. 

To  Internal  Revenue  Officers  and  Others  Concerned: 

Section  14  of  the  Act  of  April  4,  1918  (Public— No.  120— 65th 
Congress),  provided  in  part: 

"That  any  bonds  of  the  United  States  bearing  interest 
at  a  higher  rate  than  four  per  centum  (whether  Issued 
under  section  one  of  this  Act  or  upon  conversion  of  bonds 
Issued  under  this  Act  or  under  said  Act  approved  April 
twenty-fourth,  nineteen  hundred  and  seventeen),  which 
have  been  owned  by  any  person  continuously  for  at  least 
six  months  prior  to  the  date  of  his  death,  and  which  upon 
such  date  constitute  part  of  his  estate,  shall,  under  rules 
and  regulations  prescribed  by  the  Secretary  of  the  Treas- 
ury, be  receivable  by  the  United  States  at  par  and  accrued 
interest  in  payment  of  any  estate  or  inheritance  taxes 
imposed  by  the  United  States,  under  or  by  virtue  of  any 
present  or  future  law  upon  such  estate  or  the  Inheritance 
thereof." 

Bonds  of  the  United  States  falling  within  the  classification 
specified  will  be  accepted  in  payment  of  estate  tax  at  par 
and  accrued  interest.  Bonds  so  receivable  must  (1)  bear  a 
higher  rate  of  interest  than  four  per  centum  per  annum,  and 

1248 


(2)  have  been  owned  by  the  decedent  continuously  for  at 
least  six  months  prior  to  the  date  of  his  death,  and  upon 
such  date  constitute  a  part  of  the  estate  of  the  decedent. 
The  reckoning  of  the  required  period  of  ownership  may  begin 
on  the  date  when  the  decedent  acquired  bonds  bearing  interest 
at  a  higher  rate  than  four  per  centum,  by  purchase,  by  con- 
version of  other  bonds,  or  otherwise. 

The  entire  estate  tax  may  be  paid  in  bonds,  or  the  tax 
may  be  paid  partially  in  bonds  and  partially  by  cash  or 
check.  Collectors  may  not,  however,  accept  bonds,  the  par 
value  and  accrued  interest  on  which  aggregates  a  greater 
amount  than  the  tax. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:   April  23,   1918. 
L.  S.  ROWE, 

Acting  Secretary  of  the  Treasury. 


(T.  D.  2706.) 

Compensation  for  property  requisitioned  or  lost  or  destroyed 
through  war  hazards;  replacement  fund;  taxation 
deferred — 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

To  Collectors  of  Internal  Revenue,  Revenue  Agents  and  Others 
Concerned: 
Regulations  No.  33,  Revised,  provide  in  Article  94  as  foUowa: 

Art.  04.  Income  from  Damages  Becovered. — "When  a 
corporation  as  a  result  of  suit  or  otherwise  secures  pay- 
ment for  damages  which  it  may  have  sustained,  and  the 
amount  of  such  payment  is  in  excess  of  an  amount  neces- 
sary to  make  good  the  damage  or  damaged  property,  the 
amount  of  such  excess  shall  be  considered  and  returned  as 
income  for  the  year  in  which  received.  If  the  entire  or 
an  estimated  amount  of  the  damage  shall  have  been  previ- 
ously charged  off  and  deducted  from  gross  income,  from 
the  amount  recovered  shall  be  returned  as  Income. 

If  the  amount  recovered  Is  less  than  the  damage  sus- 
tained or  less  than  an  amount  necessary  to  make  good 
the  damage,  the  difference  between  the  actual  amount  of 
damage  sustained  and  the  amount  recovered  will  be  de- 
ductible as  loss. 

In  the  case  of  property,  title  to  which  has  been  requisitioned 
for  war  uses,  or  property  which  has  been  lost  or  destroyed 
in  whole  or  in  part  through  war  hazards,  the  amount  re- 
ceived by  the  owner  as  compensation  for  the  property  may 
show  an  excess  over  the  value  of  the  property  on  March  1, 
1913,  or  over  its  cost  if  it  was  acquired  after  that  date.  This 
excess  of  the  amount  received  over  the  value  or  cost  of  the 
property,  except  so  far  as  actually  used  for  the  replacement 
of  the  property  in  kind,  is  subject  to  the  income,  war  income 
and  excess  profit*  taxes. 

Although  the  intention  or  obligation  of  the  taxpayer  in 
such  case  may  be  to  use  the  entire  sum  received  as  com- 
pensation for  the  replacement  in  kind  of  the  lost  or  damaged 
property,  it  is  recognized  that  it  may  not  be  practicable, 
owing  to  war  conditions,  to  make  such  replacement  for  a  con- 
siderable time.  In  such  case  the  taxpayer  may  establish 
A  "replacement  fund"  in  which  the  entire  amount  of  the  com- 

1249 


pensation  so  received  shall  be  held,  and  pending  the  disposi- 
tion thereof  the  accounting  for  gain  or  loss  thereupon  may  be 
deferred  for  a  reasonable  period  of  time  to  be  determined  by 
the  Commissioner  of  Internal  Revenue.  Where  the  property 
requisitioned,  lost  or  damaged  constituted  all  or  part  of  the 
security  under  a  mortgage  or  trust  indenture,  the  amount  car- 
carried  to  the  replacement  fund  may,  subject  to  the  approval 
of  the  Commissioner  of  Internal  Revenue,  be  the  amount  of 
compensation  received  less  the  amount,  if  any,  which  becomes 
payable  out  of  such  compensation  under  the  terms  of  such 
instrument  or  the  obligations  thereby  secured. 

In  any  such  case  the  taxpayer  should  make  application  to 
the  Commissioner  of  Internal  Revenue  for  permission  to  estab- 
lish such  replacement  fund  and  in  his  application  should  recite 
all  the  facts  relating  to  the  transaction  and  undertake  that 
he  will  proceed  as  expeditiously  as  possible  to  replace  or  re- 
store such  property  and  an  affidavit  as  to  the  truthfulness  of 
the  statements  made  should  be  attached  to  the  application. 

The  taxpayer  will  be  required  to  furnish  a  bond  with  such 
security  or  surety  as  the  Commissioner  of  Internal  Revenue 
may  require  for  an  amount  not  less  than  the  estimated  addi- 
tional excess  profits  and  income  taxes  assessable  by  the 
United  States  upon  the  income  so  carried  to  the  replacement 
fund;  or  at  the  option  of  the  taxpayer  and  in  lieu  of  such 
bond  the  taxpayer  may  deposit  as  security  for  such  estimated 
additional  amount  of  tax,  obligations  of  the  United  States 
issued  after  September  1,  1917,  such  obligations  to  be  held  in 
trust  as  such  security  under  such  agreement  as  may  be  pre- 
scribed by  the  Commissioner  of  Internal  Revenue  in  a  bank 
or  trust  company  approved  by  him. 

In  any  such  case  when  the  the  replacement  or  restoration 
is  made  the  new  or  restored  property  shall  not  be  valued  in 
the  accounts  of  the  taxpayer  at  an  amoimt  in  excess  of  that 
at  which  the  requisitioned,  damaged  or  destroyed  property 
was  carried,  except  and  to  the  extent  that  such  new  or  re- 
stored property  has  an  increased  productive  capacity. 

Article  94  of  Regulations  No.  33  (Revised)  as  hereby  modi- 
fied shall  apply  to  individuals  and  partnerships  as  well  as  to 
corporations. 

DANIEL  C.  ROPER, 

Commissioner. 
Approved:  April  25,  1918. 
L.  S.  ROWE, 

Acting  Secretary  of  the  Treasury. 


(T.  D.  2707.) 


Amending  instructions  relative  to  reporting  income  derived 
from  the  sale  of  personal  property  on  the  installment 
plan — 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

It  has  been  ascertained  that  dealers  in  personal  property 
who  sell  on  the  installment  plan  adopt  one  of  four  ways  of 
protecting  themselves  in  case  of  default,  namely: 
1.    A  provision  that  title  is  to  remain  in  the  seller  imtil  the 
buyer  has  performed  his  part  of  the  agreement. 

1250 


2.  A  conveyance  of  title  to  the  purchaser  subject  to  a  lien 

for  the  unpaid  portion  of  the  purchase  price. 

3.  The  conveyance  to  the  purchaser  and  an  immediate  recon- 

veyance by  way  of  chattel  mortgage  to  the  seller. 

4.  Conveyance  to  a  trustee  in  trust  to  hold  the  title  pending 

performance  of  the  contract  and  subject  to  its  provisions 

The  purpose  is  the  same  in  all  of  these  transactions. 

In  view  of  the  fact  that  in  a  number  of  States  it  is  held 
that  the  form  first  mentioned  shall  not  be  enforced  according  to 
its  terms,  but  will  be  regarded  as  a  sale  with  a  chattel  mort- 
gage back  to  secure  the  unpaid  purchase  price,  it  is  desirable 
that  a  uniform  rule  be  established  which  will  be  equitable 
and  applicable  to  all. 

The  rule  prescribed  is  that  in  the  sale  or  contract  for  sale 
of  personal  property  on  the  installment  plan,  whether  or  not 
title  remains  in  the  vendor  until  the  property  is  fully  paid 
for,  the  income  to  be  returned  by  the  vendor  will  be  that 
proportion  of  each  installment  payment  which  the  gross  profit 
to  be  realized  when  the  property  is  paid  for  bears  to  the  gross 
contract  price.  If,  for  any  reason,  the  vendee  defaults  in  his 
installment  payments  and  the  vendor  repossesses  the  property, 
the  entire  amount  received  on  installment  payments  less  the 
profit  originally  returned  will  be  income  to  the  vendor  to  be  so 
returned  for  the  year  in  which  the  property  was  repossessed. 

This  ruling  amends  Articles  117  and  120  of  Regulations  33, 
Revised,  and  revokes  all  previous  decisions  and  rulings  which 
are  in  conflict  herewith. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  April  25,  1918. 
L.  S.  ROWE, 

Acting  Secretary  of  the  Treasury. 


(T.  D.  2708.) 


Estates  of  Non-residents — Payment  of  Tax  and  Transfei 
of  Securities — 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

T.  D.  2490  prescribes  a  method  to  be  followed  by  transfer 
agents  who  have  orders  for  the  transfer  of  stock  standing  in 
the  name  of  a  non-resident  decedent.  The  following  alternative 
procedure  is  established  for  observance  by  transfer  agents 
who  prefer  this  method  to  that  prescribed  in  T.  D.  2490: 

A  supply  of  Form  706  will  be  furnished  by  the  commissioner 
or  any  collector  of  internal  revenue  to  any  transfer  agent. 
The  transfer  agent  will  forward  forms  to  its  foreign  offices 
or  to  its  representatives  in  foreign  countries,  with  instructions 
that  whenever  an  order  is  received  for  the  transfer  of  securi- 
ties belonging  to  a  non-resident  decedent,  the  foreign  executor, 
administration  or  beneficiary  of  the  estate  will  be  required  to 
execute  a  complete  return  on  Form  706  of  all  property  belong- 
ing to  the  decedent  situated  in  the  United  States,  including 
shares  of  stock  in  a  domestic  corporation.  This  return,  in 
triplicate,  will  be  subscribed  and  sworn  before  a  notary  public 

1251 


or  a  similar  officer  qualified  to  administer  oaths.  If  the  notary 
public  or  other  officer  is  known  to  the  transfer  agent  and  his 
signature  is  guaranteed  by  the  transfer  agent,  the  authority 
of  the  notary  public  or  other  official  need  not  be  attested  by 
a  certificate  of  a  United  States  consul.  In  addition  to  the 
returns  the  foreign  representative  of  the  transfer  agent  will 
obtain  from  the  personal  representative  of  the  estate  a  copy 
of  the  inventory  required  to  be  filed  by  the  probate  law  of 
the  country  in  which  the  decedent  was  domiciled  at  the  time 
of  death,  which  copy  shall  be  certified  to  by  the  proper  foreign 
judicial  officer  under  the  same  conditions  provided  for  the 
certification  of  the  returns.  The  returns  and  inventory  will 
be  forwarded  to  the  United  States  with  the  order  for  transfer 
of  the  shares  of  stock. 

Upon  receipt  of  the  return  and  inventory  by  the  transfer 
agent  the  items  on  the  return  will  be  carefully  checked  against 
the  inventory.  The  transfer  agent  will  retain  the  inventory 
and  send  the  return,  in  triplicate,  to  the  Commissioner  of 
Internal  Revenue  at  Washington,  with  a  certificate  to  the 
cflTect  that  all  property  disclosed  by  the  inventory  to  be  sit- 
uated in  the  United  States  has  been  included  in  the  return  on 
Form  706.  The  inventory  will  be  furnished  for  inspection  by 
the  Commissioner  of  Internal  Revenue  in  any  case  where  the 
commissioner  so  desires. 

After  a  review  of  the  return  and  verification  of  the  amount 
of  tax  due,  two  copies  of  the  return  will  be  forwarded  to  the 
collector  to  whom  the  tax  must  be  paid.  Upon  payment  of 
the  tax  the  collector  will  issue  the  usual  receipts  in  triplicate 
and  in  addition  will  certify  on  one  copy  of  the  return  fur- 
nished him  that  the  amount  of  tax  shown  by  the  return  to 
be  due  has  been  paid.  The  certified  and  receipted  copy  of  the 
return  will  be  forwarded  with  the  usual  receipts  for  payment 
to  the  transfer  agent,  to  be  used  as  evidence  that  the  securi- 
ties listed  on  the  return  have  been  reported  to  the  United 
States  Government,  and  that  the  Federal  estate  tax  has  been 
paid  with  respect  to  all  property  disclosed  on  Form  706. 

Notice  on  Form  704  and  Form  714  must  be  filed  with  the 
collector  as  heretofore. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  April  25,  1918. 
L.  S.  ROWE, 

Acting  Secretary  of  the  Treasury. 


(T.  D.  2709.) 

Revoking  Treasury  Decision  1987;  requiring  the  filing  by 
fiduciaries  of  a  separate  ownership  certificate  where  bonds 
of  the  same  issue  are  owned  by  more  than  one  estate  or 
trust,  and  providing  for  the  filing  of  one  certificate  in  the 
case  of  joint  owners. 

Treasury    Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

1.  Where  fiduciaries  have  the  control  and  custody  of  more 
than  one  estate  or  trust,  and  said  estates  and  trusts  have  as 
assets  bonds   of  corporations,   etc.,  this   office  will  hereafter 

1252 


require  that  a  certificate  of  ownership  be  executed  for  each 
estate  or  trust  regardless  of  the  fact  that  the  bonds  are  of  the 
same  issue.  When  bonds  are  owned  jointly  by  several  persons, 
one  of  the  owners  may  execute  an  ownership  certificate  in  be- 
half of  the  other  owners  and  endorse  on  the  back  thereof  their 
names  and  addresses,  and  proportion  of  ownership  of  each. 

2.  Treasury  Decision  1987,  dated  May  29,  1914,  and  instruc- 
tions on  ownership  certificates  Forms  1000  and  1001,  Revised, 
which  provide  for  the  filing  of  a  separate  certificate  by  each 
joint  owner,  are  hereby  superseded  and  repealed. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  May  2,  1918. 
L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 


(T.  D.  2711.) 


Revision  of  Article  62  of  the  Income  Tax  Regulations  and 
Article  2  of  the  Excess  Profits  Tax  Regulations  regarding 
limited  partnerships. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue. 

Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

Section  10  (a)  of  the  Income  Tax  Act  of  September  8,  1916, 
as  amended,  provides  for  a  tax  upon  the  net  income  of  "every 
corporation,  joint-stock  company  or  association,  or  insurance 
company,  organized  in  the  United  States,  no  matter  how 
created  or  organized,  but  not  including  partnerships."  Section 
4  of  the  War  Income  Tax  Act  of  October  3,  1917,  and  Section 
407  of  the  Capital  Stock  Tax  Act  of  September  8,  1916,  contain 
language  similar  in  efl'ect.  Section  200  of  the  War  Excess 
Profits  Tax  Act  of  October  3,  1917,  specifying  that  when  used 
therein  "the  term  'corporation'  includes  joint-stock  companies 
or  associations  and  insurance  companies,"  provides  for  a  tax 
"upon  the  income  of  every  corporation,  partnership  or  indi- 
vidual." 

Article  63  of  the  Income  Tax  Regulations  classes  limited 
partnerships  as  corporations  for  the  purpose  of  the  income  tax 
and  requires  income  from  the  earnings  of  such  partnerships  to 
be  treated  like  dividends  on  corporate  stock.  Article  2  of  the 
Excess  Profits  Tax  Regulations  extends  the  term  "corporation" 
to  include  limited  partnerships. 

So  far  as  limited  partnerships  of  the  type  of  partnerships 
with  limited  liability  or  partnership  associations  authorized 
by  the  statutes  of  Pennsylvania  and  of  a  few  other  States  are 
concerned,  no  reason  exists  for  changing  the  regulations.  Such 
so-called  limited  partnerships,  offering  opportunity  for  limiting 
the  liability  of  all  the  members,  providing  for  the  transfer- 
ability of  partnership  shares,  and  capable  of  holding  real 
estate  and  bringing  suit  in  the  common  name,  are  more  truly 
corporations  or  joint-stock  companies  than  partnerships. 

But  the  regulations  require  revision  with  respect  to  limited 
partnerships  of  the  type  authorized  by  the  statutes  of  New 

1253 


York  and  of  most  of  the  States.  S'ucri  limited  partnerships, 
which  cannot  limit  the  liability  of  the  general  partners,  al- 
though the  special  partners  enjoy  limited  liability  so  long  as 
they  observe  the  statutory  conditions,  which  are  dissolved  by 
the  death  or  attempted  transfer  of  the  interest  of  a  general 
partner,  and  which  cannot  take  real  estate  or  sue  in  the  part- 
nership name,  are  so  like  common  law  partnerships  as  to 
render  inadvisable  the  differentiation  hitherto  existing  in  the 
regulations. 

The  same  considerations  apply  to  the  classification  of  lim- 
ited partnerships  for  the  purpose  of  the  capital  stock  tax. 
It  is  immaterial  that  partnerships  with  limited  liability  of  the 
Pennsylvania  type  may  not  issue  stock.  They  have  capital 
stock  and  the  interests  of  the  members  are  shares  within  the 
meaning  of  the  statute,  stock  certificates  being  mere  evidences 
of  ownership. 

Therefore,  for  the  purpose  of  the  income  tax,  the  war  Income 
tax,  the  excess  profits  tax  and  the  capital  stock  tax,  limited 
partnerships  of  the  Pennsylvania  type  of  partnerships  with 
limited  liability  are  corporations  or  joint-stock  companies,  and 
limited  partnerships  of  the  New  York  type  are  partnerships. 
Article  62  of  the  Income  Tax  Regulations  and  Article  2  of  the 
Excess  Profits  Tax  Regulations  are  modified  accordingly.  How- 
ever, in  doubtful  cases  limited  partnerships  will  be  treated  as 
corporations  unless  thay  submit  satisfactory  proof  that  they 
are  not  in  effect  so  organized. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  Mav  9,  1918. 
L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 


(T.  D.  2715). 


Revision  of  Articles  83  and  84  of  the  Income  Tax  Regulations 
regarding  interest  upon  the  obligations  of  a  State  or  any 
political  sub-division  thereof — 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  others  concerned: 

Section  4  of  the  Income  Tax  Act  of  September  8,  1916,  as 
amended  by  the  Act  of  October  3,  1917,  provides  that  the  fol- 
lowing income  shall  be  exempt  from  the  income  tax: 

"Interest  upon  the  obligations  of  a  State  or  any  political 
sub-division  thereof." 

In  order  more  clearly  to  define  this  exemption  Articles  83 
and  84  of  the  Income  Tax  Regulations,  as  revised,  are  hereby 
amended  to  read  as  follows: 

"Art.  83.  Obligations  of  a  Statei — Among  income  exempt 
from  the  income  tax  is  interest  upon  the  obligations  of  a 
State  or  any  political  sub-division  thereof.  Obligations  issued 
for  a  public  purpose  by  or  on  behalf  of  the  State  or  a  duly 
organized  political  sub-division  acting  by  constituted  authori- 
ties duly  empowered  to  issue  such  obligations  are  the  obliga- 
tions of  a  State  or  a  political  sub-division  thereof. 

1254 


"Art.  84.  Political  sub-divisions.— The  term  'political  sub- 
division' denotes  any  division  of  the  State  made  by  the  proper 
authorities  thereof  acting  within  their  constitutional  powers 
for  the  purpose  of  carrying  out  a  portion  of  those  functions  of 
the  State  which  by  long  usage  and  the  inherent  necessities  of 
government  have  always  been  regarded  as  public.  Political 
sub -divisions  of  a  State,  within  the  meaning  of  the  exemption 
referred  to  in  Article  83,  include  special  assessment  districts  so 
created  such  as  road,  water,  sewer,  gas,  light,  reclamation, 
drainage,  irrigation,  levee,  school,  harbor,  port  improvement 
and  similar  districts  and  divisions  of  a  State." 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 
Approved:   May  20,  1918, 
L.  S.  ROWE, 

Acting  Secretary  of  the  Treasury. 


(T.  D.  2716.) 

Amending  Article  35,  Regulations  No.  33  (Revised),  by  defining 
foreign  items,  and  regulating  the  furnishing  of  informa- 
tion as  to  such  items  by  the  bank  or  agency  collecting  the 
same,  and  by  the  fiscal  agent  of  the  foreign  country  or 
foreign  corporation  making  the  payment. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  0. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

(1)  Article    35,   Regulations   No.    33    (Revised),   is    hereby 
amended  to  read  as  follows: 

Art.  35.  Such  returns  of  information  shall  be  required, 
regardless  of  amount,  in  the  case  of  payments  of  interest 
upon  bonds,  mortgages,  or  deeds  of  trust  or  other  similar 
obligations  of  domestic  or  resident  corporations,  joint- 
stock  companies,  associations,  and  insurance  companies, 
and  in  the  case  of  foreign  items.  The  original  ownership 
certificates,  when  duly  filed,  shall  constitute  and  be  treated 
as   returns  of  information. 

The  term  "foreign  item,"  as  used  In  this  article,  means 
any  dividend  upon  the  stock  of  a  foreign  corporation,  or 
any  item  of  interest  upon  the  bonds  of  foreign  countries 
of  non-resident  foreign  corporations,  whether  or  not  such 
dividend  or  interest  is  paid  in  the  United  States,  or  by 
check  drawn  on  a  domestic  bank.  The  term  "foreign 
corporation,"  as  used  in  this  article,  means  one  not  organ- 
ized and  existing  under  the  laws  of  the  United  States  or  of 
any  State  or  Territory  thereof,  or  of  the  District  of  Co- 
lumbia, Porto  Rico  or  the  Philippine  Islands.  The  term 
"non-resident  foreign  corporation,"  as  used  in  this  article, 
means  any  foreign  corporation  which  has  no  office  or 
place  of  business  in  the  United  States.  The  mere  mainte- 
nance of  an  ofllce,  or  fiscal  agency,  in  the  United  States 
for  the  payment  of  dividends  on  stock  or  interest  on 
bonds,  does  not  constitute  a  foreign  corporation  a  "resi- 
dent" of  the  United  States  within  the  meaning  of  this 
article. 

The  first  bank  or  agency  accepting  a  foreign  item  for 
collection  is  required  to  make  a  return  of  information  con- 
cerning the  same.  Whenever  a  foreign  country  of  foreign 
corporation  making  payment  of  foreign  items  has  a  fiscal 
agent  in  this  country,  such  agent,  when  requested  by  the 
Commissioner  of  Internal  Revenue,  shall  furnish  whatever 
information  he  has  in  relation  to  such  Items.  A  dividend- 
disbursing  agent  is  deemed  to  be  such  a  fiscal  agent. 

12S5 


Banks  or  agencies  collecting  foreign  Items  are  required 
to  obtain  a  license  from  the  Commissioner  of  Internal 
Revenue  to  engage  In  such  business,  and  are  subject  to 
such  regulations  for  the  furnishing  of  information  as  said 
commissioner,  with  the  approval  of  the  Secretary  of  the 
Treasury,  shall  prescribe,  and  to  the  penalties  prescribed 
for  failure  to  obtain  such  license  (Act  of  September  8, 
1916,  Sec.  9(f),  as  amended  by  Act  of  October  3,  1917,  Sec. 
1205).  A  blank  application  (Form  1017)  for  such  a  license 
may  be  obtained  upon  request,  from  any  Collector  of 
Internal  Revenue.    This  license  is  issued  without  cost. 

Such  foreign  Items  shall  not  be  accepted  for  collection 
by  any  bank  or  collecting  agency  so  licensed  unless  ac- 
companied by  proper  ownership  certificates  (Form  1001- A) 
showing  names  and  addresses  of  the  owners,  and  all 
other  Information  called  for  thereon.  The  licensee  Is  also 
required  to  Indorse  upon  such  item  the  words  "Certificate 
detached  and  Information  furnished,"  adding  his  name 
and  address.  When  foreign  Items  have  been  Indorsed  as 
above  prescribed,  the  certificates  shall  be  detached  and 
forwarded  to  the  Commissioner  of  Internal  Revenue  (Sort- 
ing Division),  Washington,  D.  C,  on  or  before  the  twen- 
tieth day  of  the  month  following  that  during  which  the 
Items  were  accepted,  accompanied  by  a  letter  of  trans- 
mittal showing  the  number  of  certificates,  and  the  aggre- 
gate amount  of  foreign  items  disclosed  thereon. 

(2)  For  the  purpose  of  complying  with  the  above  require- 
ments, a  certificate,  Form  1001 -A,  will  be  provided  by  the 
Government  and  furnished  to  CoUectori  of  Internal  Revenue 
for  distribution  to  the  public.  This  certificate  shall  be  in  the 
following  form: 

FOREIGN  ITEMS. 
Form  1001-A.  Names  must  be  printed 

U.  S.  Internal  Revenue.  or  written  plainly. 

Ownership  Certificate — Tax  Not  to  be  Paid  at  the  Source. 

(For  the  use  of  owners  of  stock  of  all  foreign  corporations,  and 
owners  of  bonds  of  foreign  countries  or  non-resident  foreign 
corporations.) 


Payor  of  Interest  or  Dividend.    ]       Owner  of  Bonds  or  Stocks. 

Name Name 

Address   I  Address   


(On  line  above  give  full  description  of  foreign  Item — date  of 
dividend,  or  maturity  of  Interest. 


I  certify  that  the  owner  of  the 
bonds  or  stock  upon  which  the 
above-described  Income  accrued 
falls  within  the  class  of  per- 
sons or  organizations  opposite 
which  such  income  Is  entered, 
and  Is  entitled  to  receive  the 
income  reported  without  de- 
duction of  tax. 
Signature  of  Owner 

or  Agent. 


Address  of  Agentf. 


Owner  Int.    Diva. 

If  owner  Is  an       Individual    Is 

|If   not,    Is    he    I    the   head   of 

he  married?      |    a  family? 

1.  Citizen  or  resi- 
dent of  the  Unit- 
ed States,  indi- 
vidual or  fiduci- 
ary*     $ 

2.  Domestic  or  res- 
ident corpora- 
tion, association 
or  partnership—  $ 

3.  Non  -  resident 
alien  Individual.  S 


4.  Non  -  resident 
foreign  corpora- 
tion, association 

or  partnership--  $ |_. 

♦Fiduciaries  must  enter  un- 
der "Owner  of  bonds  or  stocks" 
the  name  of  estate,  trust,  or 
beneficiary  on  behalf  of  whom 
this  certificate  is  made. 

If  securities  are  owned  joint* 
ly  by  several  persons,  one  may 
sign,  and  the  names,  addresses 
and  proportion  of  ownership  of 
each  indorsed  on  the  back 
thereof. 


1256 


NOTE:  The  first  bank  or  collecting  agent  receiving  this  certifi- 
cate is  required  to  detach  and  forward  it  to  the  Commissioner  of 
Internal  Revenue  (Sorting  Division),  Washington,  D.  C,  accom- 
panied by  a  letter  of  transmittal  shovv^ing  the  number  of  certifi- 
cates, and  the  aggregate  amount  of  foreign  items  disclosed  there- 
on. When  certificate  is  detached,  the  collecting  agent  shall  in- 
dorse upon  the  foreign  item  "Certificate  detached  and  information 

furnished ." 

(Name  and  address  of  licensee.) 

Date 

tA  responsible  bank  or  banker  may  execute  the  certificate  on 
behalf  of  a  non-resident  alien  ov^ner  of  stocks  or  bonds. 

(3)  The  use  of  Form  1071,  Revised,  is  hereby  discontimied. 
All  Treasury  Decisions  and  other  rulings  by  this  office  in 
conflict  herewith  are  hereby  superseded  and  repealed. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

APPROVED:  May  28,  1918. 
L.  S.  ROWE, 

Acting  Secretary  of  the  Treasury. 

Printed  copies  will  be  furnished  upon  request. 


(T.  D.  2720.) 

Income  Tax  Act  of  October  3,  1913 — Decision  of  Court. 

ASSOCIATION— 

An  organization  according  to  whose  constitution  in- 
dividuals who  are  beneficially  interested  in  various 
proportions  in  the  same  property  and  hold  assignable 
certificates  representing  their  different  interests  there- 
in, but  who  can  claim  no  part  of  the  income  of  such 
property  as  their  income  as  distinguished  from  the 
income  of  the  organization  to  which  they  belong, 
commit  the  control  and  management  of  such  prop- 
erty, or  for  profit,  to  trustees,  free  from  their  own 
immediate  control  or  interference,  except  that  such 
individuals  may  act  by  majority  in  amount  and  in- 
terest for  the  purpose  of  allowing  extra  compensa- 
tion to  the  trustees,  filling  vacancies  in  the  office  of 
trustees  or  modifying  the  terms  of  the  declaration  of 
trust,  is  an  "association"  and  taxable  as  such  under 
Section  II.  G(a)   of  the  Act  of  October  3,  1913. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

The  appended  decision  of  the  United  States  Circuit  Court  of 
Appeals  for  the  First  Circuit  in  the  cases  of  Crocker  et  al., 
trustees,  v.  John  F.  Malley,  collector  of  internal  revenue,  and 
of  John  F.  Malley,  collector  of  internal  revenue,  v.  Crocker 
et  al.,  trustees,  is  published  for  the  information  of  internal 
revenue  officers  and  others  concerned. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved  June  4,  1918: 
L.  S.  ROWE, 

Acting  Secretary  of  the  Treasury. 

1257 


UNITED  STATES  CmCUIT  COURT  OF  APPEALS,  FIRST 

CIRCUIT,  OCTOBER  TERM,  1917. 

1917.     No.  1323.     No.  1324. 

Alvah  Crocker  et  al.,  trustees,  plaintiffs  in  error,  v.  John 
F.  Malley,  collector,  defendant,  defendant  in  error;  John  F. 
Malley,  collector,  defendant,  plaintiff  in  error,  v.  Alvah 
Crocker  et  al.,  trustees,  plaintiffs,  defendants  in  error. 

Error  to  the  District   Court  of   the  United   States  for  the 
District   of  Massachusetts. 

Before  Dodge,  Johnson  and  Aldrich,  Judges. 
(May  3,  1918.) 

Dodge,  Judge:  These  cases  arise  under  the  Federal  Income 
Tax  Act,  approved  October  3,  1913  (38  Stats.  166,  172). 

The  j&ve  persons  who  were  then  the  trustees  under  a  declara- 
tion of  trust  dated  March  29,  1912,  and  recorded  in  the 
Worcester  County,  Massachusetts,  Northern  District,  registry 
of  deeds,  brought  suit  on  January  15,  1917,  against  the  Col- 
lector of  Internal  Revenue  to  recover  back  certain  amounts 
paid  by  them  to  him  under  protest,  as  income  taxes  claimed 
by  him  to  be  due  from  them  under  said  act,  for  the  years 
1913,  1914  and  1915.  The  case  was  heard  in  the  district  court 
without  a  jury  on  an  agreed  statement  of  facts.  The  trus- 
tees recovered  judgment  for  $9,554.07,  with  interest,  which 
judgment  the  collector  seeks  to  reverse  in  No.  1324,  asserting 
that  the  allowance  of  any  recovery  was  error.  By  their  writ 
of  error  in  No.  1323,  the  trustees  assert  the  judgment  to  have 
been  erroneous  in  not  allowing  also  the  further  recovery  of 
$1,321.33,  included  in  their  total  claim  as  stated  in  their 
declaration.  Neither  party  disputes  the  finding  below  that 
all  the  formalities  required  by  the  statute  to  enable  the  plain- 
tiffs to  bring  this  suit  have  been  complied  with. 

The  declaration  of  trust  provided  that  "the  title  of  this 
trust  (fixed  for  convenience)  shall  be  The  Wachuset  Realty 
Trust,"  The  important  features  of  the  trust  thereby  created 
are  set  forth  as  follows  ui  the  "Opinion  and  Findings"  of  the 
district  court: 

The  trust  was  created  under  the  common  law.  In  Its  Inception 
there  were  five  trustees  and  eight  beneficiaries,  five  of  whom  were 
trustees.  The  property  of  the  trust  consisted  of  real  estate  and 
shares  of  stock  In  a  Massachusetts  corporation,  the  legal  title  to 
which  was  vested  in  the  trustees.  The  real  estate  was  leased  to 
the  Massachusetts  corporation,  and  the  income  of  the  trust  came 
from  the  dividends  on  the  stocl^  and  the  rentals  of  the  real 
estate.  Certificates  were  issued  by  the  trust  to  the  beneficiaries  in 
proportion  to  their  respective  Interests  in  the  property  held  by  the 
trust.  The  certificates  contained  a  provision  signifying  the  assent 
of  the  beneficiaries  to  the  terms  of  the  trust  agreement. 


According  to  the  trust  agreement,  the  trust  was  to  continue  for 
20  years  from  and  after  the  death  of  the  survivor  of  certain  per- 
sons named,  when  the  property  was  to  be  converted  Into  money 
and  the  net  proceeds  distributed  among  the  persons  then  holding 
and  owning  the  beneficial  interests  therein.  Pending  final  con- 
version and  distribution  of  the  property  full  management  and 
control    of   the   tame   was   vested    in    the   trustees,    with    as    full 

Sowers  as  though  they  were  themselves  sole  and  absolute  bene- 
cial  owners  thereof  in  fee  simple. 

They  were  authorized  to  collect  and  receive  all  rents  and  In- 
comes from  the  property  and  semi-annually  or  oftener  to  dis- 
tribute such  portion  thereof  as  they,  In  their  discretion,  should 
determine  to  be  fairly  distributable  as  Income  to  the  several 
cestui  que  trusts,  according  to  their  Interests.  The  compensation 
of  the  trustees  was  not  to  exceed  a  total  of  one  per  cent,  reckoned 
upon  the  gross  income  received,  "unless,  at  any  time,  a  majority 
In  interest  of  the  cestui  que  trusts  consent  in  writing  to  gome 

1258 


larger  compensation  for  any  past  service."  Any  vacancies  in  the 
office  of  trustee  were  to  be  filled  by  tlie  remaining  trustees  by  an 
instrument  in  writing  signed  by  them  and  assented  to  in  writing 
by  the  holder  or  holders  of  a  majority  in  amount  of  the  beneficial 
interests  in  the  trust;  and  the  terms  and  provisions  of  the  trust 
could  be  modified  at  any  time  by  an  instrument  in  writing, 
signed,  sealed,  and  acknowledged  "by  the  then  trustees,  assented 
to  in  writing  by  a  majority  in  interest  of  the  cestui  que  trusts." 
It  was  also  stipulated  that  the  cestui  que  trusts  should  "be  trust 
beneficiaries  only,  without  partnership,  associate,  or  any  other 
relation  whatever  inter  sese." 

The  district  court  stated  the  question  upon  which  the  trus- 
tees' right  of  recovery  depends  as  follows: 

The  principal  question  in  the  case  is  whether  the  plaintiffs  are 
trustees  and  subject  to  the  tax  provisions  of  Section  II.,  Subdivi- 
sion D,  of  the  Act  of  October  3,  1913,  or  whether  they  are  an 
association  within  Section  II..  Subdivision  G(a),  of  said  act.  The 
contention  of  the  defendant  is  that  the  plaintiffs  are  an  associa- 
tion and  taxable  under  the  provisions  of  Subdivision  G,  while 
that  of  the  plaintiffs  is  that  they  are  a  strict  trust,  not  an  asso- 
ciation or  partnership,  and  are  subject  to  the  tax  provisions  of 
Subdivision  D. 

This  question  was  resolved  by  the  district  court  in  favor 
of  the  plaintiffs,  and  the  case  decided  upon  the  ground  that 
they  are  a  trust  and  not  an  association. 

Under  the  corporation  excise  tax  statute  of  1909  (36  Stats., 
11,  112)  every  corporation,  joint- stock  company,  or  associa- 
tion organized  for  profit  and  having  a  capital  stock  represented 
by  shares,  now  or  hereafter  organized  under  the  laws  of  the 
United  States  or  of  any  State  or  Territory,  etc.,  was  made 
subject,  if  engaged  in  business  in  any  State,  etc.,  to  pay  an- 
nually a  special  excise  tax  with  respect  to  the  carrying  on  or 
doing  business  by  it,  of  1  per  cent  upon  its  entire  net  income 
over  and  above  $5,000  received  by  it  from  all  sources  during 
the  year. 

In  Eliot  V.  Freeman,  220  U.  S.,  178,  it  was  held  with  regard 
to  two  Massachusetts  real  estate  trusts,  more  or  less  similar 
in  character  to  the  trusts  here  under  consideration,  that  they 
were  not  within  the  provisions  of  the  act  nor  liable  to  the 
excise  tax  thereby  imposed  because  formed  in  a  State  where 
statutory  joint- stock  companies  are  unknown  and  not  there- 
fore deriving  either  from  the  laws  of  the  United  States  or 
of  any  State  or  Territory,  etc.,  and  quality  or  benefit  not 
existing  at  the  common  law.  The  intention  of  Congress  was 
held  to  have  been  to  embrace  within  the  statute  only  such 
corporations  and  joint- stock  associations  as  were  organized 
under  some  statute  or  did  derive  from  that  source  some  qual- 
ity or  benefit  not  existing  at  the  common  law. 

This  decision  was  in  1911.  The  language  of  the  subsequently 
enacted  income  tax  statute  of  1913  imposes  the  normal  tax 
therein  provided  for  upon  the  entire  net  income  of  every 
corporation,  joint- stock  company,  or  association  organized  in 
the  United  States,  no  matter  how  created  or  organized. 

If,  therefore.  The  Wachuset  Realty  Trust  is  a  joint- stock 
company  or  association,  within  the  meaning  of  those  terms  as 
used  in  Section  11.,  G(a),  of  the  statute  of  1913,  it  makes  no 
difference  whether  it  is  created  or  organized  under  any  statute 
or  not.  Being  organized  in  the  United  States  its  income  is 
liable  to  the  tax  imposed,  although  it  derives  no  benefit 
not  existing  at  common  law  from  any  statutory  source.  The 
question  remains,  however,  whether  or  not  the  facts  before 
the  district  court  required  the  finding  that  it  was  a  "joint- 
stock  association"  or  "association"  such  as  the  above  section 
intends.  We  find  no  indication  in  Eliot  v.  Freeman  or  in  any 
other  Supreme  Court  decision  that  a  Massachusetts  trust  like 

1259 


those  before  the  court  in  that  case  must  necessarily  be  re- 
garded as  such  an  "association"  in  the  statutory  sense.  On 
the  collector's  behalf  it  is  said  that  in  the  legislation  of  1913 
Congress  "intentionally  omitted  the  one  requirement  which 
exempted  such  an  organization"  under  the  legislation  of  1909. 
But  we  think  it  by  no  means  clear  from  anything  said  in  the 
opinion  that  either  trust  before  the  court  in  Eliot  v.  Freeman 
must  have  been  held  an  "association"  in  the  statutory  sense, 
had  it  only  been  organized  under  some  statute  expressly  per- 
mitting such  organization.  In  the  opinion  it  is  expressly  said, 
as  to  the  trusts  then  under  consideration,  that  they  could 
"hardly  be  said  to  be  organized  within  the  ordinary  meaning 
of  that  term"  (220  U.  S.,  186),  and  it  was  pointed  out  (at  p. 
187)  that  they  did  not  have  perpetual  succession,  but  ended 
2.0  years  after  lives  in  being — suggestions  which  would  hardly 
have  been  made  if  the  decision  was  meant  to  be  understood 
as  contended. 

With  regard  to  the  statute  of  1909  it  is  to  be  noticed  that 
while  corporations,  joint- stock  companies,  or  associations  and 
insurance  companies,  were  therein  classed  together  as  they 
are  in  the  statute  of  1913— the  former  statute,  unlike  the  lat- 
ter, imposed  upon  them  not  a  tax  upon  their  incomes  as  such, 
but  a  "special  excise  tax  with  respect  to  the  carrying  on  or 
doing  business  by  them,"  equivalent  to  1  per  cent  upon  their 
net  incomes  in  excess  of  $5,000.  Upon  partnerships,  not  capa- 
ble of  being  included  in  said  classification,  the  statute  of  1909 
did  not  undertake  to  impose  any  such  tax,  any  more  than 
upon  individuals.  The  incomes  of  the  partners  from  the  busi- 
ness of  an  ordinary  partnership  Congress  could  not  have  taxed 
in  1909;  the  sixteenth  amendment  not  having  become  a  part 
of  the  Constitution  until  February  25,  1913. 

The  statute  of  1913,  however,  imposes  a  tax  directly  upon 
net  incomes  not  a  special  excise  tax  equivalent  to  the  same 
percentage.  It  imposes  such  tax  directly  upon  the  incomes 
of  individuals  and  partnerships  as  well  as  those  of  corpora- 
tions, joint-stock  companies  or  associations,  and  insurance 
companies  according  to  provisions  alike  in  principle  as  to  all 
said  incomes,  however  different  as  to  matters  such  as  the  dif- 
ferent amounts  of  exemptions  or  deductions  allowed  different 
classes  of  recipients.  The  provisions  of  Section  II.,  G(a), 
which  subject  the  incomes  of  corporations,  joint-stock  com- 
panies or  associations,  and  insurance  companies  to  the  tax 
are  there  expressly  declared  not  applicable  to  partnerships. 
In  Section  II.,  D,  are  found  separate  and  distinct  provisions 
which  expressly  direct  that  persons  carrying  on  business  in 
partnership  shall  be  liable  for  income  tax  only  in  their  indi- 
vidual capacities,  and  which  regulate  accordingly  the  returns 
of  incomes  required  to  be  made  by  partnerships. 

No  provisions  are  found  in  the  statute  of  1913  which  directly 
impose  a  tax  upon  incomes  arising  or  accruing  to  fiduciaries, 
in  terms  corresponding  to  those  whereby  a  tax  is  imposed 
upon  incomes  arising  or  accruing  to  individuals  (Sec.  IT.,  A-1) 
or  to  corporations,  joint-stock  companies  or  associations,  etc. 
(Sec.  IL,  G-a).  By  Section  II.,  I>,  in  a  paragraph  mainly 
devoted  to  setting  forth  requirements  t)f  annual  returns  froin 
or  on  behalf  of  the  various  classes  of  recipients  of  taxable 
income,  trustees,  among  other  specified  kinds  of  fiduciaries, 
"and  all  persons,  corporations,  or  associations  acting  in  any 
fiduciary  capacity,"  are  required  to  make  such  returns  of  "the 
net  income  of  the  person  for  whom  they  act,  subject  to  this 
tax,  coming  into  their  custody  or  control  and  managemeit, 

1260 


and  be  subject  to  all  the  provisiona  of  this  section  which  apply 
to  individuals." 

The  provisions  just  referred  to  seem  to  be  rather  provisions 
for  the  assessment  and  collection  of  the  taxes  due  from  the 
different  classes  of  recipients  of  incomes  elsewhere  directly 
taxed  by  the  statute  than  provisions  creating  still  another 
class  of  recipients  and  imposing  a  tax  upon  incomes  arising 
or  accruing  to  them.  Nowhere  in  the  statute  are  incomes 
arising  or  accruing  to  fiduciaries  declared  subject  as  such  to 
the  provisions  taxing  incomes  arising  or  accruing  to  indi- 
viduals. 

In  view  of  the  above  features  of  the  statute,  the  nrst  ques- 
tion presented  in  determining  its  application  to  these  trustees 
seems  to  be  as  follows :  Is  the  income  received  by  them  dur- 
ing each  calendar  year  from  the  property  under  their  control 
to  be  considered  income  arising  or  accruing  to  the  "persons 
for  whom  they  act,"  or  as  income  arising  or  accruing  to  them, 
notwithstanding  that  it  is  to  be  disposed  of  by  them  as  the 
trust  declaration  requires?  If  it  is  to  be  regarded  as  income 
of  the  former  description,  i.  e.,  as  arising  or  accruing  to  the 
respective  beneficiaries,  the  above  provisions  of  Section  II.,  D, 
require  an  annual  return  of  it  from  them,  and  they  are  liable 
to  pay  the  tax  imposed  upon  it  by  a  clause  in  the  same  para- 
grapgh  subjecting  them  to  all  the  provisions  of  the  section 
applicable  to  individuals;  but  under  subsequent  provisions 
of  Section  II.,  D,  they  need  not  include  in  their  returns  so 
much  of  said  income  as  is  derived  from  dividends  upon  the 
stock  forming  part  of  the  property  under  their  control.  But 
if  said  income  is  to  be  considered  as  "arising  or  accruing"  to 
them  rather  than  to  the  beneficiaries  or  certificate  holders, 
none  of  the  above  provisions  of  Section  II.,  A,  or  of  Section 
II.,  D,  seem  to  us  applicable  either  to  said  income  or  to  them. 
Though  arising  or  accruing  to  them  as  trustees  or  title  holders 
of  the  property  from  which  it  is  derived,  they  do  not,  and 
could  not,  claim  such  income  as  their  own  in  any  individual 
capacity;  and  if  they  do  not  receive  it  as  income  subject  to 
the  tax  because  it  has  arisen  or  accrued  to  the  several  bene- 
ficiaries, it  must  be  either  income  arising  or  accruing  to  them 
collectively  as  the  receiving  officers  of  their  organization,  and 
subject  to  the  tax  imposed  by  Section  II.,  G-a,  upon  incomes 
of  the  different  class  there  dealt  with,  from  which  dividends 
may  not  be  deducted,  or  income  upon  which  no  tax  is  imposed 
by  any  express  and  distinct  provisions  of  the  statute. 

In  order  to  make  income  from  a  trust  estate  received  by  the 
fiduciary  in  any  calendar  year  income  of  the  person  for  whom 
he  acts,  subject  to  the  tax,  in  the  sense  of  the  above  provi- 
sions of  Section  II.,  D,  it  must  be  received  by  the  fiduciary 
upon  terms  which  make  it  income  arising  or  accruing  during 
that  year  to  such  person  according  to  Section  II.,  A-1.  If  the 
terms  of  the  trust  are  such  that  its  receipt  by  the  fiduciary 
immediately  renders  it,  or  so  much  of  it  as  is  net  income, 
available  as  such  to  the  beneficiary,  no  difficulty  is  found  in 
regarding  it  as  income  of  the  person  for  whom  the  fiduciary 
acts,  subject  to  the  tax,  coming  into  his  custody  or  control  and 
management,  and  therefore  governed  by  said  provisions  of 
Section   II.,   D. 

But  by  the  terms  of  the  trust  here  in  question  the  receipt 
by  the  trustees  during  a  given  calendar  year  of  income  from 
the  trust  estate  does  not  render  any  part  of  such  income 
immediately  so  available  to  the  beneficiaries  as  income  arising 
or  accruing  to  them  during  the  year.     Such  receipt  gives  to 

1361 


no  one  of  them  any  right  to  a  share  of  what  the  trustees  so 
receive  as  then  belonging  to  him  individually,  or  any  right 
to  direct  the  disposition  of  any  such  share  according  to  his 
individual  determination. 

The  plaintiffs  were  not  required  by  the  trust  declaration 
under  which  they  received  the  income  from  the  trust  estate  for 
the  calendar  years  here  in  question  to  distribute  it,  or  any 
part  of  it,  to  the  beneficiaries,  as  net  income,  at  any  time. 
The  requirements  as  to  distribution  are  only  that  they  dis- 
tribute such  portion  of  the  income  received  "as  they  may  in 
their  discretion  determine  to  be  fairly  distributable  net  in- 
come." And  they  are  given  full  authority  from  time  to  time 
to  devote  any  funds  on  hand,  whether  received  as  capital  or 
income,  to  repair,  improvement,  protection,  or  development  of 
the  property  under  their  control,  or  to  the  acquisition  of  other 
property,  as  they  "may  determine  to  be  wise  and  expedient 
for  the  protection  and  development  of  the  trust  property  as 
a  whole  pending  its  conversion  and  distribution."  Further, 
their  determination  is  expressly  made  final,  if  made  by  them 
in  good  faith,  as  to  all  questions  as  between  capital  and 
income. 

No  beneficiary  of  this  trust,  therefore,  had  the  right,  when 
the  income  for  a  given  calendar  year  from  the  trust  property 
came  into  the  plaintiffs'  hands,  to  demand  any  share  of  it  or 
direct  the  disposition  of  any  of  it  or  even  to  have  his  individ- 
ual share  of  it  determined.  To  the  plaintiffs,  and  not  to  their 
beneficiaries,  belonged  the  right  to  say  whether  any  of  it 
should  then  go  to  the  beneficiaries  or  whether  all  of  it  should 
become  part  of  the  trust  property  ultimately  to  be  distrib- 
uted. In  such  final  distribution  no  one  who  was  a  beneficiary 
during  the  calendar  year  might  live  to  share.  While  the  value 
of  his  proportionate  interest  in  the  trust  estate  might  be  in- 
creased if  income  for  the  year  went  to  augment  said  estate, 
his  proportionate  share  in  income  so  disposed  of  can  hardly 
be  called  income  arising  or  accruing  to  him  as  an  individual  dur- 
ing the  year,  in  the  ordinary  sense.  We  think  it  may  \vell  be 
doubted  whether  income,  received  by  the  plaintiffs,  subject  to 
such  independent  power  of  disposition,  or  any  part  thereof,  is 
income  within  the  meaning  of  the  language  in  Section  11.,  D, 
"the  net  income  of  the  person  for  whom  they  act,  subject  to 
this  tax,  coming  into  their  custody  or  control  and  manage- 
ment." 

The  plaintiffs'  powers  and  functions  as  defined  by  the  in- 
strument under  which  they  act  resemble  the  powers  and 
functions  ordinarily  exercised  by  the  managers  of  an  organi- 
zation so  constituted  as  to  be  of  itself  a  recipient  of  taxable 
income  independently  of  the  individuals  beneficially  interested 
in  the  property  from  which  it  is  derived,  much  more  than  they 
resemble  the  powers  and  functions  of  ordinary  fiduciaries  act- 
ing merely  as  such  for  ordinary  beneficiaries.  Particularly  is 
this  true  as  to  income  received  from  their  trust  estate.  Until 
and  unless,  after  its  receipt,  they  have  so  exercised  their  dis- 
cretion as  to  determine  it,  or  some  part  of  it,  to  be  fairly  dis- 
tributable net  income,  no  individual  for  whom  they  act  can 
claim  any  part  of  it  as  his  income,  as  distinguished  from  the 
income  of  the  organization  to  which  h-e  belongs.  The  same 
is  true  of  a  corporation's  income,  in  which  stockholders  can 
claim  no  individual  right  before  the  managers  declare  a  divi- 
dend from  it.  The  same  would  be  true  of  a  corporation,  joint- 
stock  company,  or  association  which  had  given  to  its  officers 
powers  of  disposition  over  its  income  like  the  above.     The 

1263 


same  would  not  be  true  in  the  ordinary  eases  of  fiduciaries 
exercising,  with  regard  to  income,  only  the  powers  necessary 
for  distributing  net  income  as  received  to  the  persons  for 
whom  they  act,  such  as  we  think  were  contemplated  by  the 
above  provisions  of  Section  II.,  D. 

It  is  true,  as  the  agreed  statement  before  us  shows,  tliat 
the  plaintiffs  "have  disbursed  such  income"  as  they  have  from 
time  to  time  received  from  the  real  estate  and  stock  which 
they  hold,  "less  charges  and  disbursements  for  taxes  and 
similar  expenses,  to  their  several  beneficiaries  in  proportion  to 
their  respective  interests."  This  we  understand  to  mean  that 
they  have  distributed  so  much  of  the  income  received  by  them 
during  the  calendar  years  here  in  question  as  they  determined 
in  their  discretion,  to  be  fairly  distributable  net  income;  ac- 
cording to  clause  3  of  the  declaration  of  trust.  But  in  said 
distributions  the  respective  beneficiaries  can  hardly  be  said 
to  have  got  what  they  received  because  it  had  arisen  or  ac- 
crued to  each  of  them  during  the  year;  or  the  plaintiffs  to 
have  been  performing  only  the  duty  of  paying  over  net  in- 
comes so  arising  or  accruing.  Each  beneficiary  took  what  he 
received,  not  because  it  was  his  net  income  so  arising  or 
accruing,  but  because  the  plaintiffs  had  elected  to  treat  what 
they  distributed  as  "fairly  distributable  net  income,"  instead 
of  accumulating  it  as  they  might  have  done. 

The  district  court,  as  its  opinion  states,  held  the  plaintiffs 
to  be  "a  trust"  subject  to  the  provisions  of  Section  II.,  D,  and 
not  "an  association,"  in  deference  to  the  decisions  in  Williams 
T.  Milton,  215  Mass.  1;  Crocker  v.  Crocker,  previously  decided 
in  the  district  court  (May  23,  1914),  and  the  authorities  where- 
upon those  decisions  were  based.  Crocker  v.  Crocker  required 
construction  by  the  court  of  the  same  trust  declaration  as  is 
now  before  us.  The  bill  in  that  case,  filed  by  one  of  the  bene- 
ficiaries, asked  the  court  to  enjoin  the  present  plaintiffs  from 
making  a  return  of  income  taxable  under  this  statute  accord- 
ing to  Section  II.,  G-a,  thereof. 

We  agree  with  the  district  court,  in  this  case  and  in  Crocker 
V.  Crocker,  that  the  organization  formed  under  this  trust  dec- 
laration is  not,  in  view  of  the  authorities  referred  to,  to  be 
regarded  as  an  association  in  such  sense  as  to  make  the  bene- 
ciaries  partners  and  the  plaintiffs  their  agents  for  conducting 
the  partnership  business.  Its  income,  therefore,  for  the  calen- 
dar years  in  question,  is  not  for  the  purpose  of  the  statute 
to  be  treated  as  income  of  a  partnership.  If  it  were  to  be  so 
treated  it  would  be  income  arising  or  accruing  to  the  several 
partners  and  subject  to  the  provisions  of  Section  II.,  D,  re- 
garding such  income.  Nor  could  the  organization  be  regarded 
as  belonging  to  either  of  the  classes  mentioned  in  Section 
II,  G-a,  because  the  language  there  used  expressly  excludes 
partnerships. 

But  although  their  beneficiaries  stood,  neither  as  to  the  trust 
property  nor  as  to  the  profits  of  its  control  and  management, 
nor  as  to  the  income  therefrom,  as  partners,  but  only  as 
beneficiaries  of  a  struct  trust;  and  although  the  plaintiffs  were 
not  the  agents  or  representatives  of  a  partnership,  but  trus- 
tees in  whose  management  and  control  of  the  trust  property 
and  business  the  beneficiaries  had  no  direct  voice,  we  do  not 
think  it  necessarily  follows  that  the  organization  composed 
of  themselves  and  the  individuals  for  whose  benefit  they  act 
can  not  be  called  an  "association"  for  the  purposes  of  Section 
n.,  G-a.  Though  not  associated  as  partners,  we  fail  to  see 
why  they  may  not  reasonably  be  said  to  be  associated  in  the 

1263 


sense  contemplated  by  the  statute.  As  pointed  out  above,  the 
statute,  for  the  purposes  of  the  taxation  which  it  imposes, 
broadly  distinguishes  between  two  classes  of  income  only — 
that  which  does  and  that  which  does  not  arise  or  accrue  to 
individuals  as  opposed  to  groups  or  bodies  of  individuals. 

The  plaintiffs  fail  to  satisfy  us  that  the  terms  ''voluntary 
association"  or  "association"  are  entirely  inapplicable  for  any 
purpose  to  an  organization  according  to  whose  constitution 
individuals  beneficially  interested  in  various  proportions  in  the 
same  property  commit  its  control  and  management,  for  profit, 
to  trustees  free  from  their  own  immediate  control  or  inter- 
ference. However  important  it  may  be  to  distinguish  between 
a  trust  under  which  there  is  no  partnership  relation  among 
the  beneficiaries  and  an  association  imder  which  such  relation 
exists  for  the  purposes  of  systems  of  taxation  such  as  that  of 
Massachusetts  (Williams  v.  Milton,  215  Mass.,  1),  or  for  the 
purpose  of  statutes  such  as  that  construed  in  Smith  v.  Ander- 
son, 50  L.  J.  Ch.,  39;  it  does  not  seem  to  us  that  the  dis- 
tinction 80  made  necessarily  excludes  an  organization  like 
this  from  the  general  class  of  organizations  to  which  the  terms 
"voluntary  association"  or  "association"  may  properly  be  ap- 
plied. The  holders  of  the  assignable  certificates  representing 
the  different  beneficial  interests  in  this  "trust"  may  certainly 
be  described,  without  using  language  in  any  extraordinary 
or  unusual  sense,  as  associated  together  for  their  common 
benefit  or  profit.  Their  individual  interests  in  the  trust  prop- 
erty are  combined  for  the  purposes  of  a  joint  business  venture 
managed  for  the  common  benefit  of  all.  The  trust  declaration 
in  effect  associates  them  for  the  purposes  of  allowing  extra 
compensation  to  the  trustees,  of  filling  vacancies  in  the  office 
of  trustees,  or  of  modifying  the  terms  of  the  declaration  itself 
when  it  requires  for  those  purposes  written  assent  from  a 
"majority  in  amount"  or  a  "majority  in  interest." 

Believing,  in  view  of  the  entire  scheme  for  taxation  of  in- 
comes as  established  by  this  statute,  that  the  legislative  intent 
as  to  incomes  such  as  these  plaintiffs  have  received  was  to 
treat  them  as  arising  or  accruing  to  the  trustees  collectively, 
rather  than  to  the  individual  beneficiaries  for  whose  ultimate 
benefit  they  were  received,  we  are  obliged  to  hold  that  the 
taxes  for  the  years  here  in  question  were  lawfully  assessed 
and  collected,  and  that  the  district  court  erred  in  its  decision 
to  the  contrary.  This  conclusion  renders  it  unnecessary  to 
consider  the  questions  w^hich  would  have  had  to  be  decided 
upon  the  plaintiffs'  writ  of  error  No.  1323  had  we  agreed  with 
the  district  court. 

In  No.  1323  the  writ  of  error  is  dismissed,  and  the  defendant 
in  error  recovers  his  costs  of  appeal. 

In  No.  1324  the  judgment  of  the  district  court  is  reversed, 
and  the  case  is  remanded  to  that  court  with  directions  to  enter 
judgment  for  the  defendant,  and  the  plaintiff  in  error  recovers 
his  costs  of  appeal. 


(T.  D.  2721.) 

Corporation  Excise  Tax  Act  of  1909— Decision  of  the 
Supreme  Court — 

1.  Nature  of  Iron-Ore  Leases. 

Iron  ore  leases  of  the  kind  under  consideration  are  not 
conveyances  of  the  ore  in  place,  but  are  grants  of  the  privi- 
lege' of  entering  upon,  discovering,  and  developing  and  re- 


1264 


moving  the  minerals  from  the  land — The  Sargent  Land  Com- 
pany case   (243  U.  S.,  503)    followed. 

2.  Depletion  of  Capital  Assets. 

The  lessee  of  mining  property  may  not  deduct  the  pro- 
portionate value  of  the  ore  in  place  on  January  1,  1909,  with 
respect  to  each  ton  of  ore  mined,  as  so  much  depletion  of 
capital  assets,  but  may  deduct  a  proportionate  part  of  the 
royalty  paid  in  advance. 

3.  Judgment  Reversed. 

The  judgment  of  the  Circuit  Court  of  Appeals  is  reversed 
and  that  of  the  District  Court  is  aifirmed. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

The  appended  decision  of  the  United  States  Supreme  Court 
in  the  case  of  United  States  of  America  v.  Biwabik  Mining 
Company  is  published  for  the  information  of  internal  revenue 
officers  and  others  concerned. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved  June  4,  1918: 
L.  S.  ROWE, 

Acting  Secretary  of  the  Treasury. 


SUPREME  COURT  OF  THE  UNITED  STATES.     No.   594. 
OCTOBER  TERM,  1917. 

United  States  of  America,  petitioner,  v.  Biwabik  Mining 

Company. 

On  writ  of  certiorari  to  the  United  States  Circuit  Court  of 

Appeals  for  the  Sixth  Circuit. 

(May  20,  1918.) 

Mr,  Justice  Day  delivered  the  opinion  of  the  court: 
This  case  is  here  upon  a  writ  of  certiorari  to  the  United 
States  Circuit  Court  of  Appeals  for  the  Sixth  Circuit.  It  was 
instituted  by  the  United  States  in  the  District  Court  of  the 
United  States  for  the  Northern  District  of  Ohio  to  recover 
the  sum  of  $2,653.72,  being  1  per  cent  upon  $365,372.08,  which, 
it  was  claimed,  the  mining  company  had  wrongfully  omitted 
from  the  return  of  its  net  income  for  the  year  1910  under  the 
corporation  tax  act  of  1909. 

The  case  was  tried  upon  an  agreed  statement  of  facts  which, 
omitting  imnecessary  details,  were  epitomized  by  the  District 
Court  as  follows: 

In  the  year  1898  the  defendant,  by  assi|?nment  of  a  lease,  ac- 
quired a  leasehold  estate  in  certain  ore-prodncing  properties  in 
the  State  of  Minnesota,  from  whirh  It  mined  ore  from  thnt  date 
to  and  including?  the  year  1910.  For  the  year  3930  the  dofendnnt 
made  a  retnrn  to  the  collector  of  internal  revenue  of  its  gross 
Income,  and  from  this  amount  it  dpducted,  "to  cover  realization  of 
nnfarned  increment,"  the  sum  of  $265,372.08.  The  amount  of  this 
deduction  was  arrived  at  by  mnltiplylncr  the  number  of  tons  of  ore 
mined  during  the  year  by  48%  cents,  which  was  the  market  value 
of  the  ore  in  place  on  the  premises  on  the  first  day  of  January, 
1909,  as  estimated  by  the  defendant,  this  being  the  date  upon 
which  the  returns  for  taxation  were  to  commence.  It  is  stipu- 
lated that  this  deduction  Avas  made  in  good  faith  upon  the  claim 
that  it  was  "a  reasonable  allowance  for  depreciation"  of  the  prop- 
erty of  the  defendant  for  that  year. 

1265 


In  June,  1911,  payment  was  made  In  accordance  with  this  re- 
turn, but  the  Treasury  Department  about  the  month  of  October, 
1914,  after  investigating  the  books  and  records  of  the  defendant, 
made  the  claim  that  because  the  defendant  was  not  the  owner 
in  fee  of  the  premises  from  which  it  was  mining  ore,  but  was 
lessee  of  the  same  and  was  paying  a  royalty  to  the  fee  owners, 
It  was  not  entitled  to  deduct  anything  for  depletion  of  the  ore 
body  on  the  premises.  Thereupon  the  defendant  was  requested  to 
amend  its  return  for  the  year  1910  so  as  to  include  in  its  gross 
Income  the  amount  of  said  deduction,  which  it  declined  to  do, 
and  thereupon  this  suit  was  instituted  to  recover  the  tax  upon 
the  amount  of  this  deduction,  amounting  to  $2,653.72. 

Some  time  prior  to  the  making  of  the  return  for  the  year  1910 
the  defendant  estimated  the  tonnage  and  the  market  value  of  the 
ore  In  place  upon  the  premises  upon  which  it  held  its  lease,  which 
estimate  gave  to  the  ore  in  place  a  value  of  4S%  cents  per  ton, 
exclusive  of  royalty. 

The  rights  of  the  defendant  in  the  Iron  ore  mined  In  the  year 
1910  were  derived  from  the  assignment  to  it  of  a  written  lease 
dated  April  4,  1898,  by  the  Biwabik  Bessemer  Company,  lessor. 
By  the  terms  of  that  lease  the  defendant  acquired  the  right  for 
the  term  of  50  years  and  3  months  from  the  first  day  of  May, 
1898,  to  explore  for,  mine  out,  and  remove  the  merchantable 
shipping  iron  ore  which  might  be  found  upon  the  lands  described 
In  the  lease  upon  the  payment  of  a  royalty  of  30  cents  for  each 
ton  mined.  The  expression  "merchantable  ore"  is  defined  as 
including  "all  ores  which  grade  55  per  cent  and  above  in  metallic 
iron  regardless  of  other  ingredients." 

The  lessee  contracted  to  mine  and  remove  at  least  300,000  toui 
of  ore  annually,  or  to  pay  to  the  lessor  30  cents  per  ton  on  that 
amount  if  it  should  not  be  mined,  but  payments  made  In  any 
year  in  excess  of  royalty  on  ore  actually  mined  could  be  credited 
upon  the  excess  which  might  be  mined  over  the  minimum  re- 
quirement In  subsequent  years.  Any  failure  to  keep  or  perform 
any  of  the  covenants  or  conditions  of  the  lease  gave  to  the  lessor 
the  option  to  take  Immediate  possession  of  the  premises. 

The  lessor  in  the  lease  reserved  a  lien  upon  any  ore  mined  and 
upon  all  improvements  for  any  unpaid  balance  of  royalty,  and  It 
was  also  provided  in  the  lease  that  the  lessee  should  have  the 
right  to  terminate  the  lease  on  any  first  day  of  January  during 
its  term  by  giving  90  days'  notice  of  the  purpose  and  desire  so 
to  do. 

The  defendant,  at  the  time  it  acquired  this  lease,  paid  to  the 
prior  lessee  the  sum  of  $612,000,  In  addition  to  contracting  to  pay 
the  30  cents  per  ton  royalty  upon  the  ore  mined,  as  has  been 
Btated. 

It  Is  stipulated  In  the  agreed  statement  of  facts  that  the  deposit 
of  ore  on  the  leased  premises  is  of  such  character  that  its  quality 
and  quantity  were  capable  of  determination  "with  extraordinary 
accuracy"  by  drilling  and  shafts,  and  that  the  defendant  "by 
drilling  and  by  standard  recognized  methods"  had  calculated  the 
tonnage  remaining  on  the  land  on  January  1,  19C9,  as  6,874,605 
tons,  all  of  which  could  be  easily  removed  within  the  term  of  the 
lease. 

Upon  these  facts  the  district  court  reached  the  conclusion 
that  the  leases  in  question  were  not  conveyances  of  ore  in 
place,  but  were  grants  of  the  privilege  of  entering  upon  the 
premises  and  mining  and  removing  the  ore,  and,  consequently, 
that  the  deduction  claimed  as  being  one  from  capital  invest- 
ment could  not  be  allowed.  In  reaching  this  conclusion  the 
court  cited  the  opinion  of  this  court  in  Stratton's  Independ- 
ence (Ltd.)  V.  Howbert,  Collector  (231  U.  S.,  399),  and  the 
judgment  of  the  Circuit  Court  of  Appeals  for  the  Eighth 
Circuit  (311  Fed.,  1023)  affirming  the  judgment  of  the  district 
court  (207  Fed.,  419),  which  decision  of  the  Circuit  Court  of 
Appeals  was  made  after  the  return  of  the  answer  to  the  ques- 
tions propounded  by  that  court  to  this  court  in  the  Stratton's 
Independence  case. 

Coming  to  the  question  as  to  whrtt  allowance  should  be 
made  to  the  mining  company  by  way  of  deduction  from  its 
income  in  making  return,  the  district  judge  said: 

The  defendant  paid  $612,000  for  the  lease  under  considera- 
tion and  in  addition  assumed  the  payment  of  the  royalties 
stipulated  for  therein.    This  may  properly  and  justly  be  con- 

1266 


sidered  a  payment  in  advance  of  an  increased  royalty  on  ore 
to  be  mined,  and  that  is  precisely  the  character  which  the 
defendant  gave  to  the  payment  when  dealing  with  it  in  its 
private  accounts,  in  which  the  stipulation  shows  (Ex.  H.)  that 
it  carried  one  account,  entitled  "Rate  of  general  ledger  or 
capitalized  value  $0,03885  per  ton,"  and  another  account  en- 
titled "Rate  of  increment  value,  January  1,  1909,  $0.44865  per 
ton."  These  two  values  added  make  the  48%  cents  per  ton 
which  the  defendant  deducted  in  making  its  return. 

Thus,  in  its  own  bookkeeping  the  defendant  gives  its  private 
opinion  as  to  the  requisite  reimbursement  necessary  to  main- 
tain its  capital  investment,  and  thereby  is  made  applicable 
that  long-standing  rule  for  the  construction  of  contracts,  viz. : 
"Show  me  what  men  have  done  under  a  contract,  and  I  will 
tell  you  what  it  means."  The  defendant  should  not  complain 
if  it  be  held  to  that  construction  of  this  lease  and  its  invest- 
ment under  it  which  it  adopted  for  purposes  of  its  own  ac- 
counting before  the  question  of  taxation  had  arisen  to  call 
forth  ingenuity  of  interpretation. 

It  results  that  a  decree  will  be  entered  allowing  instead  of 
the  deduction  computed  on  the  basis  of  48.75  cents  per  ton  of 
ore  mined,  the  sum  of  0.03885  cent  per  ton,  and  there  being 
no  question  of  bad  faith  in  the  case,  the  ends  of  justice  will 
be  served  by  the  payment  of  interest  at  the  rate  of  6  per  cent 
per  annum  from  the  date  when  the  additional  payment  found 
due  should  have  been  made. 

The  district  court  thereupon  entered  judgment: 

And  the  court  finds  as  conclusions  of  law  from  said  facts  that 
the  defendant  was  entitled  to  deduct  for  and  on  account  of  the 
544,353  tons  of  iron  ore  mined  by  it  under  its  lease  in  the  year 
1910,  the  sum  of  0.03885  cents  per  ton  (which  amount  the  parties 
agree  hereoy  is  the  cost  to  defendant  of  said  ore  at  the  time  it 
acquired  the  property  in  the  year  1898,  interest,  taxes,  surveys 
and  other  carrying  charges  on  the  said  ore  up  to  the  time  of  its 
removal  from  the  said  mine  having  been  charged  annually 
including  the  year  1910  into  operating  expenses),  and  defendant 
is  not  entitled  to  deduct  the  48,75  cents  per  ton  deducted  by  it 
In  its  return,  and  there  is  due  from  the  defendant  to  the  plaintiff 
the  sum  of  $2,442.23,  with  interest  thereon  at  6  per  cent  from  the 
30th  day  of  June,  1911,  the  date  when  said  sum  should  have  been 
paid,  and  the  court  assesses  the  plaintiff's  damages  herein  at 
$3,140.70,  and  judgment  is  hereby  rendered  against  the  defendant 
in  favor  of  the  plaintiff  of  the  sum  of  $3,140.70,  with  interest  from 
the  first  day  of  this  term  of  court. 

The  company  took  the  case  to  the  Circuit  Court  of  Appeals 
upon  writ  of  error,  that  court  reversed  the  judgment  of  the 
district  court,  holding  that  the  company  was  entitled  to  the 
deduction  of  48.75  cents  per  ton  upon  each  ton  of  ore  mined,  as 
so  much  depletion  of  capital  assets  (242  Fed,,  9).  This  con- 
clusion was  reached  upon  a  construction  of  the  lease  in  view 
of  the  character  of  the  mining  property  involved,  and  largely 
because  of  the  fact  that  the  quantity  of  the  ore  in  place  could 
be  estimated  with  substantial  accuracy.  The  court  held  that 
the  selling  price  of  the  ore  in  any  one  year  so  far  as  it  rep- 
resented the  actual  value  to  the  mining  company  of  the  ore 
in  the  ground  on  January  1,  1909,  was  not  income  within  the 
meaning  of  the  corporation  tax  act  of  1909.  In  the  course  of 
its  opinion  the  Circuit  Court  of  Appeals  announced  the  de- 
cisive question  of  law  to  be:  "So  far  as  the  selling  price 
of  the  ore  in  1910  represented  its  actual  value  to  the  company 
in  the  ground  on  January  1,  1909,  was  it  income  or  was  it  the 
sale  price  of  capital  assets?"  And  after  dealing  with  the 
character  of  this  lease  and  the  property  covered  by  it,  said: 

1267 


We  think  that  the  lessee  of  such  property  and  under  such  a 
lease  Is  as  much  entitled  as  Is  the  owner  of  the  fee  to  treat  the 
value  of  his  interest  In  the  ore  in  the  ground  at  the  beginning  ol 
the  tax  period  as  his  capital — Indeed,  the  lessee's  right  to  do  so  is, 
In  some  respects,  the  stronger  of  the  two,  as  hereafter  pointed  out. 
Such  a  lease,  as  applied  to  this  situation,  is  in  every  substantial 
way  pro  tanto  a  purchase. 

This  view  of  the  character  of  these  instruments  and  their 
legal  effect  differs  from  that  taken  by  this  court  in  the  Sar- 
gent Land  Company  case  (242  U.  S.,  503),  wherein  precisely 
similar  iron  ore  leases  were  under  consideration.  In  that 
case  this  court  reached  the  conclusion  that  such  leases  were 
not  conveyances  of  the  ore  in  place,  but  were  grants  of  the 
privilege  of  entering  upon,  discovering,  and  developing  and 
removing  the  minerals  from  the  land,  and  that  the  lessor's 
income  from  such  operation  was  obtained  by  a  corporation 
shown  to  be  carrying  on  business,  and  upon  principles  laid 
down  in  previous  cases  in  this  court  (Stratton's  Independence 
V.  Howbert,  supra;  'Stanton  v.  Baltic  Mining  Company,  240 
U.  S.,  103)  that  such  income  was  subject  to  taxation  under  the 
corporation  act  of  1909. 

In  the  Sargent  Land  Company  case  it  was  pointed  out  that 
the  courts  of  Minnesota,  certainly  familiar  with  the  physical 
characteristics  of  the  ore  deposits  involved,  had  in  a  series  of 
cases  held  these  instruments  to  be  leases,  and  that  the  royal- 
ties agreed  to  be  paid  were  rentals  in  compensation  for  the 
privileges  granted  the  lessee.  We  held  the  conclusion  of  the 
Minnesota  courts  to  be  warranted  by  reason  and  authority. 
(242  U.  S.,  503,  and  cases  cited  in  margin,  p.  518.) 

The  Circuit  Court  of  Appeals  distinguished  the  Sargent 
Land  Company  case,  and  of  it  said: 

Finally,  It  Is  urged  that  this  case  Is  controlled  by  the  decision 
of  the  Supreme  Court  In  the  Sargent  Land  Company  case.  The 
mining  leases  involved  in  that  case  and  in  this  one  seem  to  be  iden- 
tical in  substance,  and  It  is  now  said  with  great  plausibility  that 
the  ore  in  the  ground  and  affected  by  such  a  lease  belongs  partly 
to  the  lessor  and  partly  to  the  lessee,  and  that  if  the  interest  of 
the  lessor  Is  not  capital  assets  no  more  is  the  interest  of  the 
lessee,  and  that  If  the  receipts  of  the  former  are  income  so  must 
those  of  the  latter  be.  We  are  convinced  that  the  analogy  between 
the  two  cases  is  superficial  and  not  substantial.  In  that  case 
the  Supreme  Court  had  to  determine  Avhether  the  royalties  re- 
ceived by  the  lessor  were  income  or  were  a  depletion  of  capital. 
Many  considerations  led  to  the  conclusion  that  they  must  be 
treated  as  income.  The  contract  was  a  "lease,"  the  receipts  were 
"royalties,"  and  royalties  being  rentals  are  inherently  Income  and 
have  been  commonly  so  considered.  All  these  things  seem  to  have 
affected  the  conclusion  of  the  court,  but  after  all  the  dominating 
thought  appears  to  be  that  when  land  Is  devoted  to  mining  it  Is 
put  to  only  one  of  those  productive  uses  of  Avhich  it  is  capable, 
and  that  the  product  of  the  use  should  be  called  Income.  The 
land  Itself  Is  the  chief  thing.  After  the  mining  is  finished  the 
land  remains  suitable  for  other  uses;  and  the  fact,  If  it  Is  a  fact, 
that  the  minerals  are  the  greater  part  of  its  value  can  not  operate 
to  make  the  Incidental  overshadow  the  principal.  These  reasons 
do  not  apply  at  all  to  the  case  of  the  lessee  whose  existing  interest 
at  the  beginning  of  the  taxing  period  over  and  above  the  royalty 
which  he  must  pay  amounted  to  $3,000,000;  his  entire  interest  was 
each  year,  as  far  as  he  went,  consumed  and  exhausted  forever; 
he  did  not  have  remaining  the  principal  thing— the  land— which 
he  could  put  to  some  other  use;  the  receipt  In  1910  of  his  Janu- 
ary 1,  1909.  Interest  in  the  ore  was  not  the  offshoot  and  Income 
of  his  property;  it  was  the  transformation  and  eating  up  of  the 
very  property  and  of  the  whole  of  It.  We  therefore  think  that 
applying  the  principle  of  the  Sargent  case  results  in  holding  that 
these  receipts  were  from  the  sale  of  capital  assets  and  not  from 
income. 

We  are  unable  to  concur  in  this  view  expressed  in  the  opin- 
ion of  the  Circuit  Court  of  Appeals  as  to  the  effect  of  the 
Sargent  Land  Company  case.    Certainly  this  court  had  not  in 

1268 


mind  the  distinction  suggested.  In  the  Sargent  Land  Company- 
case  the  Circuit  Court  of  Appeals  for  the  Eighth  Circuit  found 
that  the  land  including  the  ore  in  it  was  worth  hundreds  of 
thousands  of  dollars,  and  without  the  right  to  the  ore  the  land 
was  worth  practically  nothing.  (219  Fed.  38.)  This  finding, 
as  well  as  facts  of  general  knowledge,  leave  little  room  to 
suppose  that  this  court  made  its  decision  concerning  the  rights 
of  the  lessor  influenced  by  the  fact  that  the  land  itself  was 
the  chief  thing,  and  the  ownership  of  it  after  the  exhaustion 
of  the  minerals  one  of  the  controlling  reasons  in  reaching  the 
conclusion  announced  in  that  case.  The  lessee  takes  from  the 
property  the  ore  mined,  paying  for  the  privilege  so  much  per 
ton  for  each  ton  removed.  He  has  this  right  or  privilege  under 
the  form  of  lease  here  involved  so  long  as  he  sees  fit  to  hold 
the  same  without  exercising  the  privilege  of  cancellation 
therein  contained.  He  is,  as  we  held  in  the  Sargent  Land 
Company  case,  in  no  legal  sense  a  purchaser  of  ore  in  place. 

In  this  case  the  Government  took  no  writ  of  error  as  to  the 
partial  deduction  allowed  by  the  District  Court,  it  follows 
that  the  correctness  of  that  ruling  is  not  open  here.  The 
Circuit  Court  of  Appeals  erred  in  making  the  additional  allow- 
ance for  capital  depletion..  It  follows  that  the  judgment  of  the 
Circuit  Court  of  Appeals  must  be  reversed,  and  that  of  the 
District  Court  affirmed,  and  it  is  so  ordered. 

Reversed. 

Mr.  Justice  Clarke  took  no  part  in  the  consideration  or 
decision  of  this  case. 


(T.  D.  27^2.) 


Corporation  Excise  Tax  Act  of  1909— Decision  of  the 
Supreme  Court — 

1.  Depletion  of  Ore  Bodies. 

For  the  purpose  of  determining  its  net  income  for  the 
basis  of  taxation  under  the  act,  a  mining  corporation  is  not 
entitled  to  deduct  from  its  gross  income  any  amount  what- 
ever on  account  of  depletion  or  exhaustion  of  ore  bodies 
caused  by  its  operations  for  the  year  for  which  the  tax  is 
assessed. 

2.  Deduction  of  Cost  Value  of  Ore  in  Ground. 

In  the  ascertainment  of  its  net  income  under  the  act,  a 
mining  corporation  is  not  entitled  to  a  deduction  against 
gross  proceeds  from  the  mining  and  treatment  of  ores  to 
the  extent  of  the  cost  value  of  the  ore  in  the  ground  before 
it  was  mined,  ascertained  in  compliance  with  T.  D.  1675. 

3.  Questions  Answered. 

The  questions  propounded  by  the  Circuit  Court  of  Appeals 
are  answered  as  above  specified. 

Treasury  Department, 

Ofiice  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

The  appended  decision  of  the  United  States  Supreme  Court 
in  the  case  of  the  Goldfield  Consolidated  Mines  Company  v. 

1369 


Joseph  J.  Scott,  as  collector  of  internal  revenue,  is  published 
for  the  information  of  internal  revenue  officers  and  others 
concerned. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved  June  4,  1918: 
L.  S.  ROWE, 

Acting  Secretary  of  the  Treasury. 


SUPREME  COURT  OF  THE  UNITED  STATES.     No.  334. 

OCTOBER  TERM,  1917. 

Goldfield  Consolidated  Mines  Company  v.  Joseph  J.  Scott,  as 

collector  of  internal  revenue.  Fourth  California  District. 

On  a  certificate  from  the  United  States  Circuit  Court  of  Appeals 

for  the  Ninth  Circuit. 

(May  20,  1918.) 

Mr.  Justice  Day  delivered  the  opinion  of  the  court: 
This  case  is  here  upon  certificate  from  the  United  States 
Circuit  Court  of  Appeals  for  the  Ninth  Circuit,  from  which  it 
appears  that  the  Goldfield  Consolidated  Mines  Company 
brought  an  action  against  Scott,  United  'States  collector  of 
internal  revenue,  Fourth  California  District,  to  recover  certain 
taxes  levied  for  the  years  1909  and  1910  imder  the  corpora- 
tion tax  act  of  1909.  The  District  Court  sustained  a  demurrer 
to  the  complaint,  and  entered  judgment  against  the  present 
plaintiff  in  error. 

In  the  certificate  the  Circuit  Court  of  Appeals  sets  out  the 
allegations  of  the  complaint  as  to  the  first  cause  of  action, 
stating  that  the  second  cause  of  action  need  not  be  repeated 
as  the  facts  are  of  the  same  character  as  those  set  out  in  the 
first.  Omitting  formal  and  unnecessary  matters  the  Circuit 
Court  of  Appeals  certifies  as  the  allegations  of  the  complaint, 
to  which  the  demurrer  was  sustained,  the  following. 

The  plaintiff  below,  and  plaintiff  in  error  herein,  the  Goldfield 
Consolidated  Mines  Company  is  and  was  a  corporation  engaged 
in  mining  in  the  State  of  Nevada,  which  State  is  within  the  juris- 
diction of  the  fourth  internal  revenue  district  of  California. 

An  assessment  of  an  excise  tax  under  Section  38  of  the  Act  of 
Congress  approved  August  5,  1909,  entitled  "An  Act  to  Provide 
Revenue,  Equalize  Duties,  and  Encourage  the  Industries  of  the 
United  States,  and  for  other  purposes,"  was  levied  upon  the 
plaintiff  in  error  by  the  then  collector  of  internal  revenue  for  the 
said  district  amounting  to  $41,890.91,  upon  an  assessment  of 
$4,189,091.61  which  tax  was  paid  under  protest  of  the  levy  and 
assessment.  The  plaintiff  in  error  had  made  a  return  of  annual 
net  income  for  that  year,  1909,  claiming  a  deduction  for  the  value 
of  the  ore  in  the  ground  before  it  was  mined,  of  230,4(i3  tons  of 
ore,  of  the  value  in  the  ground  before  it  was  mined,  of  $.'),64G,940.46, 
upon  the  ground  that  such  ore  constituted  exhaustion  of  the 
capital  value  of  the  property  owned  by  it,  and  its  protest  against 
the  assessment  and  levy  was  based  thereon.  Thereafter,  the 
plaintiff  in  error  made  application  for  refund  of  said  tax  pur- 
suant to  Sections  3220  and  3226  of  the  Revised  Statutes,  and  based 
its  claim  to  such  refund  upon  the  propriety  of  the  deduction  so 
claimed,  and  stated  in  said  application  that  such  exhaustion  of 
capital  assets  constituted  a  depreciation  within  the  meaning  of 
the  Act  in  question,  and  that  the  same  would  have  more  than 
offset  the  total  net  income  of  the  plaintiff  in  error. 

Thereafter,  during  the  pendency  before  the  Commissioner  of 
Internal  Revenue  of  said  application  for  refund,  the  plaintiff  in 
error,  by  its  duly  authorized  officials,  made  full  explanation  before 
the  Commissioner  of  Internal  Revenue,  and  offered  full  proof  of 
the  correctness  in  all  respects  of  its  said  return  of  annual  net  in- 
come for  the  year  1909  and  of  all  statements  of  fact  contained 
therein,  and  while  the  Commissioner  of  Internal  Revenue  was 
holding  said  application  under  consideration  the  plaintiff  in  error 

1270 


was  duly  and  regularly  granted  by  said  commissioner  leave  to 
comply  fully  with  the  then  rules  and  regulations  of  the  Treasury 
Department  embodied  in  Treasury  Decision  1675,  promulgated 
February  14,  1911,  and  particularly  Sections  80  to  89  thereof  re- 
lating to  depreciation  of  property  of  corporations  whose  business 
involved  wasting  assets  and  like  leave  was  so  given  to  present  to 
the  Commissioner  of  Internal  Revenue  an  amended  statement  and 
return  of  annual  net  income  for  said  year  with  explanations  of 
fact  in  support  thereof,  and  to  ascertain  the  unit  cost  per  ton  of 
the  estimated  ore  bodies  belonging  to  the  plaintiff  in  its  various 
mining  properties  as  of  January  1,  1909,  and  the  estimated  value 
of  the  ore  in  the  ground  before  it  was  mined  for  the  year  1909, 
by  multiplying  the  said  unit  cost  per  ton  by  the  total  number  of 
tons  mined  in  said  year,  all  of  which  was  done,  and  the  same 
was  filed  by  the  plaintiff  in  error  during  the  time  so  provided. 

The  rules  and  regulations  are  then  set  out. 

In  addition  to  the  rules  and  regulations  as  above  set  out,  the 

flaintiff  in  error  was  further  required  by  the  Commissioner  of 
nternal  Revenue  to  make  a  calculation  for  the  year  1909  and 
of  previous  years  of  operation  to  ascertain  the  total  exhaustion  of 
ore  which  had  taken  place  in  the  operation  of  its  mining  proper- 
ties, and  to  enter  such  amount  of  tonnage  exhaustion,  multiplied 
by  the  unit  cost  per  ton,  in  its  official  corporate  books  of  ac- 
counts, and  also  cause  the  same  to  be  included  in  its  printed 
annual  report  of  that  current  year  to  its  stockholders  and  the 
public  with  appropriate  explanation  thereof,  all  of  which  require- 
ments were  performed  by  the  plaintiff  in  error  in  obedience  to 
said  orders  of  the  Commissioner  of  Internal  Revenue,  and  within 
the  time  granted  therefor. 

The  complaint  alleged  that  the  resulting  figures  so  rendered 
In  said  return  were  and  are  in  all  respects  true  and  correct,  and 
resulted  in  a  showing  of  net  income  measuring  the  excise  tax 
under  the  rules  and  regulations  amounting  to  $765,380.02,  upon 
which  the  tax  would  have  been  $7,653.80;  it  also  appeared  from 
said  complaint  that  this  compliance  with  the  requirements  of  the 
Commissioner  of  Internal  Revenue  was  made  by  the  plaintiff 
in  error  without  waiving  its  claim  to  the  full  deduction  originally 
claimed. 

It  further  appears  from  the  complaint  that,  in  disobedience  and 
disregard  of  the  law  and  of  the  rules  and  regulations  of  the 
Treasury  Department,  the  Commissioner  of  Internal  Revenue  dis- 
allowed the  application  for  refund  of  the  plaintiff  in  error  in 
toto,  which  disallowance  was  communicated  to  the  plaintiff  In 
error  December  29,  1913,  by  the  defendant  in  error.  Collector 
of  Internal  Revenue,  the  then  collector  having  succeeded  to  the 
office  of  the  Collector  of  Internal  Revenue  who  had  originally 
levied  the  tax  in  question.     The  complaint  alleges  that  no  part 

of  the  said  tax  has  been  refunded  or  paid  back,  and  that  the 

same  is  still  due  and  unpaid. 

The  questions  propounded  are: 

1.  Under  the  provisions  of  paragraph  38  of  the  Act  of  Con- 
gress entitled  "An  Act  to  provide  revenue,  equalize  duties,  and 
encourage  the  industries  of  the  United  States,  and  for  other 
purposes,"  approved  August  5,  1909  (36  Stat.  L.,  p.  11,  at 
p.  112),  is  a  mining  corporation,  for  the  purpose  of  determining 
its  net  income  for  the  basis  of  taxation,  entitled  to  deduct 
from  its  gross  income  any  amount  whatever  on  accomit  of 
depletion  or  exhaustion  of  ore  bodies  caused  by  its  operations 
for  the  year  for  which  the  tax  is  assessed? 

2.  Is  such  a  corporation  under  said  act  entitled  in  the  ascer- 
tainment of  its  net  income  to  a  deduction  against  gross  pro- 
ceeds from  the  mining  and  treatment  of  ores  to  the  extent 
of  the  cost  value  of  the  ore  in  the  ground  before  it  was  mined, 
ascertained  in  strict  compliance  with  the  rules  and  regulations 
of  the  Treasury  Department  of  February  14,  1911  (Tr.  Dec. 
1675) ? 

3.  Where  such  a  corporation  claimed  originally  in  its  return 
of  net  income  under  said  act  a  deduction  for  depreciation 
from  exhaustion  of  ore  for  the  year  equal  to  the  actual  valua 

1371 


of  the  ore  in  the  ground  before  it  was  mined,  and  having  been 
denied  any  deduction  whatever  for  exhaustion  of  ore,  and 
having  been  assessed  accordingly  and  having  paid  the  resulting 
tax,  made  application  pursuant  to  {Sections  3220  and  3226, 
lievised  Statutes,  for  refund,  during  the  pendency  of  which 
application  said  corporation  was  granted  leave  to  amend  and 
did  amend  its  return  of  net  income  in  strict  accordance  with 
the  rules  and  regulations  promulgated  February  14,  lyil  (sees. 
80  to  89,  T.  D.  1675),  resulting  in  an  amended  return  based 
upon  cost  as  provided  in  said  regulations  and  showing  claimed 
deductions  therefrom  less  than  the  corporation's  net  realiza- 
tions for  the  year  from  the  ore  actually  mined,  is  such  cor- 
poration entitled  to  an  allowance  of  deductions  and  refund 
of  taxes  accordingly? 

4.  In  what,  if  any,  way  is  the  right  to  such  claimed  deduc- 
tions affected  by  the  fact  that  such  corporation,  in  obedience 
to  requirements  imposed  by  the  Commissioner  of  Internal 
Revenue  at  the  time  of  liling  its  amended  returns  showing  the 
cost  value  as  of  January  1,  1909,  of  the  ores  mined  during 
the  year,  caused  to  be  entered  in  its  oiiicial  books  of  account 
and  printed  in  its  annual  report  of  that  current  year  to  all  of 
its  stockholders  and  to  the  public,  a  statement  of  the  total 
amomit  of  ore  exhaustions,  multiplied  by  the  unit  cost  per 
ton  on  its  mining  properties  for  that  and  all  previous  years! 

In  the  brief  submitted  for  the  Goldheld  Consolidated  Mines 
Company  comisel  frankly  admit  that  if  this  court  is  to  adhere 
to  the  principles  laid  down  in  Stratton's  Independence  v. 
Howbert  (231  U.  S.,  399)  and  Von  Baumbach,  Collector,  v. 
Sargent  Land  Company  (242  U.  S.,  503),  those  cases  are  con- 
clusive against  the  contentions  of  the  Mines  Company  in  this 
proceeding.  In  view  of  the  discussion  of  the  nature  of  mining 
property  in  Stratton's  Independence  v.  Howbert  (supra),  and 
the  application  of  the  principles  therein  laid  down  in  the  sub- 
sequent cases  of  Baltic  Mining  Company  v.  Stanton  (240  U.  S., 
103),  and  Von  Baumbach,  Collector,  v.  Sargent  Land  Com- 
pany (supra),  it  is  necessary  to  enter  upon  further  considera- 
tion of  the  matters  disposed  of  in  those  cases.  We  find  no 
occasion  to  depart  from  the  principles  therein  announced,  or 
the  rulings  therein  made.  They  have  been  reaffirmed  in  the 
case  of  United  States  v.  Biwabik  Mining  Company,  just  de- 
cided. In  this  view  it  follows  that  the  first  and  second  ques- 
tions must  be  answered  in  the  negative,  and  that  it  is  unnec- 
essary to  answer  the  tlurd  and  fourth  questions. 

So  ordered. 


(T.  D.  2723.) 


Corporation  Excise  Tax  Act  of  1909— Decision  of  the 
Supreme  Court — 

1.  Purpose  of  the  Act. 

The  legislative  purpose  was  not  to  tax  property  as  such 
or  the  mere  conversion  of  property,  but  to  tax  the  conduct 
of  the  business  of  corporations  organized  for  profit  by  a  meas- 
ure based  upon  the  gainful  returns  from  their  business 
operations  and  property  from  the  time  the  act  took  effect. 

2.  Treatment  of  Proceeds  of  Conversion  of  Capital  Assets. 

The  suggestion  that  the  entire  proceeds  of  the  conversion 
of  capital  assets  should  be  still  treated  as  the  same  capital, 

1272 


changed  only  in  form  and  containing  iio  element  of  income, 
although  including  an  increment  of  value,  is  inconsistent 
with  the  general  purpose  of  the  act. 

3.  Meaning  of  "Income." 

"Income"  imports,  as  used  in  the  act,  something  entirely 
distinct  from  principal  or  capital  either  as  a  subject  of  taxa- 
tion or  as  a  measure  of  the  tax,  conveying  rather  the  idea 
of  gain  or  increase  arising  from  corporate  activities. 

4.  Determination  of  Gain  or  Loss. 

In  order  to  determine  whether  there  has  been  gain  or  loss 
and  the  amount  of  the  gain,  if  any,  an  amount  must  be 
withdrawn  from  the  gross  proceeds  of  sale  sufficient  to  re- 
store the  capital  value  that  existed  on  December  31,  1908, 
notwithstanding  any  increment  of  value  up  to  that  time  had 
not  been  entered  upon  the  plaintiff's  books  of  account. 

5.  Sales  of  Timber. 

The  gain  on  a  sale  of  timber  acquired  by  a  lumber  manu- 
facturing company  before  January  1, 1909,  and  converted  into 
money  after  that  date  is  income  within  the  meaning  of  the 
act,  but  only  such  portion  of  the  gain  as  accrued  subsequent 
to  December  31,  1908,  is  taxable. 

6.  Judgment  Affirmed. 

The  judgment  of  the  Circuit  Court  of  Appeals  is  affirmed. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

The  appended  decision  of  the  United  States  Supreme  Court 
In  the  case  of  Emanuel  J.  Doyle,  collector  of  internal  revenue, 
V.  Mitchell  Brothers  Company  is  published  for  the  information 
of  internal  revenue  officers  and  others  concerned. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved  Jime  4,  1918: 
L.  S.  ROWE, 

Acting  Secretary  of  the  Treasury. 


SUPREME   COURT  OF  THE  UNITED  STATES.     No.  492. 
OCTOBER  TERM,  1917. 

Emanuel  J.  Doyle,  collector  of  internal  revenue,  petitioner,  v. 
Mitchell  Brothers  Company. 

On    writ    of   certiorari    to    the   United    States    Circuit    Court    of 

Appeals  for  tlie  Sixth  Circuit. 

(May  20,  1918.) 

Mr.  Justice  Pitney  delivered  the  opinion  of  the  court : 
This  was  an  action  to  recover  from  the  collector  additional 
taxes  assessed  against  the  respondent  under  the  corporation 
excise-tax  act  of  August  5,  1909  (ch.  6,  36  Stat.  11,  112,  sec. 
38),  and  paid  under  protest.  The  district  court  gave  judgment 
for  the  plaintiff,  which  was  affirmed  by  the  Circuit  Court  of 
Appeals  (225  Fed.  Rep.,  437;  235  Fed.  Rep.,  686),  and  the  case 
comes  here  on  certiorari. 

It  was  submitted  at  the  same  time  with  several  other  cases 
decided  this  day  arising  under  the  same  act. 

1273 


The  facts  are  as  follows:  Plaintiff  is  a  lumber  manufactur- 
ing corporation  which  operates  its  own  mills,  manufactures 
into  lumber  therein  its  own  stumpage,  sells  the  lumber  in  the 
market,  and  from  these  sales  and  sales  of  various  by-products 
makes  its  profits,  declares  its  dividends,  and  creates  its  sur- 
plus. It  sells  its  stumpage  lands,  so  called,  after  the  timber 
is  cut  and  removed.  Its  sole  business  is  as  described;  it  is  not 
a  real  estate  trading  corporation.  Plaintiff  acquired  certain 
timberlands  at  its  organization  in  1903  and  paid  for  them  at 
a  valuation  approximately  equivalent  to  $30  per  acre.  Owing 
to  increases  in  the  market  price  of  stumpage  the  market  value 
of  the  timberland,  on  December  31,  1908,  had  become  approxi- 
mately $40  per  acre.*  The  company  made  no  entry  upon  its 
books  representing  this  increase,  but  each  year  entered  as  a 
profit  the  difference  between  the  original  cost  of  the  timber 
cut  and  the  sums  received  for  the  manufactured  product,  less 
the  cost  of  manufacture.  After  the  passage  of  the  excise-tax 
act,  and  preparatory  to  making  a  return  of  income  for  the 
year  1909,  the  company  revalued  its  timber  stumpage  as  of 
December  31,  1908,  at  approximately  $40  per  acre.  The  good 
faith  and  accuracy  of  this  valuation  are  not  in  question,  but 
the  figures  representing  it  never  were  entered  in  the  corporate 
books. 

Under  the  act  the  company  made  a  return  for  each  of  the 
years  1909,  1910,  1911  and  1912,  and  in  each  instance  deducted 
from  its  gross  receipts  the  market  value,  as  of  December  31, 
1908,  of  the  stumpage  cut  and  converted  during  the  year 
covered  by  the  tax.  There  appears  to  have  been  no  change 
in  its  market  value  during  these  years. 

The  Commissioner  of  Internal  Revenue  having  allowed  a 
deduction  of  the  cost  of  the  timber  in  1903  and  refused  to 
allow  the  difference  between  that  cost  and  the  market  value 
of  the  timber  on  December  31,  1908,  the  question  is  whether 
this  difference  (made  the  basis  of  the  additional  taxes)  was 
income  for  the  y^ars  in  which  it  was  converted  into  money, 
within  the  meaning  of  the  act. 

Other  items  are  involved  in  the  case,  arising  from  the  sale 
of  certain  stump  lands,  certain  by-products,  and  a  parcel  of 
real  estate,  but  they  raise  no  different  question  from  that 
which  arises  upon  the  valuation  of  the  stumpage,  and  need 
not  be  further  mentioned. 

The  act  became  effective  January  1,  1909,  and  provided  for 
the  annual  payment  by  every  domestic  corporation  "organized 
for  profit  and  having  a  capital  stock  represented  by  shares" 
of  an  excise  tax  "equivalent  to  one  per  centum  upon  the 
entire  net  income  over  and  above  five  thousand  dollars  re- 
ceived by  it  from  all  sources  during  such  year,"  with  excep- 
tions not  now  material.  It  is  declared  that  such  net  income 
should  be  ascertained  by  deducting  from  the  gross  mcome 
received  within  the  year  from  all  sources  the  expenses  paid 
within  the  year  out  of  income  in  the  maintenance  and  opera- 
tion of  business  and  property,  including  rentals  and  the  like; 
losses  sustained  within  the  year  and  not  compensated  by  in- 
surance or  otherwise,  including  a  reasonable  allowance  for 
depreciation  of  property;  interest  paid  within  the  year  to  a 
limited  extent;  taxes;  and  amounts  received  within  the  year 
as  dividends  upon  stock  of  other  corporations  subject  to  the 
same  tax.    In  the  case  of  a  corporation  organized  under  the 


•The  valuations  were  based  upon  the  Qu^'^tity  of  standing  tlm 
ber, 

1274 


ber?  at  certain  prices  per  thousand  feet  for  the  different  varieties. 
^       ayproxiniate  acreage  equivalent  is  employed  for  convenience. 


laws  of  a  foreign  country,  the  net  income  was  to  be  ascer- 
tained by  taking  into  account  the  gross  income  received  within 
the  year  "from  business  transacted  and  capital  invested  within 
the  United  States  and  any  of  its  Territories,  Alaska  and  the 
District  of  Columbia,"  with  deductions  for  expenses  of  main- 
tenance and  operation,  business  losses,  interest  and  taxes,  all 
referable  to  that  portion  of  its  business  transacted  and  capital 
invested  within  the  United  States,  etc. 

An  examination  of  these  and  other  provisions  of  the  act 
makes  it  plain  that  the  legislative  purpose  was  not  to  tax 
property  as  «uch,  or  the  mere  conversion  of  property,  but  to 
tax  the  conduct  of  the  business  of  corporations  organized  for 
profit  by  a  measure  based  upon  the  gainful  returns  from  their 
business  operations  and  property  from  the  time  the  act  took 
effect.  As  was  pointed  out  in  Flint  v.  Stone  Tracy  Co.  (220 
U.  S.,  107,  145),  the  tax  was  imposed  "not  upon  the  franchises 
of  the  corporation  irrespective  of  their  use  in  business,  nor 
upon  the  property  of  the  corporation,  but  upon  the  doing  of 
corporate  or  insurance  business  and  with  respect  to  the  carry- 
ing on  thereof";  an  exposition  that  has  been  consistently  ad- 
hered to.  McCoach  v.  Minehill  R.  R.  Co.  (228  U.  S.,  295,  300) ; 
United  States  v.  Whitridge  (231  U.  S.,  144,  147);  Anderson  v. 
Forty-two  Broadway  (239  U.  S.,  69,  72). 

When  we  come  to  apply  the  act  to  gains  acquired  through 
an  increase  in  the  value  of  capital  assets  acquired  before  and 
converted  into  money  after  the  taking  effect  of  the  act,  ques- 
tions of  difficulty  are  encountered.  The  suggestion  that  the 
entire  proceeds  of  the  conversion  should  be  still  treated  as  the 
same  capital,  changed  only  in  form  and  containing  no  element 
of  income,  although  including  an  increment  of  value,  we  reject 
at  once  as  inconsistent  with  the  general  purpose  of  the  act. 
Selling  for  profit  is  too  familiar  a  business  transaction  to 
permit  us  to  suppose  that  it  was  intended  to  be  omitted  from 
consideration  in  an  act  for  taxing  the  doing  of  business  in 
corporate  form  upon  the  basis  of  the  income  received  "from 
all  sources." 

Starting  from  this  point,  the  learned  Solicitor  General  has 
submitted  an  elaborate  argument  in  behalf  of  the  Government, 
based  in  part  upon  theoretical  definitions  of  "capital,"  "in- 
come," "profits,"  etc.,  and  in  part  upon  expressions  quoted 
from  our  opinions  in  Flint  v.  Stone  Tracy  Company  (220  U.  S., 
107,  147),  and  Anderson  v.  Forty-two  Broadway  (239  U.  S., 
69,  72),  with  the  object  of  showing  that  a  conversion  of  capi- 
tal into  money  always  produces  income,  and  that  for  the 
purposes  of  the  present  case  the  words  "gross  income"  are 
equivalent  to  "gross  receipts";  the  insistence  being  that  the 
entire  proceeds  of  a  conversion  of  capital  assets  should  be 
treated  as  gross  income,  and  that  by  deducting  the  mere  cost 
of  such  assets  we  arrive  at  net  income.  The  cases  referred 
to  throw  little  light  upon  the  present  matter,  and  the  expres- 
sions quoted  from  the  opinions  were  employed  by  us  with 
reference  to  questions  wholly  remote  from  any  that  is  here 
presented. 

The  formula  that  the  entire  receipts  derived  from  a  con- 
version of  capital  assets  after  deducting  cost  value  must  be 
treated  as  net  income,  so  far  as  it  is  applied  to  a  conversion 
of  assets  acquired  before  the  act  took  effect  and  so  as  to  tax 
as  income  any  increased  value  that  accrued  before  that  date, 
finds  no  support  in  either  the  letter  or  the  spirit  of  the  act, 
and  brings  the  former  into  incongruity  with  the  latter.  If  the 
gross  receipts  upon  such  a  conversion  are  to  be  treated  as 

1275 


gross  income,  what  authority  have  we  for  deducting  either  the 
cost  or  the  previous  market  value  of  the  assets  converted  in 
order  to  arrive  at  net  income?  The  deductions  specifically 
authorized  are  only  such  as  expenses  of  maintenance  and 
operation  of  the  business  and  property,  rentals,  uncompen- 
sated losses,  depreciation,  interest  and  taxes.  There  is  no 
express  provision  that  even  allows  a  merchant  to  deduct  the 
cost  of  the  goods  that  he  sells. 

Yet  it  is  plain,  we  think,  that  by  the  true  intent  and  mean- 
ing of  the  act  the  entire  proceeds  of  a  mere  conversion  of  capi- 
tal assets  were  not  to  be  treated  as  income.  Whatever  diffi- 
culty there  may  be  about  a  precise  and  scientific  definition 
of  "income,"  it  imports,  as  used  here,  something  entirely  dis- 
tinct from  principal  or  capital  either  as  a  subject  of  taxation 
or  as  a  measure  of  the  tax;  conveying  rather  the  idea  of  gain 
or  increase  arising  from  corporate  activities.  As  was  said 
in  Stratton's  Independence  v.  Howbert  (231  U.  S.,  399,  415) : 
"Income  may  be  defined  as  the  gain  derived  from  capital,  from 
labor,  or  from  both  combined." 

Understanding  the  term  in  this  natural  and  obvious  sense, 
it  can  not  be  said  that  a  conversion  of  capital  assets  invariably 
produces  income.  If  sold  at  less  than  cost,  it  produces  rather 
loss  or  outgo.  Nevertheless,  in  many  if  not  in  most  cases 
there  results  a  gain  that  properly  may  be  accounted  as  a  part 
of  the  "gross  income"  received  "from  all  soui'ces,"  and  by 
applying  to  this  the  authorized  deductions  we  arrive  at  "net 
income."  In  order  to  determine  whether  there  has  been  gain 
or  loss,  and  the  amount  of  the  gain,  if  any,  we  must  with- 
draw from  the  gross  proceeds  an  amount  sufficient  to  restore 
the  capital  value  that  existed  at  the  commencement  of  the 
period  under  consideration. 

This  has  been  recognized  from  the  beginning  by  the  admin- 
istrative officers  of  the  Government.  Shortly  after  the  pas- 
sage of  the  act,  and  before  the  time  (March  1,  1910)  for  mak- 
ing the  first  returns  of  income,  the  Commissioner  of  Internal 
Revenue,  with  the  approval  of  the  Secretary  of  the  Treasury, 
promulgated  Regulations  No.  31,  under  date  December  3, 
1909,  for  the  guidance  of  collectors  and  other  subordinate  offi- 
cers in  the  performance  of  their  duties  under  the  act.  These 
prescribed,  with  respect  to  manufacturing  companies,  that 
gross  income  should  consist  of  the  difference  between  the  price 
received  for  the  goods  as  sold  and  the  cost  of  such  goods  as 
manufactured;  cost  to  be  "ascertained  by  an  addition  of  a 
charge  to  the  account  of  the  cost  of  goods  as  manufactured 
during  the  year  of  the  sum  of  the  inventory  at  beginning  of 
the  year  and  a  credit  to  the  account  of  the  sum  of  the  inven- 
tory at  the  end  of  the  year."  In  the  case  of  mercantile  com- 
panies, gross  income  was  to  be  the  "amount  ascertamed 
through  inventory,  or  its  equivalent,  which  shows  the  differ- 
ence between  the  price  received  for  goods  sold  and  the  cost 
of  goods  purchased  during  the  year,  with  an  addition  of  a 
charge  to  the  account  of  the  sum  of  the  inventory  at  begin- 
ning of  the  year  and  a  credit  to  the  account  of  the  sum  of  the 
inventory  at  the  end  of  the  year."  And  as  to  miscellaneous 
corporations,  gross  income  was  to  be  "the  gross  revenue  de- 
rived from  the  operation  and  management  of  the  business 
and  property  of  the  corporation,"  with  all  income  derived  from 
other  sources.  The  matter  of  income  arising  from  a  profitable 
gale  of  capital  assets  was  dealt  with  specifically  in  such  a  way 
as  to  limit  the  tax  to  income  arising  after  the  effective  date 
of  the  act.    This  was  done  by  adopting  the  rule  that  an  ad- 

1276 


vance  in  value  arising  during  a  period  of  years  should  be  so 
adjusted  that  only  so  much  as  property  was  attributable  to 
the  time  subsequent  to  January  1,  1909  (December  31,  1908, 
would  have  been  more  precise),  should  be  subjected  to  the 
tax.*  Subsequent  Treasury  regulations,  promulgated  from 
time  to  time  (T.  D.  1606,  March  29,  1910,  paragraphs  40,  71, 
76;  T.  D.  1675,  February  14,  1911,  paragraphs  37,  55,  75;  T.  D. 
1742,  December  15,  1911,  paragraphs  43,  62,  86,  91),  adhered 
to  the  same  rule  with  respect  to  lands  bought  prior  to  Janu- 
ary 1,  1909,  and  sold  during  a  subsequent  year,  prescribing, 
however,  that  the  profits,  when  not  otherwise  accurately  de- 
terminable, should  be  prorated  according  to  the  time  elapsed 
before  and  after  the  act  took  effect;  and  gave  to  it  an  appli- 
cation especially  pertinent  here,  one  of  the  regulations  reading: 

The  mere  removal  of  timber  by  onttinj?  from  timber  lanfli=!,  unless 
the  timber  Is  otherwise  disposed  of  through  sales  or  plant  opera- 
tions, is  considered  simply  a  change  in  form  of  assets.  If  said 
timber  is  disposed  of  through  sales  or  otherwise,  it  is  to  be 
Recounted  for  in  accordance  with  regulations  governing  disposi- 
tion  of  capital   and   other  assets. 

In  our  opinion  these  regulations  correctly  interpret  the  act 
in  its  application  to  the  facts  of  the  present  case.  When  the 
Oct  took  effect,  plaintiff's  timber  lands,  with  whatever  value 
they  then  possessed,  were  a  part  of  its  capital  assets,  and  a 
subsequent  change  of  form  by  conversion  into  money  did  not 
change  the  essence.  Their  increased  value  since  purchase,  as 
that  value  stood  on  December  31,  1908,  was  not  in  any  proper 
sense  the  result  of  the  operation  and  management  of  the 
business  or  property  of  the  corporation  while  the  act  was  in 
force.  Nor  is  the  result  altered  by  the  mere  fact  that  the 
increment  of  value  had  not  been  entered  upon  plaintiff's  books 
of  account.  Such  books  are  no  more  than  evidential,  being 
neither  indispensable  nor  conclusive.  The  decision  must  rest 
upon  the  actual  facts,  which  in  the  present  case  are  not  in 
dispute. 

The  plaintiff,  in  making  up  its  income  tax  returns  for  the 
years  1909,  1910,  1911  and  1912,  deducted  from  its  gross  re- 
ceipts the  admittedly  accurate  valuation  as  of  December  31, 
1908,  of  the  stumpage  cut  and  converted  during  the  year  cov- 
ered by  the  tax.  There  having  been  no  change  in  market 
values  during  these  years,  the  deduction  did  but  restore  to  the 
capital  in  money  that  which  had  been  withdrawn  in  stumpage 
cut,  leaving  the  aggregate  of  capital  neither  increased  nor 
decreased,  and  leaving  the  residue  of  the  gross  receipts  to 
represent  the  gain  realized  by  the  conversion,  so  far  as  that 
grain  arose  while  the  act  was  in  effect.  This  was  in  accord- 
ance with  the  true  intent  and  meaning  of  the  act. 

It  may  be  observed  that  it  is  a  mere  question  of  methods, 
not  affecting  the  result,  whether  the  amount  necessary  to  be 
withdrawn  in  order  to  preserve  capital  intact  should  be  de- 


♦TJxtract  from  Treasury  Regulations  No.  31,  Issued  December 
3,  1909: 

Sale  of  Capital  Assets. — Tn  ascertaining  income  derived  from 
the  sale  of  capital  assets  If  the  assets  were  acquired  subsequent 
to  January  1,  1909,  the  difference  between  the  selling  price  and 
the  buying  price  shall  constitute  an  item  of  gross  income  to  be 
added  to  or  subtracted  from  gross  Income  according  to  whether 
the  selling  price  was  greater  or  less  than  the  buying  price.  If 
the  capital  assets  were  acquired  prior  to  January  1,  1909,  the 
amount  of  increment  or  depreciation  representing  the  diflFerence 
between  the  selling  and  buying  price  Is  to  be  adjusted  so  as  to 
fairly  determine  tbe  proportion  of  the  loss  or  gain  arising  subse- 
quent to  January  1,  1909,  and  which  proportion  shall  be  deducted 
from  or  added  to  the  gross  income  for  the  year  In  which  the  sale 
was  made. 

1277 


ducted  from  gross  receipts  in  the  process  of  ascertaining  gross 
income  or  should  be  deducted  from  gross  income  in  the  form 
of  a  depreciation  account  in  the  process  of  determining  net 
income.  In  either  case  the  object  is  to  distinguish  capital 
previously  existing  from  income  taxable  under  the  act. 

There  is  only  a  superficial  analogy  between  this  case  and 
the  case  of  an  allowance  claimed  for  depreciation  of  a  mining 
property  through  the  removal  of  minerals,  since  we  have  held 
that  owing  to  the  peculiar  nature  of  mining  property  its 
partial  exhaustion  attributable  to  the  removal  of  ores  can  not 
be  regarded  as  depreciation  within  the  meaning  of  the  act. 
Von  Baumbach  v.  Sargent  Land  Company  (243  U.  S.,  503,  520, 
524);  United  States  v.  Biwabik  Mining  Company,  this  day 
decided;  Goldfield  Consolidated  Mines  Company  v.  Scott,  this 
day  decided. 

It  should  be  added  that  in  this  case  no  question  is  raised 
as  to  whether,  in  apportioning  the  profits  derived  from  a 
disposition  of  capital  assets  acquired  before  and  converted 
after  the  act  took  effect,  the  division  should  be  pro  rata,  ac- 
cording to  the  time  elapsed,  or  should  be  based  upon  an  inven- 
tory taken  as  of  December  31,  1908.  PlaintilTs,  in  accordance 
with  Treasury  Regulations  No.  31,  T.  D.  1578,  January  4,  1910, 
and  T.  D.  1588,  January  24,  1910,  adopted  the  latter  method, 
and  the  Government  makes  no  contention  as  to  the  accuracy 
of  the  result  thereby  reached,  under  the  stipulated  facts,  if 
our  construction  of  the  act  be  correct. 

Judgment  affirmed. 


(T.  D.  2724.) 

Corporation  excise  tax  act  of  1909 — Decision  of  the  Supreme 
Court— 

l.The  Act  of  March  2,  1867,  Distinguished. 

The  act  of  March  2,  1867,  with  certain  exceptions,  taxed 
only  such  gains  or  profits  as  might  be  realized  from  a  busi- 
ness transaction  begun  and  completed  during  the  preceding 
year,  but  the  language  of  the  act  of  1909  is  different  in 
material  particulars. — Gray  v.  Darlington  (15  Wall.,  63), 
which  construed  the  former  act,  is  accordingly  not  con- 
trolling. 

2.  Construction  of  the  Act. 

The  act  measured  the  tax  by  the  income  received  within 
the  year  for  which  the  assessment  was  levied,  whether  it 
accrued  within  that  year  or  in  some  preceding  year  while 
the  act  was  in  effect;  but  it  excluded  all  income  that  accrued 
prior  to  January  1,  1909,  although  afterwards  received  while 
the  act  was  in  effect. 

B.  Computation  of  Gain. 

The  sale  of  stock  resulted  in  a  gain  or  profit  to  the  extent 
of  the  difference  between  the  buying  and  selling  prices,  there 
being  no  merit  in  the  contention  that  interest^  should  be 
added  to  the  purchase  price  in  order  to  ascertain  its  cost, 
and  so  much  of  the  profits  as  may  be  deemed  to  have  ac- 
crued subsequent  to  December  31,  1908,  must  be  treated  as 
a  part  of  the  gross  income  of  the  respondent. 

4.  Determination  of  Value  of  Capital  Assets  on  December  31, 
1908. 
Whether  the  determination  of  the  value  of  the  capital 
assets  on  December  31,  1908,  should  be  made  by  taking  an 

1278 


L 


inventory  upon  the  basis  of  market  values  then  existing, 
or  whether  the  entire  increment  accruing  between  the  time 
of  acquiring  and  the  time  of  disposing  of -the  assets  should 
be  prorated  as  if  it  had  arisen  through  a  series  of  gradual 
and  imperceptible  augmentations,  is  a  matter  of  detail,  to 
be  settled  according  to  the  best  evidence  abtainab^e  and  in 
accordance  with  valid  departmental  regulations. 

5.  Judgment  Reversed. 

The  judgment  of  the  Circuit  Court  of  Appeals  is  reversed 
and  that  of  the  District  Court  is  affirmed. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

The  appended  decision  of  the  United  States  Supreme  Court 
in  the  case  of  S.  A.  Hays,  collector  of  internal  revenue,  v.  The 
Gauley  Mountain  Coal  Company  is  published  for  the  informa* 
tion  of  internal  revenue  officers  and  others  concerned. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 
Approved  June  4,  1918: 
L.  S.  ROWE, 

Acting  Secretary  of  the  Treasury. 


SUPREME   COURT  OF  THE  UNITED  STATES.     No.  327. 
OCTOBER  TERM,  1917. 

5.  A.  Hays,  collector  of  internal  revenue  for  the  district  of 

West  Virginia,  petitioner,  v.  The  Gauley  Mountain 
Coal  Company. 

On    writ   of   certiorari    to    the   United    States    Circuit    Court    of 

Appeals  for  the  Fourth  Circuit. 

(May  20,  1918.) 

Mr.  Justice  Pitney  delivered  the  opinion  of  the  court: 
Suit  by  the  Gauley  Mountain  Coal  Company  against  the 
collector  to  recover  taxes  alleged  to  have  been  unlawfully  col- 
lected under  corporation  excise-tax  act  of  August  5,  1909  (ch. 

6,  36  Stat.,  11,  112,  sec.  38).  The  district  court  gave  judgment 
in  favor  of  defendant,  which  was  reversed  by  the  Circuit 
Court  of  Appeals  (230  Fed.  Rep.,  110),  whereupon  a  writ  of 
certiorari  was  allowed.  The  case  was  submitted,  together  with 
several  other  cases  decided  this  day,  arising  under  the  same 
act. 

The  agreed  facts  are  in  substance  as  follows:  The  com- 
pany is  a  mining  corporation  organized  under  the  laws  of  the 
State  of  West  Virginia.  The  business  of  trading  in  stocks  is 
not  included  among  its  corporate  powers,  nor  does  it  appear 
that,  with  a  single  exception,  it  ever  bought  or  sold  any. 
On  December  9,  1902,  it  purchased  certain  shares  of  another 
mining  corporation  for  $800,000,  and  sold  them  October  16, 
1911,  for  $1,010,000,  this  sum  being  less  by  $214,933.33  than 
the  purchase  price  plus  interest  at  6  per  cent,  but  greater  by 
$210,000  than  cost  ignoring  interest.  The  Commissioner  of 
Internal  Revenue  held  that  a  proportion  of  the  $210,000  rep- 
resented by  the  ratio  of  the  1,019  days  that  elapsed  between 
January  1,  1909,  when  the  corporation  excise-tax  act  became 
effective,  and  October  16,  1911,  the  date  of  the  sale,  to  the 
3,233  days  that  elapsed  between  the  date  of  purchase  and  the 

1279 


date  of  sale,  constituted  income  of  the  corporation  for  the 
year  1911  within  the  meaning  of  the  act.  The  apportioned 
simi,  $66,189.30,  reduced  to  $52,506  by  certain  deductions  not 
now  in  question,  was  made  the  basis  of  an  additional  assess- 
ment at  1  per  cent  upon  the  latter  sum;  and  this  assessment, 
having  been  collected  by  duress,  formed  the  subject  of  the 
present  suit. 

The  decision  of  the  Circuit  Court  of  Appeals,  and  the  prin- 
cipal contentions  made  by  respondent  in  support  of  it,  are 
based  upon  the  decision  of  this  court  in  Gray  v.  Darlington 
(15  Wall.,  63).  That  case  arose  under  the  act  of  Congress 
of  March  2,  1867  (14  Stat.,  477,  ch.  169,  sec.  13),  which  pro- 
vided that  a  certain  tax  should  be  levied,  collected  and  paid 
annually  upon  the  amount  over  $1,000  of  the  gains,  profits 
and  income  of  every  person,  declaring  that  "the  tax  herein 
provided  for  shall  be  assessed,  collected  and  paid  upon  the 
gains,  profits  and  income  for  the  year  ending  the  thirty-first 
of  December  next  preceding  the  time  for  levying,  collecting  and 
paying  said  tax."  There  was  this  further  provision:  "That, 
in  estimating  the  gains,  profits  and  income  of  any  person, 
there  shall  be  included  all  income  derived  from  interest  upon 
notes,  bonds  and  other  securities  of  the  United  States;  profits 
realized  within  the  year  from  sales  of  real  estate  purchased 
within  the  year  or  within  two  years  previous  to  the  year 
for  which  income  is  estimated.  .  .  .  and  all  other  gains, 
profits  and  income  derived  from  any  sources  whatever,"  with 
an  exception  that  need  not  be  stated.  It  appeared  that  plain- 
tiff acquired  certain  United  States  bonds  in  the  year  1865  and 
sold  them  in  1869  at  an  advance  of  $20,000  over  their  cost,  and 
was  taxed  upon  this  amount  as  gains,  profits  and  income  for 
the  latter  year.  This  court  held  that  by  the  true  construction 
of  the  act,  except,  as  to  gains  and  profits  from  trade  and 
commerce  and  sales  of  real  property,  the  statute  only  applied 
to  such  gains,  profits  and  income  as  were  strictly  acquisitions 
made  during  the  year  preceding  that  in  which  the  assessment 
was  levied  and  collected.  We  do  not  regard  the  decision  as 
controlling,  because  the  language  of  the  act  now  under  con- 
sideration is  different  in  material  particulars.  As  pointed  out 
in  Doyle,  collector,  v.  Mitchell  Brothers  Company,  this  day 
decided,  ante,  p. — ,  it  imposes  annually  a  special  excise  tax 
with  respect  to  the  carrying  on  or  doing  business  by  the  cor- 
poration "equivalent  to  one  per  centum  upon  the  entire  net 
income  over  and  above  five  thousand  dollars  received  by  it 
from  all  sources  during  such  year,"  to  be  ascertained  by  tak- 
ing gross  income  and  applying  certain  exceptions  and  deduc- 
tions. "Gains,  profits  and  income  for  the  year  ending  the 
thirty-first  day  of  December  next  preceding"  (act  of  1867) 
conveys  a  different  meaning  from  "the  entire  net  income  .  .  . 
received  by  it  .  .  .  during  such  year"  (act  of  1909).  The  former 
expression,  as  this  court  held  (15  Wall.,  65),  denoted  "such 
gains  or  profits  as  may  be  realized  from  a  business  transac- 
tion begun  and  completed  during  the  preceding  year,'*  with 
the  exceptions  already  mentioned.  The  expression  "income 
received  during  such  year,"  employed  in  the  act  of  1909,  looks 
to  the  time  of  realization  rather  than  to  the  period  of  accrue- 
ment,  except  as  the  taking  effect  of  the  act  on  a  specified 
date  (January  1,  1909)  excludes  income  that  accrued  before 
that  date.  There  are  other  differences  upon  which  we  need 
not  dwell. 

As  we  construe  the  latter  act,  it  measured  the  tax  by  the 
income  received  within  the  year  for  which   the   assessment 

1380 


was  levied,  whether  it  accrued  within  that  year  or  in  some 
preceding  year  while  the  act  was  in  elFect;  but  it  excluded 
all  income  that  accrued  prior  to  January  1,  1909,  although 
afterwards  received  while  the  act  was  in  effect. 

This  brings  us  to  consider  whether  the  proceeds  of  the  sale 
of  stock  by  respondent  in  October,  1911,  included  anything, 
and  if  so,  how  much,  of  "income"  accruing  on  or  after  Janu- 
ary 1,  1909,  as  the  term  "income"  is  employed  in  the  act. 

That  the  sale  resulted  in  a  gain  or  profit  to  the  extent  of 
$210,000,  the  difference  between  the  buying  and  selling  prices, 
is  not  to  be  doubted,  for  there  is  no  merit  in  the  contention 
that  interest  should  be  added  to  the  purchase  price  in  order 
to  ascertain  its  cost.  The  money  that  went  into  the  purchase 
was  not  loaned  at  interest;  on  the  contrary,  by  the  very  fact 
of  the  purchase  it  was  placed  where  it  could  not  earn  interest 
for  the  respondent  in  the  ordinary  sense,  and  the  gain  rep- 
resented by  the  increase  of  selling  price  over  cost  price  must 
be  regarded  as  a  substitute  for  whatever  return  some  other 
form  of  investment  might  have  yielded. 

It  results  that  so  much  of  the  $210,000  of  profits  as  may  be 
deemed  to  have  accrued  subsequent  to  December  31,  1908,  must 
be  treated  as  a  part  of  the  "gross  income"  of  respondent.  For 
it  is  the  simple  case  of  a  conversion  of  capital  assets  acquired 
before  and  turned  into  money  after  the  taking  effect  of  the 
act;  and,  as  we  have  shown  in  Doyle,  collector,  v.  Mitchell 
Brothers  Company,  this  day  decided,  since  a  conversion  of 
capital  often  results  in  gain,  the  general  purpose  of  the  act  of 
1909  to  measure  the  tax  by  the  increase  arising  from  corporate 
activities  together  with  the  income  from  invested  property 
leads  to  the  inference  that  that  portion  of  the  gross  proceeds 
which  represents  gain  or  increase  acquired  after  the  taking 
effect  of  the  act  must  be  regarded  as  "gross  income";  and  to 
this  end  it  must  be  distinguished  from  that  portion  which 
represents  a  return  of  the  capital  value  existing  before.  In 
order  to  do  this,  it  is  necessary  to  ascertain  what  was  the 
value  of  the  capital  assets  on  December  31,  1908.  Whether 
this  should  be  done  by  taking  an  inventory  upon  the  basis  of 
market  values  then  existing,  or  whether  the  entire  increment 
accruing  between  the  time  of  acquiring  and  the  time  of  dis- 
posing of  the  assets  should  be  prorated  as  if  it  had  arisen 
through  a  series  of  gradual  and  imperceptible  augmentations, 
is  a  matter  of  detail,  to  be  settled  according  to  the  best  evi- 
dence obtainable,  and  in  accordance  with  valid  departmental 
regulations.  Treasury  Regulations  No.  31,  December  3,  1909, 
provided  for  inventories  at  the  beginning  and  end  of  each 
year  with  respect  to  manufacturing  and  mercantile  companies; 
and  with  regard  to  a  sale  of  capital  assets  acquired  prior  to 
January  1,  1909,  and  sold  thereafter,  required  that  the  amount 
of  increment  or  depreciation  representing  the  difference  be- 
tween the  selling  and  buying  prices  should  be  adjusted  so  as 
fairly  to  determine  the  proportion  of  the  loss  or  gain  arising 
subsequent  to  the  date  mentioned;  but  without  prescribing 
any  particular  method  of  doing  this.  Subsequent  rulings  re- 
quired that  sales  of  stocks  and  bonds  should  be  regarded  as 
sales  of  capital  assets  and  accounted  for  accordingly  under 
Regulations  No.  31,  and,  while  still  requiring  inventories,  re- 
sorted to  the  prorating  method  with  respect  to  real  estate,  ap- 
parently on  the  ground  that  increases  and  decreases  in  the 
value  of  this  class  of  property  during  particular  periods  could 
not  be  accurately  determined.  (T.  D.  106,  March  29,  1910, 
paragraphs  37,  50,  71;  T.  D.  1675,  February  14,  1911,  para- 

1281 


graphs  36,  48,  55,  69;  T.  D.  1743,  December  15,  1911,  para- 
graphs 42,  55,  62,  86.) 

The  present  case  was  heard  upon  an  agreed  statement  of 
facts  which  contains  nothing  from  which  the  value  of  the 
stock  at  the  time  the  act  took  effect  may  be  deduced,  other- 
wise than  by  the  prorating  method  that  was  adopted;  nor  is 
any  objection  made  by  the  respondent  to  the  application  of 
that  method.  Hence  there  is  no  lawful  ground  for  overthrow- 
ing the  tax,  and  the  district  court  did  not  err  in  rendering 
Judgment  in  favor  of  the  collector. 

Judgment  of  the  Circuit  Court  of  Appeals  reversed  and 
that  of  the  District  Court  aflirmed. 


(T.  D.  2725.) 


Corporation  Excise-Tax  Act  of  1909 — Decision  of  the 
Supreme  Court — 

1.  Profit  upon  Sale  of  Corporate  Stock. 

A  railroad  corporation  purchasing  stock  in  another  cor- 
poration for  investment  prior  to  January  1,  1909,  is  taxable 
with  respect  to  so  much  of  the  profit  upon  a  sale  of  the 
stock  as  accrued  after  December  31,  1908. 

2.  Determination  of  Value  of  Stock  on  December  31,  1908. 

The  market  value  of  the  stock  on  December  31,  1908,  may 
be  determined  by  an  inventory  taken  as  of  that  date,  and 
the  stipulated  fact  of  the  market  value  of  the  stock  on  that 
date  may  be  accepted  as  supplying  the  lack  of  an  inventory. 

3.  Judgment  Affirmed. 

The  judgment  of  the  Circuit  Court  of  Appeals  is  affirmed. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

The  appended  decision  of  the  United  States  Supreme  Court 
in  the  case  of  the  United  States  of  America  v.  The  Cleveland, 
Cincinnati,  Chicago  and  St.  Louis  Railway  Company  is  pub- 
lished for  the  information  of  internal  revenue  officers  and 
others  concerned. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved  June  4,  1918: 
L.  S.  ROWE, 

Acting  Secretary  of  the  Treasury. 


SUPREME  COURT  OF  THE  UNITED   STATES.     No.   593. 
OCTOBER  TERM,  1917. 

United  States  of  America,  petitioner,  v.  Cleveland,  Cincinnati, 
Chicago  and  St.  Louis  Railway  Company. 

On   writ    of   certiorari    to    the   United    States    Circuit    Court    of 

Appeals  for  the  Sixth  Circuit. 

(May  20,  1918.) 

Mr.  Justice  Pitney  delivered  the  opinion  of  the  court: 
In  January,  1900,  the  respondent  purchased  30,000  shares  of 
stock  of  the  Chesapeake  and  Ohio  Railway  Company  for  $981,- 
427.92,  and  sold  them  January  28,  1909,  for  $1,795,719— a  profit 

1282 


of  over  $814,000.  It  included  no  portion  of  this  profit  in  its 
return  for  the  year  1909  under  the  corporation  excise-tax  act 
of  August  5,  1909  (ch.  6,  36  Stat.,  11,  112,  sec.  38),  and  the 
United  States  brought  this  suit  to  recover  the  tax  of  1  per 
cent  thereon.  The  district  court  directed  a  verdict  in  favor 
of  plaintiff.  Upon  review  the  circuit  court  of  appeals  held  the 
proceeds  of  sale  of  the  stock  could  not  be  considered  as  income 
under  the  act  except  to  the  extent  by  which  they  exceeded 
the  market  value  of  the  stock  on  December  31, 1908,  ascertained 
to  be  $57  per  share.  It  therefore  reversed  the  judgment,  and 
remanded  the  case  with  instruction  to  enter  a  new  judgment 
to  include  a  tax  on  this  account  only  upon  the  balance  of  the 
selling  price  above  $57  per  share  or  $1,710,000  in  all.  (243  Fed., 
Rep.  18.)     A  writ  of  certiorari  was  then  allowed. 

For  reasons  sufficiently  stated  in  Doyle,  collector,  v.  Mitchell 
Brothers  Company  and  Hays,  collector,  v.  Gauley  Mountain 
Coal  Company,  this  day  decided,  ante,  pp.  — ,  — ,  we  concur  in 
the  view  that  defendant  was  not  taxable  except  with  respect 
to  so  much  of  the  profit  upon  the  stock  as  accrued  after  De- 
cember 31,  1908.  Just  how  this  part  is  to  be  separated  from 
that  which  previously  accrued  is  a  matter  of  some  nicety,  as 
we  have  shown  in  the  Hays  case.  The  Circuit  Court  of  Ap- 
peals adopted  the  theory  of  an  inventory  taken  as  of  the  time 
the  act  went  into  effect;  and  although  the  assets  here  under 
consideration  were  not  acquired  for  the  purpose  of  sale  in  the 
manner  of  merchandise,  but  were  bought  for  investment,  and 
hence  were  not  inventoried  on  December  31,  1908,  it  accepted 
the  stipulated  fact  that  the  stock  had  regular  market  value 
of  $57  per  share  on  that  date  as  supplying  the  lack  of  an 
inventory.  This  result  accords  with  the  views  we  have  ex- 
pressed in  the  cases  referred  to. 

Judgment  affirmed. 

Mr.  Justice  Holmes  took  no  part  in  the  consideration  or 
decision  of  this  case. 


(T.  D.  2726.) 


Income  Tax  Act  of  October  3,  1913 — ^Decision  of  the 
Supreme  Court — 

1.  Effect  of  Sixteenth  Amendment. 

The  sixteenth  amendment  to  the  Constitution  of  the 
United  States  does  not  extend  the  taxing  power  to  new  or 
excepted  subjects,  but  merely  removes  all  occasion  which 
otherwise  might  exist  for  an  apportionment  among  the 
States  of  taxes  laid  on  income,  whether  it  be  derived  from 
one  source  or  another. 

2.  Nature  of  Tax. 

The  tax  is  not  laid  on  articles  in  course  of  exportation  or 
on  anything  which  inherently  or  by  the  usages  of  commerce 
is  embraced  in  exportation  or  any  of  its  processes,  but  on 
the  contrary  is  a  general  tax. 

3.  Net  Income  from  Exportation  Taxable. 

The  net  income  from  the  venture  of  exportation  when 
completed,  that  is  to  say,  after  the  exportation  and  sale  are 
fully  consummated,  is  subject  to  taxation  under  general 
laws. 

4.  Judgment  Affirmed. 

The  judgment  of  the  District  Court  is  affirmed. 


Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

The  appended  decision  of  the  United  States  Supreme  Court 
in  the  case  of  William  E.  Peck  and  Company  (Inc.)  v.  John 
Z.  Lowe,  Jr.,  collector  of  internal  revenue,  is  published,  for  the 
information  of  internal  revenue  officers  and  others  concerned: 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved  June  4,  1918: 
L.  S.  ROWE, 

Acting  Secretary  of  the  Treasury. 


SUPREME  COURT  OF  THE  UNITED  STATES.  No.  234. 
OCTOBER  TERM,  1917. 

William  E.  Peck  and  Company    (Inc.),  plaintiff  in  error,  v. 
John  Z.  Lowe,  Jr.,  collector,  etc. 

In   Error   to    the   District   Court   of   the   United    States   for   the 

Southern  District  of  New  York. 

(May  20,  1918.) 

Mr.  Justice  Van  Devanter  delivered  the  opinion  of  the  court : 

This  was  an  action  to  recover  a  tax  paid  under  protest  and 
alleged  to  have  been  imposed  contrary  to  the  constitutional 
provision  (art.  1,  sec.  9,  cl.  5)  that  "No  tax  or  duty  shall  be 
laid  on  articles  exported  from  any  State."  The  judgment  below 
was  for  the  defendant.     (234  Fed.,  135.) 

The  plaintiff  is  a  domestic  corporation  chiefly  engaged  in 
buying  goods  in  the  several  States,  shipping  them  to  foreign 
countries,  and  there  selling  them.  In  1914  its  net  income  from 
this  business  was  $30,173.66  and  from  other  sources  $12,436.24. 
An  income  tax  for  that  year,  computed  on  the  aggregate  of 
these  sums,  was  assessed  against  it  and  paid  under  compul- 
sion. It  is  conceded  that  so  much  of  the  tax  as  was  based 
on  the  income  from  other  sources  was  valid,  and  the  contro- 
versy is  over  so  much  of  it  as  was  attributable  to  the  income 
from  shipping  goods  to  foreign  countries  and  there  selling 
them. 

The  tax  was  levied  under  the  act  of  October  3,  1913  (c.  16, 
Sec.  II.,  38  Stat.,  166,  172),  which  provided  for  annually  sub- 
jecting every  domestic  corporation  to  the  payment  of  a  tax 
of  a  specified  per  centum  of  its  "entire  net  income  arising  or 
accruing  from  all  sources  during  the  preceding  calendar  year." 
Certain  fraternal  and  other  corporations,  as  also  income  from 
certain  enumerated  sources,  were  specifically  excepted,  but 
none  of  the  exceptions  included  the  plaintiff  or  any  part  of  its 
income.  So,  tested  merely  by  the  terms  of  the  act,  the  tax 
collected  from  the  plaintiff  was  rightly  computed  on  its  total 
net  income.  But  as  the  act  obviously  could  not  impose  a  tax 
forbidden  by  the  Constitution,  we  proceed  to  consider  whether 
the  tax,  or  rather  the  part  in  question,  was  forbidden  by  the 
constitutional  provision  on  which  the  plaintiff  relies. 

The  sixteenth  amendment,  although*  referred  to  in  argument, 
has  no  real  bearing  and  may  be  put  out  of  view.  As  pointed 
out  in  recent  decisions,  it  does  not  extend  the  taxing  power 
to  new  or  excepted  subjects,  but  merely  removes  all  occasion, 
which  otherwise  might  exist,  for  an  apportionment  among  the 
States  of  taxes  laid  on  income,  whether  it  be  derived  from 

1284 


one  source  or  another.  Brushaber  v.  Union  Pacific  Railroad 
Company  (240  U.  S.,  1,  17-19) ;  Stanton  v.  Baltic  Mining  Com- 
pany (240  U.  S.,  103,  112-113). 

The  Constitution  broadly  empowers  Congress  not  only  "to 
lay  and  collect  taxes,  duties,  imposts  and  excises,"  but  also 
"to  regulate  commerce  with  foreign  nations."  So,  if  the  pro- 
hibitory clause  invoked  by  the  plaintiff  be  not  in  the  way. 
Congress  undoubtedly  has  power  to  lay  and  collect  such  a  tax 
as  is  here  in  question.  That  clause  says  "No  tax  or  duty 
shall  be  laid  on  articles  exported  from  any  State."  Of  course 
it  qualifies  and  restricts  the  power  to  tax  as  broadly  conferred. 
But  to  what  extent?  The  decisions  of  this  court  answer  that 
it  excepts  from  the  range  of  that  power  articles  in  course  of 
exportation,  Turpin  v.  Burgess  (117  U.  S.,  504,  507);  the  act 
or  occupation  of  exporting.  Brown  v.  Maryland  (12  Wheat., 
419,  445) ;  bills  of  lading  for  articles  being  exported,  Fair- 
banks V.  United  States  (181  U.  S.,  283) ;  charter  parties  for 
the  carriage  of  cargoes  from  State  to  foreign  ports.  United 
States  V.  Hvoslef  (237  U.  S.,  1);  and  policies  of  marine  insur- 
ance on  articles  being  exported — such  insurance  being  uni- 
formly regarded  as  "an  integral  part  of  the  exportation"  and 
the  policy  as  "one  of  the  ordinary  shipping  documents," 
Thames  and  Mersey  Ins.  Company  v.  United  States,  237 
U.  S.,  19.  In  short,  the  court  has  interpreted  the  clause  as 
meaning  that  exportation  must  be  free  from  taxation,  and 
therefore  as  requiring  "not  simply  an  omission  of  a  tax  upon 
the  articles  exported,  but  also  a  freedom  from  any  tax  which 
directly  burdens  the  exportation."  Fairbanks  v.  United  States, 
supra,  pages  292-293.  And  the  court  has  indicated  that  where 
the  tax  is  not  laid  on  the  articles  themselves  while  in  course 
of  exportation  the  true  test  of  its  validity  is  whether  it  "so 
directly  and  closely"  bears  on  the  "process  of  exporting"  as  to 
be  in  substance  a  tax  on  the  exportation.  Thames  and  Mersey 
Ins.  Company  v.  United  States,  supra,  page  25.  In  this  view 
it  has  been  held  that  the  clause  does  not  condemn  or  invalidate 
charges  or  taxes,  not  laid  on  property  while  being  exported, 
merely  because  they  affect  exportation  indirectly  or  remotely. 
Thus  a  charge  for  stamps  which  each  package  of  manufac- 
tured tobacco  intended  for  export  was  required  to  bear  before 
removal  from  the  factory  was  upheld  in  Pace  v.  Burgess, 
92  U.  S.,  372,  and  Turpin  v.  Burgess,  117  U.  S.,  504;  and  the 
application  of  a  manufacturing  tax  on  all  filled  cheese  to 
cheese  manufactured  under  contract  for  export,  and  actually 
exported,  was  upheld  in  Cornell  v.  Coyne,  192  U.  S.,  418.  In 
that  case  it  was  said,  page  427:  "The  true  construction  of 
the  constitutional  provision  is  that  no  burden  by  way  of  tax 
or  duty  can  be  cast  upon  the  exportation  of  articles,  and  does 
not  mean  that  articles  exported  are  relieved  from  the  prior 
ordinary  burdens  of  taxation  which  rest  upon  all  property 
similarly  situated.  The  exemption  attaches  to  the  export  and 
not  to  the  article  before  its  exportation. 

While  fully  assenting  and  adhering  to  the  interpretation 
which  has  been  put  on  the  clause  in  giving  effect  to  its  spirit 
as  well  as  its  letter,  we  are  of  opinion  that  to  broaden  that 
interpretation  would  be  to  depart  from  both  the  spirit  and 
letter. 

The  tax  in  question  is  unlike  any  of  those  heretofore  con- 
demned. It  is  not  laid  on  articles  in  course  of  exportation  or 
on  anything  which  inherently  or  by  the  usages  of  commerce  is 
embraced  in  exportation  or  any  of  its  processes.  On  the  con- 
trary, it  is  an  income  tax  laid  generally  on  net  incomes.    And 

1285 


while  it  can  not  be  applied  to  any  income  which  Congress  has 
no  power  to  tax  (see  Stanton  v.  Baltic  Mining  Company, 
supra,  p.  113),  it  is  both  nominally  and  actually  a  general 
tax.  It  is  not  laid  on  income  from  exportation  because  of 
its  source,  or  in  a  discriminative  way,  but  just  as  it  is  laid 
on  other  income.  The  words  of  the  act  are  "net  income  aris- 
ing or  accruing  from  all  sources."  There  is  no  discrimination. 
At  most,  exportation  is  affected  only  indirectly  and  remotely. 
The  tax  is  levied  after  exportation  is  completed,  after  all  ex- 
penses are  paid  and  losses  adjusted,  and  after  the  recipient 
of  the  income  is  free  to  use  it  as  he  chooses.  Thus  what  is 
taxed — the  net  income — is  as  far  removed  from  exportation  as 
are  articles  intended  for  export  before  the  exportation  begins. 
If  articles  manufactured  and  intended  for  export  are  subject 
to  taxation  under  general  laws  up  to  the  time  they  are  put 
in  course  of  exportation,  as  we  have  seen  they  are,  the  con- 
clusion is  unavoidable  that  the  net  income  from  the  venture 
when  completed,  that  is  to  say,  after  the  exportation  and 
sale  are  fully  consummated,  is  likewise  subject  to  taxation 
under  general  laws.  In  that  respect  the  status  of  the  income 
is  not  different  from  that  of  the  exported  articles  prior  to 
the  exportation. 

For  these  reasons  we  hold  that  the  objection  urged  against 
the  tax  is  not  well  grounded. 

Judgment  affirmed. 


(T.  D.  2729.) 


Income  Tax  Act  of  October  3,  1913— Decision  of  the  Supreme 
Court— 

1.  Taxable  Income. 

Where  the  capital  assets  of  a  corporation  increased  in 
value  prior  to  March  1,  1913,  and  a  single  and  final  divi- 
dend was  made  in  liquidation  of  the  entire  assets  in  1914, 
without  further  appreciation  or  addition  to  the  assets  hav- 
ing occurred,  no  part  of  the  dividend  received  by  a  stock- 
holder is  taxable  under  the  act  of  October  3,  1913.— Collector 
V.  Hubbard  (12  Wall.,  1),  and  Bailey  v.  Railroad  Co.  (22 
Wall.,  604;  106  U.  S.,  109)  discussed. 

2.  Judgment  Affirmed. 

The  judgment  of  the  Circuit  Court  of  Appeals  is  affirmed. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

The  appended  decision  of  the  United  States  Supreme  Court 
in  the  case  of  E.  J.  Lynch,  as  collector  of  internal  revenue,  v. 
Henry  Turrish,  is  published  for  the  information  of  internal 
revenue  officers  and  others  concerned. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved  June  11,  1918: 
L.  S.  ROWE, 

Acting  Secretary  of  the  Treasury. 

1286 


SUPREME  COURT  OF  THE  UNITED  STATES. 
NO.  421.  OCTOBER  TERM,  1917. 

E.  J.  Lynch,  Collector  of  Internal  Revenue  for  the  District  of 
Minnesota,  petitioner,  v.  Henry  Turrish. 

On  Writ  of  Certiorari  to  the  United  States  Circuit  Court 

of  Appeals  for  the  Eighth  Circuit. 

[June  3,  1918.] 

Mr.  Justice  McKenna  delivered  the  opinion  of  the  court: 

Suit  to  recover  an  income  tax,  paid  under  protest,  assessed 
under  the  act  of  October  3,  1913,  38  Stat.  166. 

The  facts,  as  submitted  by  demurrer,  are  these:  Respond- 
ent, Turrish,  who  was  plaintiff  in  the  trial  court,  made  a  re- 
turn of  his  income  for  the  calendar  year  1914  which  showed 
that  he  had  no  net  income  for  that  year;  afterwards  the 
Commissioner  of  Internal  Revenue  made  a  supplemental 
assessment  showing  that  he  had  received  a  net  income  of 
$32,712.08,  which,  because  of  specific  deductions  and  exemp- 
tions, resulted  in  no  normal  tax,  but  as  the  net  income  ex- 
ceeded the  sum  of  $20,000  the  commissioner  assessed  an  addi- 
tional or  super  tax  of  one  per  cent  upon  the  excess,  resulting 
in  a  tax  of  $127.12,  which  was  sought  to  be  recovered.  The 
re-asssessment  was  based  upon  certain  sums  received  by 
the  plaintiff  in  the  year  1914  as  distributions  from  corpora- 
tions subject  to  the  income-tax  law  and  held  by  the  com- 
missioner to  be  income  derived  from  dividends  received  by  the 
plaintiff  on  stock  of  domestic  corporations;  of  which  the  sum 
of  $79,975,  received  as  a  distribution  from  the  Payette  Lumber 
&  Manufacturing  Co.,  and  without  which  no  tax  could  have 
been  levied  against  the  plaintiff  is  here  in  dispute. 

Prior  to  March  1,  1913,  and  continuously  thereafter  until 
the  surrender  of  his  stock  as  hereinafter  mentioned,  plaintiff 
was  a  stockholder  in  the  Payette  Co.,  which  was  organized 
in  the  year  1903  with  power  to  buy,  hold,  and  sell  timber- 
lands,  and  in  fact  never  engaged  in  any  other  business  than 
this  except  minor  businesses  incidental  to  it.  Immediately 
after  its  organization  this  company  began  to  invest  in  timber- 
lands,  and  prior  to  March  1,  1913,  had  thus  invested  approxi- 
mately $1,375,000. 

On  March  1,  1913,  the  value  of  its  assets  was  not  less  than 
$3,000,000,  of  which  sum  the  value  of  the  timberlands  was 
not  less  than  $2,875,000.  The  increase  was  due  to  the  gradual 
rise  in  the  market  value  of  the  lands.  At  that  date  the 
value  of  Turrish's  stock  was  twice  its  par  value,  pr  $159,950, 
and  about  that  time  he  and  all  the  other  stockholders  gave 
an  option  to  sell  their  stock  for  twice  its  par  value.  The 
holders  of  the  option  formed  another  company,  called  the 
Boise-Payette  Lumber  Co.,  and  transferred  the  options  to  it. 
The  options  having  been  extended  to  December  31,  1913,  the 
new  company  informed  the  Payette  Co.  and  its  stockholders 
shortly  before  this  date  that  instead  of  exercising  the  option 
it  preferred  and  proposed  to  purchase  all  of  the  assets  of 
the  Payette  Co.,  paying  to  that  company  such  a  purchase 
price  that  there  would  be  available  for  distribution  to  its 
stockholders  twice  the  par  value  of  their  stock.  The  stock- 
holders by  resolution  authorized  this  sale,  and,  pursuant  to 
this  and  a  resolution  of  the  directors,  the  Payette  Co.  trans- 
ferred to  the  new  company  all  of  its  assets,  property,  and 
franchises,  and  upon  the  completion  of  the  transaction  found 
itself  with  no  assets  or  property,  except  cash  to  the  amount 

1287 


of  double  the  par  value  of  its  stock  which  had  been  paid  to 
it  by  the  new  company,  and  with  no  debt,  liabilities,  or  obli- 
gations except  those  which  the  new  company  had  assumed. 
The  cash  was  distributed  to  the  stockholders  on  the  surrender 
of  their  certificates  of  stock,  and  the  company  went  out  of 
business.  In  this  way,  upon  the  surrender  of  his  shares, 
Turrish  received  $159,950,  being  double  their  par  value. 

The  Commissioner  of  Internal  Revenue  considered  that  of 
this  sum  one -half  was  not  taxable,  being  tlie  liquidation  of 
the  par  value  of  Turrish's  stock,  but  that  the  other  half 
was  income  for  the  year  1914  and  taxable  under  the  act  of 
1913. 

The  question  in  the  case  is  thus  indicated.  The  district 
court  took  a  different  view  from  that  of  the  Commissioner  of 
Internal  Revenue  and  therefore  overruled  the  demurrer  to 
Turrish's  complaint  and  entered  judgment  for  him  for  the 
sum  prayed,  which  judgment  was  affirmed  by  the  Circuit 
Court  of  Appeals  for  the  Eighth  Circuit.     (236  Fed.,  653.) 

The  point  in  the  case  seems  a  short  one.  It,  however,  has 
provoked  much  discussion  on  not  only  the  legal  but  the 
economic  distinction  between  capital  and  income  and  by  what 
processes  and  at  what  point  of  time  the  former  produces  or 
becomes  the  latter.  And  this  in  resolution  of  a  statute  which 
concerns  the  activities  of  men  and  intended,  it  might  be  sup- 
posed, to  be  without  perplexities  and  readily  solvable  by  the 
offhand  conceptions  of  those  to  whom  it  was  addressed. 

The  provisions  of  the  act,  so  far  as  material  to  be  noticed, 
are  the  following:  That  there  is  assessed  "upon  the  entire 
net  income  arising  or  accruing  from  all  sources  in  the  pre- 
ceding calendar  year  to  every  *  ♦  *  person  residing  in 
the  United  States  *  ♦  ♦  a  tax  of  one  per  centum  per 
annum  upon  such  income    *    *    *     »     (Par.  A,  subdiv.  1.) 

In  addition  to  that  tax,  which  is  denominated  the  normal 
income  tax,  it  is  provided  that  there  shall  be  levied  "upon 
the  net  income  of  every  individual  an  additional  tax  *  *  * 
of  one  per  centum  per  annum  upon  the  amount  by  which 
the  total  net  income  exceeds"  certain  amounts,  and  the  per- 
son subject  to  the  tax  is  required  to  make  a  personal  return 
of  his  total  net  income  from  all  sources  under  rules  and  regu- 
lations to  be  prescribed  by  the  Commissioner  of  Internal 
Revenue.     (Subdiv.  2.) 

By  paragraph  B  it  is  provided  that,  subject  to  certain  ex- 
emptions and  deductions,  "the  net  income  of  a  taxable  person 
shall  include  gains,  profits,  and  income  derived  from  salaries, 
wages,  or  compensation  for  personal  service  ♦  •  *  also 
from  interest,  rent,  dividends,  securities,  or  the  transaction  of 
any  lawful  business  carried  on  for  gain  or  profit,  or  gains  or 
profits  and  income  derived  from  any  source  whatever." 

After  specifying  tlie  exemptions  and  deductions  allowed, 
the  law  declares  as  follows: 

The  said  tax  shall  be  computed  upon  the  remainder  of  said 
net  income  of  each  pei'son  subject  thereto,  accruing  during  each 
preceding  calendar  year  ending  December  thirty-first:  Provided, 
however,  That  for  the  year  ending  December  thirty-first,  nine- 
teen hundred  and  thirteen,  said  tax  shall  be  computed  on  the 
net  incotae  accruing  from  March  first  Jo  December  thirty-first, 
nineteen  hundred  and  thirteen,  both  dates  inclusive  ♦  ♦  ♦. 
(Par.  D.) 

It  will  be  observed,  therefore,  that  the  statute  levies  a 
normal  tax  and  an  additional  tax  upon  net  incomes,  derived 
from  whatever  source,  "arising  or  accruing"  each  preceding 
calendar  year  ending  December  31,  except  that  for  the  year 

1288 


ending  December  31,  1913,  the  tax  shall  be  computed  on  the 
net  income  accruing  from  March  1,  1913,  to  December  31,  1913. 

And  in  determining  the  application  of  the  statute  to  Turrish 
we  must  keep  in  mind  that  on  the  admitted  facts  the  dis- 
tribution received  by  him  from  the  Payette  Co.  manifestly 
was  a  single  and  final  dividend  in  liquidation  of  the  entire 
assets  and  business  of  the  company,  a  return  to  him  of  the 
value  of  his  stock  upon  the  surrender  of  his  entire  interest 
in  the  company,  and  at  a  price  that  represented  its  intrinsic 
value  at  and  before  March  1,  1913,  when  the  act  took  effect. 

The  district  court  and  the  Circuit  Court  of  Appeals  de- 
cided that  the  amount  so  distributed  to  Turrish  was  not  in- 
come within  the  meaning  of  the  statute,  basing  the  decision 
on  two  propositions,  as  expressed  in  the  opinion  of  the 
Circuit  Court  of  Appeals,  by  Sanborn,  circuit  judge — (a)  The 
amount  was  the  realization  of  an  investment  made  some 
years  before,  representing  its  gradual  increase  during  those 
years,  and  which  reached  its  height  before  the  effective  date 
of  the  law,  that  is,  before  March  1,  1913,  and  the  mere 
change  of  form  of.  the  property  "as  from  real  to  personal 
property,  or  from  stock  to  cash"  was  not  income  to  its  holders 
because  the  value  of  the  property  was  the  same  after  as 
before  the  change;  (b)  the  timberlands  were  the  property, 
capital,  and  capital  assets  of  their  legal  and  equitable  owner 
and  the  enhancement  of  their  value  during  a  series  of  years 
"prior  to  the  effective  date  of  the  income-tax  law,  although 
divided  or  distributed  by  dividend  or  otherwise  subsequent 
to  that  date,  does  not  become  income,  gains,  or  profits  tax- 
able under  such  an  act." 

For  proposition  "a"  the  court  cited  Collector  v.  Hubbard 
(12  Wall.,  1);  Bailey  v.  Railroad  Company  (22  Wall.,  604, 
and  the  same  case  in  106  U.  S.,  109).  For  proposition  "b" 
Gray  v.  Darlington  (15  Wall.,  63),  was  relied  on. 

The  Government  opposes  both  contentions  by  an  elaborate 
argument  containing  definitions  of  capital  and  income  drawn 
from  legal  and  economic  sources  and  given  breadth  to  cover 
a  number  of  other  cases  submitted  with  this.  The  argument, 
in  effect,  makes  any  increase  of  value  of  property  income, 
emerging  as  such  and  taxable  at  the  moment  of  realization  by 
sale  or  some  act  of  separation,  as  by  dividend  declared  or  by 
distribution,  as  in  the  instant  case. 

To  sustain  the  argument  these  definitions  are  presented: 

1.  Capital  is  anything,  material  or  otherwise,  capable  of  owner- 
ship, viewed  in  its  static  condition  at  a  moment  of  time,  or  the 
rights  of  ownership  therein. 

2.  Income  is  the  service  or  return  rendered  by  capital  during 
a  period  of  time.    ♦    ♦    ♦ 

4.  Net  income  ("profits")  is  the  difference  between  income  and 
outgo.    ♦    ♦    * 

7.  In  the  actual  production  and  distribution  of  capital  there 
is  a  constant  conversion  of  capital  into  income,  and  vice  versa. 

8.  The  attempt  to  conceal  this  conversion  by  treating  "income" 
as  the  standard  return  from  intact  "capital"  only  leads  to  con- 
fusion of  the  value  of  capital  with  capital  itself. 

From  these  definitions  are  deduced  the  following  proposi- 
tions, which  are  said  to  be  decisive  of  the  problems  in  the 
cases: 

1.  Income  being  derived  from  the  use  of  capital,  the  conversion 
or  transfer  of  capital  always  produces  income. 

2.  Mere  appreciation  of  capital  value  does  not  produce  "in- 
come," nor  mere  depreciutiou  "outgo." 

1289 


3.  Net  Income  Is  the  difference  between  actual  "income"  and 
actual  "outgo." 

4.  Income  is  not  confined  to  money  income,  but  includes  any- 
tliing  capable  of  easy  valuation  in  money. 

It  will  be  observed  that  the  breadth  of  definition  and  the 
breadth  of  application  are  necessary  to  the  refutation  of  the 
reasoning  of  the  Circuit  Court  of  Appeals.  There  is  direct 
antagonism,  the  court  basing  its  reliance,  it  says,  upon  what 
it  asserts  is  the  common  sense  and  understanding  of  the 
words  of  the  law,  and  the  exposition  of  like  laws  by  the  de- 
cisions of  this  court.  The  Government's  resource  is  the  dis- 
cussion of  economists  and  the  fact,  concrete  and  practical, 
of  wealth  not  only  increased  but  come  to  actual  hand.  The 
instant  case  is  an  example.  Turrish's  stock  doubled  in  value. 
He  paid  for  it  $79,975.00;  he  received  $159,950.00.  It  requires 
a  struggle  to  resist  the  influence  of  the  fact,  but  we  are 
aided  and  fortified  by  our  own  precedents  and  saved  from 
such  intricate  and  subtle  discussion  and  an  elaborate  review 
of  other  cases  cited  in  confirmation  or  opposition. 

In  Collector  v.  Hubbard,  supra,  the  distinction  between  a 
corporation  and  its  stockholders  was  recognized  and  that  the 
stockholder  had  no  title  for  certain  purposes  to  the  earnings 
of  the  corporation,  net  or  other,  prior  to  a  dividend  being 
declared,  but  they  might  become  capital  by  investment  in 
permanent  improvements  and  thereby  increase  the  market 
value  of  the  shares,  "whether  held  by  the  original  subscribers 
or  by  assignees."  In  other  words,  it  was  held  that  the  in- 
vestments of  the  corporation  were  the  investments  of  the 
stockholders;  that  is,  the  stockholders  could  have  an  interest, 
taxable  under  the  act  considered'  though  not  identical  w^ith 
the  corporation.  This  was  repeated  in  Bailey  v.  Railroad  Co. 
(22  Wall.,  604,  635,  636). 

The  latter  case  came  here  again  in  106  U.  S.,  109,  and  it 
was  then  declared  that  the  purpose  of  an  income  tax  law 
was  to  tax  the  income  for  the  year  that  it  accrued;  in  other 
words,  no  tax  in  contemplation  of  the  law  accrues  upon  some- 
thing except  for  the  year  in  which  that  something — earnings, 
profits,  gains,  or  income — accrues.  In  that  case  the  subject 
of  the  tax  was  a  scrip  dividend,  but  the  certificates  did  not 
show  the  year  of  the  earnings  and  testimony  as  to  the  par- 
ticular year  was  admitted.  The  principle  applies  to  the  case 
at  bar.  If  increase  m  value  of  the  lands  was  income,  it  had 
its  particular  time  and  such  time  must  have  been  within  the 
time  of  the  law  to  be  subject  to  the  law,  that  is,  it  must 
have  been  after  March  1,  1913.  But,  according  to  the  fact 
admitted,  there  was  no  increase  after  that  date  and  therefore 
no  increase  subject  to  the  law.  There  was  continuity  of 
value,  not  gain  or  increase.  In  the  first  proposition  of  the 
Court  of  Appeals  we,  therefore,  concur. 

In  support  of  its  second  proposition  it  adduced,  as  we  have 
seen.  Gray  v.  Darlington  (15  Wall.,  63).  The  case  arose 
under  the  income  tax  law  of  1867,  which  levied  "upon  the 
gains,  profits,  and  income  of  every  person,  ♦  ♦  ♦  whether 
derived  from  any  kind  of  property  *  *  *  or  from  any 
other  source  whatever  *  *  *  a  tax  of  5  per  centum  on 
the  amount  so  derived  over  $1,000  *  *  *  for  the  year 
ending  the  thirty -first  of  December  next  preceding  the  time 
for  levying,  collecting  and  paying  said  tax." 

Darlington,  in  1865,  being  the  owner  of  certain  United 
States  Treasury  notes,  exchanged  them  for  United  States 
bonds.    In  1869  he  sold  the  bonds  at  an  advance  of  $20,000 

1290 


over  the  cost  of  the  notes  and  upon  this  amount  was  levied 
a  tax  of  5  per  centum  as  gains,  profits,  and  income  for  that 
year.  He  paid  the  tax  under  protest  and  sued  to  recover, 
and  prevailed.    This  court,  by  Mr.  Justice  Field,  said: 

The  question  presented  is  wliether  the  advance  in  the  value  of 
the  bonds,  during  this  period  of  four  years,  over  their  cost, 
realized  by  their  sale,  was  subject  to  taxation  as  gains,  profits, 
or  income  of  the  plaintiff  for  the  year  in  which  the  bonds  were 
sold.  The  answer  which  should  be  given  to  this  question  does 
not,  in  our  judgment,  admit  of  any  doubt.  The  advance  in  the 
value  of  property  during  a  series  of  years  can,  in  no  just  sense, 
be  considered  the  gains,  profits,  or  income  of  any  one  particular 
year  of  the  series,  although  the  entire  amount  of  the  advance 
be  at  one  time  turned  into  money  by  the  sale  of  the  property. 
The  statute  looks,  with  some  exceptions,  for  subjects  of  taxation 
only  to  annual   gains,   profits  and  income. 

And  again: 

The  mere  fact  that  property  has  advanced  in  value  between  the 
date  of  its  acquisition  and  sale  does  not  authorize  the  imposition 
of  a  tax  on  the  amount  of  the  advance.  Mere  advance  in  value 
in  no  sense  constitutes  the  gains,  profits,  or  income  specified 
by  the  statute.  It  constitutes  and  can  be  treated  merely  as 
increase  of  capital. 

This  case  has  not  been  since  questioned  or  modifier' 

The  Government  feels  the  impediment  of  the  case  and  at- 
tempts to  confine  its  ruling  to  the  exact  letter  of  the  act  of 
March  2,  1867,  and  thereby  distinguish  that  act  from  the  act 
of  1913  and  give  to  the  latter  something  of  retrospective 
effect.  Opposed  to  this  there  is  a  presumption,  resistless 
except  against  an  intention  imperatively  clear.  The  Govern- 
ment, however,  makes  its  view  depend  upon  disputable  differ- 
ences between  certain  words  of  the  two  acts.  It  urges  that 
the  act  of  1913  makes  the  income  taxed  one  "arismg  or  ac- 
cruing" in  the  preceding  calendar  year,  while  the  act  of  1867 
makes  the  income  one  "derived."  Granting  that  there  is  a 
shade  of  difference  between  the  words,  it  cannot  be  granted 
that  Congress  made  that  shade  a  criterion  of  intention  and 
committed  the  construction  of  its  legislation  to  the  disputes 
of  purists.  Besides,  the  contention  of  the  Government  does 
not  reach  the  principle  of  Gray  v.  Darlington,  which  is  that 
the  gradual  advance  in  the  value  of  property  during  a  series 
of  years  in  no  just  sense  can  be  ascribed  to  a  particular  year, 
not  therefore  as  "arising  or  accruing,"  to  meet  the  challenge 
of  the  words,  in  the  last  one  of  the  years,  as  the  Government 
contends,  and  taxable  as  income  for  that  year  or  when 
turned  into  cash.  Indeed,  the  case  decides  that  such  advance 
in  value  is  not  income  at  all,  but  merely  increase  of  capital 
and  not  subject  to  a  tax  as  income. 

We  concur,  therefore,  in  the  second  proposition  of  the 
Circuit  Court  of  Appeals  as  well  as  in  the  first,  and  affirm  the 
judgment. 

Mr.  Justice  Brandeis  and  Mr.  Justice  Clarke  concur  in  the 
result. 


(T.  D.  2730.) 


Income-Tax  Act  of  October  3,  1913 — ^Decision  of  the 
Supreme  Court — 

\     1.  Intention  of  the  Act. 

It  is  the  evident  purpose  of  the  act  to  refrain  from  tax- 
ing income  that  accrued  prior  to  March  1,  1913,  and  to 
exclude  from  consideration  in  making  computation  of  tax- 

i2di 


able  income  for  a  given  year  any  income  that  accrued  in 
the  preceding  taxable  year. 

2.  Act  of  June  30,  1864,  Compared  and  Distinguished. 

The  income  tax  act  of  June  30,  1864,  contains  special 
language,  different  from  the  1913  act,  which  distinguishes 
the  case  of  Collector  of  Hubbard  (12  Wall.,  1),  from  the 
present  case. 

3.  Taxability  of  Dividends  from  Subsidiary  Corporation. 

Where  a  corporation  is  the  owner  of  all  the  stock  in  a 
subsidiary  company  and  the  lessee  of  all  its  property, 
regularly  maintaining  possession,  control,  and  management 
of  all  the  subsidiary's  money  and  other  property,  so  that 
the  subsidiary  is  a  mere  agent  of  the  other  corporation 
and  is  practically  merged  therewith,  dividends  of  the  sub- 
sidiary declared  out  of  a  surplus  which  accrued  prior  to 
March  1,  1913,  are  not  taxable  income  of  the  parent  cor- 
poration. 

4.  Effect  of  Decision  Limited. 

This  case  turns  on  its  peculiar  facts.  Pullman  Car  Co.  v. 
Missouri  Pacific  Co.  (115  U.  S.,  587) ;  Peterson  v.  Chicago, 
Rock  Island  &  Pacific  Railway  (206  U.  S.,  364),  are  dis- 
tinguishable. 

5.  Judgment  Reversed. 

The  judgment  of  the  District  Court  is  reversed,  and  the 
cause  remanded  for  further  proceedings. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

The  appended  decision  of  the  United  States  Supreme  Court 
in  the  case  of  Southern  Pacific  Co.  v.  John  Z.  Lowe,  Jr.,  aa 
Collector  of  Internal  Revenue,  is  published  for  the  information 
of  internal -revenue  officers  and  others  concerned. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved  June  11,  1918: 
L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 


SUPREME   COURT   OF  THE   UNITED   STATES. 
NO.  452.    OCTOBER  TERM,  1917. 

Southern  Pacific  Co.,  plaintiff  in  error,  v.  John  Z.  Lowe,  Jr., 

United  States  Collector  of  Internal  Revenue  for  the 

Second  District  of  New  York. 

In  Error  to  the  District  Court  of  the  United  States  for  the 

Southern  District  of  New  York. 

[June  3,  1918.] 

Mr.  Justice  Pitney  delivered  the  opinion  of  the  court: 
This  case  presents  a  question  arising  under  the  Federal 
income-tax  act  of  October  3,  1913  (Ch.  16,  38  Stat.,  114,  166). 
Suit  was  brought  by  plaintiff-in-error  against  the  collector 
to  recover  taxes  assessed  against  it  and  paid  under  protest. 
There  were  two  causes  of  action,  of  which  only  the  second 
went  to  trial,  it  having  been  stipulated  that  the  trial  of  the 


1292 


other  might  be  postponed  imtil  the  final  determination  of 
this  one.  So  far  as  it  is  presented  to  us,  the  suit  is  an  effort 
to  recover  a  tax  imposed  upon  certain  dividends  upon  stock, 
in  form  received  by  the  plaintiff  from  another  corporation  in 
the  early  part  of  the  year  1914,  and  alleged  by  the  plaintiff 
to  have  been  paid  out  of  a  surplus  accumulated  not  only 
prior  to  the  effective  date  of  the  act  but  prior  to  the  adoption 
of  the  sixteenth  amendment  to  the  Constitution  ot  the  United 
States.  The  District  Court  directed  a  verdict  and  judgment 
in  favor  of  the  collector  (238  Fed,  Eep.,  847),  and  the  case 
comes  here  by  direct  writ  of  error  under  section  238,  Judicial 
Code,  because  of  the  constitutional  question.  That  our  juris- 
diction was  properly  invoked  is  settled  by  Towne  v.  Eisner 
(245  U.  S.,  418,  425). 

The  case  was  submitted  at  the  same  time  with  several  other 
cases  arising  under  the  same  act  and  decided  this  day,  viz.: 
Lynch,  Collector  v.  Turrish,  and  Lynch,  Collector  v.  Hornby, 
and  Peabody  v.  Eisner,  Collector. 

The  material  facts  are  as  follows:  Prior  to  Januarv  1, 
1913,  and  at  all  times  material  to  the  case,  plaintiff,  a  cor- 
poration organized  under  the  laws  of  the  State  of  Kentucky, 
owned  all  the  capital  stock  of  the  Central  Pacific  Railway 
Co.,  a  corporation  of  the  State  of  Utah,  including  the  stock 
registered  in  the  names  of  the  directors.*  This  situation  ex- 
isted continuously  from  the  incorporation  of  the  railway 
company  in  the  year  1899.  That  company  is  the  successor  of 
the  Central  Pacific  Railroad  Co.  and  acquired  all  of  its  prop- 
erties, which  constitute  a  part  of  a  large  system  of  railways 
owned  or  controlled  by  the  Southern  Pacific  Co.  The  latter 
company,  besides  being  sole  stockholder,  was  in  the  actual 
physical  possession  of  the  railroads  and  all  other  assets  of 
the  railway  company,  and  in  charge  of  its  operations,  which 
were  conducted  in  accordance  with  the  terms  of  a  lease  made 
by  the  predecessor  company  to  the  Southern  Pacific  and  as- 
sumed by  the  railway  company,  the  effect  of  which  was  that 
the  Southern  Pacific  should  pay  to  the  lessor  company  $10,000 
per  annum  for  organization  expenses,  should  operate  the  rail- 
roads, branches,  and  leased  lines  belonging  to  the  lessor,  and 
account  annually  for  the  net  earnings,  and  if  these  exceeded 
6  per  cent  on  the  existing  capital  stock  of  the  lessor  the 
lessee  should  retain  to  itself  one-half  of  the  excess;  ad- 
vances by  the  lessee  for  account  of  the  lessor  were  to  bear 
lawful  interest,  and  the  lessee  was  to  be  entitled  at  any 
time  and  from  time  to  time  to  refund  to  itself  its  advances 
and  interest  out  of  any  net  earnings  which  might  be  in  its 
hands.  The  provisions  of  the  lease  were  observed  by  both 
corporations  for  bookkeeping  purposes.  The  Southern  Pacific 
acted  as  cashier  and  banker  for  the  entire  system;  the  Central 
Pacific  kept  no  bank  account,  its  earnings  being  deposited 
with  the  bank  account  of  the  Southern  Pacific;  and  if  the 
Central  Pacific  needed  money  for  additions  and  betterments 
or  for  making  up  a  deficit  of  current  earnings  the  necessary 
funds  were  advanced  by  the  Southern  Pacific.  As  a  result 
of  these  operations  and  of  the  conversion  of  certain  capital 
assets  of  the  Central  Pacific  Co.,  that  company  showed  upon 
its  books  a  large  surplus  accumulated  prior  to  January  1, 
1913,  principally  in  the  form  of  a  debit  against  the  Southern 
Pacific,   which   at   the    same   time,    as    sole    stockholder,    was 


♦There  was  another  question,  concerning  a  dividend  paid  by  the 
Reward  Oil  Co.,  whose  stock  likewise  was  owned  by  the  Southern 
Pacific  Co.,  but  the  contention  of  plaintiff  in  error  respecting  this 
item  has  been  abandoned. 

1293 


entitled  to  any  and  all  dividends  that  might  be  declared,  and 
being  in  control  of  the  board  of  directors  was  able  to  and 
did  control  the  dividend  policy.  The  dividends  in  question 
were  declared  and  paid  during  the  first  six  months  of  the. 
year  1914  out  of  this  surplus  of  the  Central  Pacific  accumu- 
lated prior  to  January  1,  1913;  but  the  payment  was  only 
constructive,  being  carried  into  effect  by  bookkeeping  entries 
which  simply  reduced  the  apparent  surplus  of  the  Central 
Pacific  and  reduced  the  apparent  indebtedness  of  the  Southern 
Pacific  to  the  Central  Pacific  by  precisely  the  amount  of  the 
dividends. 

The  question  is  whether  the  dividends  received  under  these 
circumstances  and  in  this  manner  by  the  Southern  Pacific  Co. 
were  taxable  as  income  of  that  company  under  the  income 
tax  act  of  1913.t 

The  act  provides  in  section  2,  paragraph  A,  subdivision  1 
(38  Stat.,  166),  "that  there  shall  be  levied,  assessed,  collected, 
and  paid  annually  upon  the  entire  net  income  arising  or  ac- 
cruing from  all  sources  in  the  preceding  calendar  year"  to 
every  person  residing  in  the  United  States  a  tax  of  1  per 
cent  per  annum,  with  exceptions  not  now  material,  by  para- 
graph G  (a)  (p.  172),  it  is  provided  "that  the  normal  tax 
hereinbefore  imposed  upon  individuals  [1  per  cent]  likewise 
shall  be  levied,  assessed,  and  paid  annually  upon  the  entire 
net  income  arising  or  accruing  from  all  sources  during  the 
preceding  calendar  year  to  every  corporation  "  *  *  or- 
ganized in  the  United  States,"  with  other  provisions  not  now 
material. 

It  is  provided  in  paragraph  G  (b),  as  to  domestic  corpora- 
tions, that  such  net  income  shall  be  ascertained  by  deducting 
from  the  gross  amount  of  the  income  of  the  corporation 
(1)  ordinary  and  necessary  expenses  paid  within  the  year  in 
the  maintenance  and  operation  of  its  business  and  properties, 
including  rentals  and  the  like;  (2)  losses  sustained  within 
the  year  and  not  compensated  by  insurance  or  otherwise,  in- 
cluding a  reasonable  allowance  for  depreciation  by  use,  wear 
and  tear  of  property,  if  any,  and  in  the  case  of  mines  a  cer- 
tain allowance  for  depletion  of  ores  and  other  natural  de- 
posits; (3)  interest  accrued  and  paid  within  the  year  upon 
indebtedness  of  the  corporation,  within  the  prescribed  limits; 
(4)  National  and  State  taxes  paid.  It  will  be  observed  that 
.  moneys  received  as  dividends  upon  the  stock  of  other  cor- 
porations are  not  deducted,  as  they  are  in  computing  the  in- 
come of  individuals  for  the  purpose  of  the  normal  tax  under 
this  act  (p.  167),  and  as  they  were  in  computing  the  income 
of  a  corporation  under  the  excise  tax  act  of  August  5,  1909 
(Ch.  6,  36  Stat.,  11,  113,  sec.  38). 

By  paragraph  G  (c)  the  tax  upon  corporations  is  to  be  com- 
puted upon  tJie  entire  net  income  accrued  within  each  cal- 
endar year,  but  for  the  year  1913  only  upon  the  net  income 
accrued  from  March  1  to  December  31,  to  be  ascertained  by 
taking  five-sixths  of  the  entire  net  income  for  the  calendar 
year. 

The  purpose  to  refrain  from  taxing  income  that  accrued 
prior  to  March  1,  1913,  and  to  exclude  from  consideration  in 
making  the  computation  any  income  that  accrued  in  a  pre- 


tln  addition,  n  question  was  made  to  the  District  Court  as  to 
a  special  dividend  declared  by  the  Central  I'aciflc  out  of  the 
proceeds  of  sale  of  certain  land  on  Long  Island,  taken  in  satis- 
faction of  a  debt  and  sold  in  December.  1913.  As  to  this,  how- 
ever, no  argument  is  submitted  by  plaintiff  in  error,  the  facts 
are  not  clear,  and  we  pass  it  without  consideration. 

1294 


ceding  calendar  year,  is  made  plain  by  the  provision  last 
referred  to;  indeed,  the  sixteenth  amendment,  under  which 
for  the  first  time  Congress  was  authorized  to  tax  income 
from  property  without  apportioning  the  tax  among  the  States 
according  to  population,  received  the  approval  of  the  requisite 
number  of  States  only  in  February,  1913.  (Pollock  v.  Farmers' 
Loan  &  Trust  Co.,  157  U.  S.,  429,  581;  158  U.  S.,  601,  637; 
Brushaber  v.  Union  Pacific  Railroad,  240  U.  S.,  1,  16.) 

We  must  reject  in  this  case,  as  we  have  rejected  in  cases 
arising  under  the  corporation  excise  tax  act  of  1909  (Doyle, 
collector,  v.  Mitchell  Bros.  Co.,  and  Hays,  collector,  v.  Gauley 
Mountain  Coal  Co.,  decided  May  20,  1918),  the  broad  conten- 
tion submitted  in  behalf  of  the  Government  that  all  receipts — 
eveiything  that  comes  in — are  income  within  the  proper 
definition  of  the  term  "gross  income,"  and  that  the  entire 
proceeds  of  a  conversion  of  capital  assets,  in  whatever  form 
and  under  whatever  circumstances  accomplished,  should  be 
treated  as  gross  income.  Certainly  the  term  "income"  has 
no  broader  meaning  in  the  1913  act  than  in  that  of  1909 
(see  Stratton's  Independence  v.  Howbert,  231  U.  S.,  399,  416, 
417),  and  for  the  present  purpose  we  assume  there  is  no 
difference  in  its  meaning  as  used  in  the  two  acts.  This  being 
go,  we  are  bound  to  consider  accumulations  that  accrued  to 
a  corporation  prior  to  January  1,  1913,  as  being  capital,  not 
income,  for  the  purposes  of  the  act.  And  we  perceive  no 
adequate  ground  for  a  distinction,  in  this  regard,  between  an 
accumulation  of  surplus  earnings,  and  the  increment  due  to 
an  appreciation  in  value  of  the  assets  of  the  taxpayer. 

That  the  dividends  in  question  were  paid  out  of  a  surplus 
that  accrued  to  the  Central  Pacific  prior  to  January  1,  1913, 
is  undisputed;  and  we  deem  it  to  be  equally  clear  that  this 
surplus  accrued  to  the  Southern  Pacific  (Jo.  prior  to  that  date, 
in  every  substantial  sense  pertinent  to  the  present  inquiry, 
and  hence  underwent  nothing  more  than  a  change  of  form 
when  the  dividends  were  declared. 

We  do  not  rest  this  upon  the  view  that  for  the  purposes 
of  the  act  of  1913  stockholders  in  the  ordinary  case  have 
the  same  interest  in  the  accumulated  earnings  of  the  company 
before  as  after  the  declaration  of  dividends.  The  act  is  quite 
different  in  this  respect  from  the  income  tax  act  of  June  30, 
1864  (Ch.  173,  13  Stat.,  223,  281,  282),  under  which  this  court 
held  in  Collector  v.  Hubbard  (12  Wall,  1,  16),  that  an  indi- 
vidual was  taxable  upon  his  proportion  of  the  earnings  of 
the  corporation  although  not  declared  as  dividends.  That 
decision  was  based  upon  the  very  special  language  of  a 
clause  of  section  117  of  the  act  (13  Stat.,  282)  that  "the 
gains  and  profits  of  all  companies,  whether  incorporated 
or  partnersliip,  other  than  the  companies  specified  in  this 
section,  shall  be  included  in  estimating  the  annual  gains, 
profits,  or  income  of  any  person  entitled  to  the  same,  whether 
divided  or  otherwise."  The  act  of  1913  contains  no  similar 
language,  but  on  the  contrary  deals  with  dividends  as  a  par- 
ticular item  of  incom.e,  leaving  them  free  from  the  normal 
tax  imposed  upon  individuals,  subjecting  them  to  the  grad- 
uated surtaxes  only  when  received  as  dividends  (38  Stat., 
167,  par.  B),  and  subjecting  the  interest  of  an  individual 
shareholder  in  the  undivided  gains  and  profits  of  his  corpora- 
tion to  these  taxes  only  in  case  the  company  is  formed  or 
fraudulently  availed  of  for  the  purpose  of  preventing  the  im- 
position of  such  tax  by  permitting  gains  and  profits  to  ac- 

1295 


cumulate  instead  of  being  divided  or  distributed.*  Our  view 
of  the  effect  of  this  act  upon  dividends  received  by  the 
ordinary  stockholder  after  it  took  effect  but  paid  out  of  a 
surplus  that  accrued  to  the  corporation  before  that  event,  is 
set  forth  in  Lynch,  collector,  v.  Hornby,  decided  this  day. 

We  base  our  conclusion  in  the  present  case  upon  the  view 
that  it  was  the  purpose  and  intent  of  Congress,  while  taxing 
"the  entire  net  income  arising  or  accruing  from  all  sources" 
during  each  year  commencing  with  the  first  day  of  March, 
1913,  to  refrain  from  taxing  that  which  in  mere  form  only 
bore  the  appearance  of  income  accruing  after  that  date,  while 
in  truth  and  in  substance  it  accrued  before;  and  upon  the 
fact  that  the  Central  Pacific  and  the  Southern  Pacific  were 
in  substance  identical  because  of  the  complete  ownership  and 
control  which  the  latter  possessed  over  the  former,  as  stock- 
holder and  in  other  capacities.  While  the  two  companies 
were  separate  legal  entities,  yet  in  fact,  and  for  all  practical 
purposes  they  were  merged,  the  former  being  but  a  part  of 
the  latter,  acting  merely  as  its  agent  and  subject  in  all  things 
to  its  proper  direction  and  control.  And,  besides,  the  funds 
represented  by  the  dividends  were  in  the  actual  possession 
and  control  of  the  Southern  Pacific  as  well  before  as  after 
the  declaration  of  the  dividends.  The  fact  that  the  books 
were  kept  in  accordance  with  the  provisions  of  the  lease,  so 
that  these  funds  appeared  upon  the  accounts  as  an  indebted- 
ness of  the  lessee  to  the  lessor,  cannot  be  controlling,  in 
view  of  the  practical  identity  between  lessor  and  lessee. 
Aside  from  the  interests  of  creditors  and  the  public — and 
there  is  nothing  to  suggest  that  the  interests  of  either  were 
concerned  in  the  disposition  of  the  surplus  of  the  Central 
Pacific — the  Southern  Pacific  was  entitled  to  dispose  of  the 
matter  as  it  saw  fit.  There  is  no  question  of  there  being  a 
surplus  to  warrant  the  dividends  at  the  time  they  were  made, 
hence  any  speculation  as  to  what  might  have  happened  in 
case  of  financial  reverses  that  did  not  occur  is  beside  the 
mark. 

It  is  true  that  in  ordinary  cases  the  mere  accumulation  of 
an  adequate  surplus  does  not  entitle  a  stockholder  to  divi- 
dends until  the  directors  in  their  discretion  declare  them. 
New  York,  etc.,  Railroad  v.  Nickals  (119  U.  S.,  296,  306); 
Gibbons  v.  Mahan  (136  U.  S.,  549,  558).  And  see  Humphreys 
V.  McKissock  (140  U.  S.,  304,  312).  But  this  is  not  the 
ordinary  case.  In  fact  the  discretion  of  the  directors  was 
affirmatively  exercised  by  declaring  dividends  out  of  the 
surplus  that  was  accumulated  prior  to  January  1,  1913; 
it  does  not  appear  that  any  other  fair  exercise  of  discretion 
was  open;  and  the  complete  ownership  and  right  of  control 


♦'•For  the  purpose  of  this  additional  tax  the  taxable  income 
of  any  individual  shall  embrace  the  share  to  which  he  would  be 
entitled  of  the  gains  and  profits,  if  divided  or  distributed, 
whether  divided  or  distributed  or  not,  of  all  corporations,  joint- 
stock  companies,  or  associations  however  created  or  organized, 
formed  or  fraudulently  availed  of  for  the  purpose  of  preventing 
the  Imposition  of  such  tax  through  the  medium  of  permitting 
such  gains  and  profits  to  accumulate  instead  of  being  divided 
or  distributed:  and  the  fact  that  any  such  corporation  •  ♦  • 
is  a  mere  holding  company,  or  that  the  gains  and  profits  are  per- 
mitted to  accumulate  beyond  the  reasonable  needs  of  the  business 
shall  be  prima  facie  evidence  of  a  fraudulent  purpose  to  escape 
such  tax;  but  the  fact  that  the  gains  and  profits  are  in  any  case 
permitted  to  accumulate  and  become  surplus  shall  not  be  con- 
strued as  evidence  of  a  purpose  to  escape  the  said  tax  in  such 
case  unless  the  Secretary  of  the  Treasury  shall  certify  that  in 
his  opinion  such  accumulation  Is  unreasonable  for  the  purposes 
of  the  business."     (38  Stat.,  166,  167.) 

1296 


of  the  Southern  Pacific  at  all  times  material  makes  it  a 
matter  of  indifference  whether  the  vote  was  at  one  time  or 
another.  Under  the  circumstances,  the  entire  matter  of  the 
declaration  and  payment  of  the  dividends  was  a  paper  trans- 
action to  bring  the  books  into  accord  with  the  acknowledged 
rights  of  the  Southern  Pacific;  and  so  far  as  the  dividends 
represented  the  surplus  of  the  Central  Pacific  that  accumu- 
lated prior  to  January  1,  1913,  they  were  not  taxable  as  in- 
come of  the  Southern  Pacific  within  the  true  intent  and 
meaning  of  the  act  of  1913. 

The  case  turns  upon  its  very  peculiar  facts,  and  is  dis- 
tinguishable from  others  in  which  the  question  of  the  identity 
of  a  controlling  stockholder  with  his  corporation  has  been 
raised.  Pullman  Car  Co.  v.  Missouri  Pacific  Co.  (115  U.  S., 
687,  596);  Peterson  v.  Chicago,  Rock  Island  &  Pacific  Railway 
1205  U.  S.,  364,  391). 

Judgment  reversed,  and  the  cause  remanded  for  further 
fjroceedings  in  conformity  with  this  opinion. 

Mr.  Justice  Clarke  dissents. 


(T.  D.  2731.) 


Income  Tax  Act  of  October  3,  1913 — Decision  of  the 
Supreme  Court — 

1.  Taxing  Power  Under  Sixteenth  Amendment. 

Under  the  sixteenth  amendment  to  the  Constitution, 
Congress  has  power  to  tax  as  income,  without  apportion- 
ment, everything  that  became  income  in  the  ordinary  sense 
of  the  word  after  the  adoption  of  the  amendment. 

2.  Retroactive  Report. 

The  retroactivity  of  the  act  to  March  1,  1913 — a  date  not 
prior  to  the  adoption  of  the  amendment — is  permissible. 
Brushaber  v.  Union  Pacific  Railroad  (240  U.  S.,  1)  approved. 

3.  Taxable  Income. 

An  individual  stockholder  is  subject  to  the  additional 
tax  under  the  1913  act  on  all  dividends  declared  and  paid 
by  a  corporation  in  the  ordinary  course  of  busmess  after 
the  taking  eftect  of  the  act,  whether  from  current  earnings 
or  from  the  accumulated  surplus  made  up  of  past  earnings 
or  increase  in  value  of  corporate  assets,  notwithstanding 
the  surplus  accrued  to  the  corporation  in  whole  or  in  part 
prior  to  March  1,  1913. 

4.  Cases  Distinguished. 

Lynch,  collector,  v.  Turrish,  decided  by  the  Supreme  Court 
June  3,  1918,  and  Southern  Pacific  Railway  Co.  v.  Lowe, 
collector,  decided  by  the  Supreme  Court  June  3,  1915,  rest 
upon  their  special  facts,  and  are  plainly  distinguishable. 

5.  The  Act  of  September  8,  1916,  and  the  Act  of  October  3, 
1917,  Discussed. 

The  act  of  September  8,  1916,  and  the  act  of  October  3, 
1917,  in  excluding  dividends  declared  out  of  earnings  or 
profits  that  accrued  prior  to  March  1,  1913,  are  not  intended 
to  be  declaratory  of  the  meaning  of  the  term  "dividends'* 
in  the  1913  act. 

1297 


6.  Judgment  Reversed. 

The  judgment  of  the  Circuit  Court  of  Appeals  is  reversed, 
and  the  cause  remanded  to  the  District  Court  for  further 
proceedings. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

The  appended  decision  of  the  United  States  Supreme  Court 
in  the  case  of  E.  J.  Lynch,  as  collector  of  internal  revenue, 
V.  H.  C.  Hornby  is  published  for  the  information  of  internal- 
revenue  officers  and  others  concerned. 

DANIEL  C.  ROPER, 
Commissioner  ot  Internal  Revenue. 

Approved  June  11,  1918: 
L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 


SUPREME  COURT  OF  THE  UNITED  STATES. 
NO.  422.     OCTOBER  TERM,  1917. 

E.  J.  Lynch,  Collector  of  Internal  Revenue  for  the  District  of 
Minnesota,  petitioner,  v.  H.  C.  Hornby. 

On  Writ  of  Certiorari  to  the  United  States  Circuit  Court  of 

Appeals  for  the  Eighth  Circuit. 

[June  3,  1918.] 

Mr.  Justice  Pitney  delivered  the  opinion  of  the  court: 
Hornby,  the  respondent,  recovered  a  judgment  in  the  United 
States  District  Court  against  Lynch,  as  collector,  ot  internal 
revenue,  for  the  the  return  of  $171,  assessed  as  an  additional 
income  tax  under  the  act  of  October  3,  1913  (Ch.  16,  38  Stat., 
114,  166),  and  paid  under  protest.  The  Circuit  Court  of 
Appeals  affirmed  the  judgment  (236  Fed.,  661),  and  the  case 
comes  here  on  certiorari.  It  was  submitted  at  the  same  time 
with  Lynch,  collector,  v.  Turrish,  Southern  Pacific  Co.  v. 
Lowe,  collector,  and  Peabody  v.  Eisner,  collector,  arising  under 
the  same  act,  and  this  day  decided. 

The  facts,  in  brief,  are  as  follows:  Hornby,  from  1906  to 
1915,  was  the  owner  of  434  (out  of  10,000)  shares  of  the 
capital  stock  of  the  Cloquet  Lumber  Co.,  an  Iowa  corporation, 
which  for  more  than  a  quarter  of  a  century  had  been  engaged 
in  purchasing  timber  lands,  manufacturing  the  timber  into 
lumber  and  selling  it.  Its  shares  had  a  par  value  of  $100 
each,  making  the  entire  capital  stock  $1,000,000.  On  and  prior 
to  March  1,  1913,  by  the  increase  of  the  value  of  its  timber 
lands  and  through  its  business  operations,  the  total  property 
of  the  company  had  come  to  be  worth  $4,000,000,  and  Hornby's 
stock,  the  par  value  of  which  was  $43,400,  had  become  worth 
at  least  $150,000.  In  the  year  1914  the  company  was  engaged 
in  cutting  its  standing  timber,  manufacturing  it  into  lumber, 
selling  the  lumber,  and  distributing  the  proceeds  among  its 
stockholders.  In  that  year  it  thus  distributed  dividends  ag- 
gregating $650,000,  of  which  $240,000,  or  24  per  cent  of  the 
par  value  of  the  capital  stock,  was  derived  from  current  earn- 
ings, and  $410,000  from  conversion  into  money  of  property 
that  it  owned  or  in  which  it  had  an  interest  on  March  1,  1913. 
Hornby's  share  of  the  latter  amount  was  $17,794,  and  this  not 

1398 


having  been  included  in  his  income  tax  return,  the  Commis- 
sioner of  Internal  Revenue  levied  an  additional  tax  of  $171 
on  account  of  it,  and  this  forms  the  subject  of  the  present 
suit. 

The  case  was  tried  in  the  district  court  and  argued  in  the 
Circuit  Court  of  Appeals  together  with  Lynch,  collector,  v. 
Turrish  (236  Fed.,  653),  and  was  treated  as  presenting  sub- 
stantially the  same  question  upon  the  merits.  In  our  opinion 
it  is  distinguishable  from  the  Turrish  case,  where  the  dis- 
tribution in  question  was  a  single  and  final  dividend  received 
by  Turrish  from  the  Payette  Co.  in  liquidation  of  the  entire 
assets  and  business  of  the  company  and  a  return  to  him  of 
the  value  of  his  stock  upon  the  surrender  of  his  entire  interest 
in  the  company,  at  a  price  that  represented  its  intrinsic  value 
at  and  before  March  1,  1913,  when  the  income  tax  act  took 
effect. 

In  the  present  case  there  was  no  winding  up  or  liquidation 
of  the  Cloquet  Lumber  Co.  nor  any  surrender  of  Hornby's 
stock.  He  was  but  one  of  many  stockholders,  and  had  but 
the  ordinary  stockholder's  interest  in  the  capital  and  surplus 
of  the  company — that  is,  a  right  to  have  them  devoted  to 
the  proper  business  of  the  corporation  and  to  receive  from 
the  current  earnings  or  accumulated  surplus  such  dividends 
as  the  directors  in  their  discretion  might  declare.  Gibbons  v, 
Mahon  (136  U.  S.,  549,  557).  The  operations  of  this  company 
in  the  year  1914  were,  according  to  the  facts  pleaded,  of  a 
nature  essentially  like  those  in  whtch  it  had  been  engaged 
for  more  than  a  quarter  of  a  century.  The  fact  that  they 
resulted  in  converting  into  money,  and  thus  setting  free  for 
distribution  as  dividends,  a  part  of  its  surplus  assets  accumu- 
lated prior  to  March  1,  1913,  does  not  render  Hornby's  share 
of  those  dividends  any  the  less  a  part  of  his  income  within 
the  true  intent  and  meaning  of  the  act,  the  pertment  lan- 
guage of  which  is  as  follows  (38  Stat.,  166,  167)  : 

A.  Subdivision  1.  That  there  shall  be  levied,  assessed,  col- 
lected, and  paid  annually  upon  the  entire  net  income  arising  or 
accruing  from  all  sources  in  the  preceding  calendar  year  to  every 
citizen  of  the  United  States,  ♦  *  •  and  to  every  person  re- 
siding in  the  United  States,  ♦  *  *  a  tax  of  1  per  centum  per 
annum  upon  such  income,  except  as  hereinafter  provided;    •    ♦    ♦ 

B,  That,  subject  only  to  such  exemptions  and  deductions  as 
are  hereinafter  allowed,  the  net  income  of  a  taxable  person  shall 
include  gains,  profits,  and  income  derived  from  salaries,  wages, 
or  compensation  for  personal  service,  •  ♦  ♦  also  from  interest, 
rent,  dividends,  securities,  or  the  transaction  of  any  lawful  busi- 
ness carried  on  for  gain  or  profit,  or  gains  or  profits  and  income 
derived  from  any  source  whatever. 

Among  the  deductions  allowed  for  the  purpose  of  the  normal 
tax  is  "seventh,  the  amount  received  as  dividends  upon  the 
stock  or  from  the  net  earnings  of  any  corporation,  *  *  • 
which  is  taxable  upon  its  net  income  as  hereinafter  provided." 
There  is  a  graduated  additional  tax,  commonly  known  as  a 
"surtax,"  upon  net  income  in  excess  of  $20,000,  including 
income  from  dividends,  and  for  the  purpose  of  this  additional 
tax  "the  taxable  income  of  any  individual  shall  embrace  the 
share  to  which  he  would  be  entitled  of  the  gains  and  profits, 
if  divided  or  distributed,  whether  divided  or  distributed  or 
not,  of  all  corporations  *  *  *  formed  or  fraudulently 
availed  of  for  the  purpose  of  preventing  the  imposition  of 
such  tax  through  the  medium  of  permitting  such  gains  and 
profits  to  accumulate  instead  of  being  divided  or  distributed." 

It  is  evident  that  Congress  intended  to  draw  and  did  draw 
a  distinction  between  a  stockholder's  undivided  share  or  in- 

1399 


tere«t  in  the  gains  and  profits  of  a  corporation  prior  to  the 
declaration  of  a  dividend,  and  his  participation  in  the  divi- 
dends declared  and  paid,  treating  the  latter  in  ordinary  cir- 
cumstances as  a  part  of  his  income  for  the  purposes  of  the 
surtax,  and  not  regarding  the  former  as  taxable  income  un- 
less fraudulently  accumulated  for  the  purpose  of  evading  the 
tax. 

This  treatment  of  undivided  profits  applies  only  to  profits 
permitted  to  accumulate  after  the  taking  effect  of  the  act, 
since  only  with  respect  to  these  is  a  fraudulent  purpose  of 
evading  the  tax  predicable.  Corporate  profits  that  accumu- 
lated before  the  act  took  effect  stand  on  a  different  footing. 
As  to  these,  however,  just  as  we  deem  the  legislative  intent 
manifest  to  tax  the  stockholder  with  respect  to  such  accumu- 
lations only  if  and  when  and  to  the  extent  that  his  interest 
in  them  comes  to  fruition  as  income — that  is,  in  dividends 
declared— so  we  can  perceive  no  constitutional  obstacle  that 
stands  in  the  way  of  carrying  out  this  intent  when  dividends 
are  declared  out  of  a  pre-existing  surplus.  The  act  took 
effect  on  March  1,  1913,  a  few  days  after  the  requisite  number 
of  States  had  given  approval  to  the  sixteenth  amendment, 
under  which  for  the  first  time  Congress  was  empowered  to 
tax  income  from  property  without  apportioning  the  tax 
among  the  States  according  to  population.  Southern  Pacific 
Co.  V.  Lowe,  supra.  That  the  retroactivity  of  the  act  from 
the  date  of  its  passage  (Oct.  3,  1913)  to  a  date  not  prior  to 
the  adoption  of  the  amendment  was  permissible  is  settled 
by  Brushaber  v.  Union  Pacific  Railroad  (240  U.  S.,  1,  20). 
And  we  deem  it  equally  clear  that  Congress  was  at  liberty 
under  the  amendment  to  tax  as  income,  without  apportion- 
ment, everything  that  became  income  in  the  ordinary  sense 
of  the  word  after  the  adoption  of  the  amendment,  including 
dividends  received  in  the  ordinary  course  by  a  stockholder 
from  a  corporation,  even  though  they  were  extraordinary  in 
amount  and  might  appear  upon  analysis  to  be  a  mere  realiza- 
tion in  possession  of  an  inchoate  and  contingent  interest  that 
the  stockholder  had  in  a  surplus  of  corporate  assets  pre- 
viously existing.  Dividends  are  the  appropriate  fruit  of  stock 
ownership,  are  commonly  reckoned  as  income,  and  are  ex- 
pended as  such  by  the  stockholder  without  regard  to  whether 
they  are  declared  from  the  most  recent  earnings  or  from  a 
surplus  accumulated  from  the  earnings  of  the  past  or  are 
based  upon  the  increased  value  of  the  property  of  the  corpora- 
tion. The  stockholder  is  in  the  ordinary  case  a  different 
entity  from  the  corporation,  and  Congress  was  at  liberty  to 
treat  the  dividends  as  coming  to  him  ab  extra  and  as  con- 
stituting a  part  of  his  income  when  they  came  to  hand. 

Hence  we  construe  the  provision  of  the  act  that  "the  net 
income  of  a  taxable  person  shall  include  gains,  profits,  and 
income  derived  from  *  *  *  interest,  rent,  dividends,  ♦  •  • 
or  gains  or  profits  and  income  derived  from  any  source 
whatever"  as  including  (for  the  purposes  of  the  additional 
tax)  all  dividends  declared  and  paid  in  the  ordinary  course 
of  business  by  a  corporation  to  its  stockholders  after  the 
taking  effect  of  the  act  (Mar.  1,  1913),  whether  from  current 
earnings  or  from  the  accumulated  surplus  made  up  of  past 
earnings  or  increase  in  value  of  corporate  assets,  notwith- 
standing it  accrued  to  the  corporation  in  whole  or  in  part 
prior  to  March  1,  1913.  In  short,  the  word  "dividends"  was 
employed  in  the  act  as  descriptive  of  one  kind  of  gain  to  the 
individual  stockholder,  dividends  being  treated  as  the  tangible 

1300 


and  recurrent  returns  upon  his  stock,  analogous  to  the  in- 
terest and  rent  received  upon  other  forms  of  invested  capital. 
In  the  more  recent  income-tax  acts,  provisions  have  been 
inserted  for  the  purpose  of  excluding  from  the  efi'ect  of  the 
tax  any  dividends  declared  out  of  earnings  or  profits  that 
accrued  prior  to  March  1,  1913.  This  originated  with  the  act 
of  September  8,  1916,  and  has  been  continued  in  the  act  of 
October  3,  1917.*  We  are  referred  to  the  legislative  history 
of  the  act  of  1916,  which  it  is  contended  indicates  that  the 
new  definition  of  the  term  "dividends"  was  intended  to  be 
declaratory  of  the  meaning  of  the  term  as  used  in  the  1913 
act.  We  cannot  accept  this  suggestion,  deeming  it  more 
reasonable  to  regard  the  change  as  a  concession  to  the  equity 
of  stockholders  granted  in  the  1916  act,  in  view  of  consti- 
tutional questions  that  had  been  raised  in  this  case,  in  the 
companion  case  of  Lynch,  collector,  v.  Turrish,  and  perhaps 
in  other  cases.  These  two  cases  were  commenced  in  October, 
1915,  and  decisions  adverse  to  the  tax  were  rendered  in  the 
District  Court  in  January,  1916,  and  in  the  Circuit  Court  of 
Appeals  September  4,  1916. 

We  repeat  that  under  the  1913  act  dividends  declared  and 
paid  in  the  ordinary  course  by  a  corporation  to  its  stock- 
holders after  March  1,  1913,  whether  from  current  earnings 
or  from  a  surplus  accumulated  prior  to  that  date,  were  taxable 
as  income  to  the  stockholder. 

We  do  not  overlook  the  fact  that  every  dividend  distribu- 
tion diminishes  by  just  so  much  the  assets  of  the  corporation, 
and  in  a  theoretical  sense  reduces  the  intrinsic  value  of  the 
stock.  But,  at  the  same  time,  it  demonstrates  the  capacity 
of  the  corporation  to  pay  dividends,  holds  out  a  promise  of 
further  dividends  in  the  future,  and  quite  probably  increases 
the  market  value  of  the  shares.  In  our  opinion.  Congress  laid 
hold  of  dividends  paid  in  the  ordinary  course  as  de  facto  in- 
come of  the  stockholder,  without  regard  to  the  ultimate  effect 
upon  the  corporation  resulting  from  their  payment. 

Of  course,  we  are  dealing  here  with  the  ordinary  stockholder 


♦In  act  of  September  8,  1916  (Ch.  463,  39  Stat.,  756,  757),  which 
took  the  place  of  the  act  of  1913,  the  substance  of  what  we  have 
quoted  from  paragraph  B  of  the  3913  act  was  embodied  in  sec.  2 
(a),  but  with  this  proviso:  "Provided,  that  the  term  'dividends' 
as  used  in  this  title  shall  be  held  to  mean  any  distribution 
made  or  ordered  to  be  made  by  a  corporation  *  ♦  ♦  out  of 
its  earnings  or  profits  accrued  since  March  first,  nineteen  hundred 
and  thirteen,  and  payable  to  its  shareholders,  whether  in  cash 
or  in  stock  of  the  corporation,"  etc.  And  by  the  act  of  October 
3,  1917  (Ch.  63,  40  Stat.,  300,  329,  337-8),  sec.  2  (a)  of  the  1916 
act  was  amended  by  being  repeated  without  the  proviso  (p.  329), 
while  the  proviso  was  inserted  as  a  new  section — 31  (a) — and  to 
It  Avas  added  a  subsection   (b),  as  follows: 

"(b)  Any  distribution  made  to  the  shareholders  or  members 
of  a  corporation  ♦  *  *  in  the  year  nineteen  hundred  and 
seventeen,  or  subsequent  tax  years  shall  be  deemed  to  have  been 
made  from  the  most  recently  accumulated  undivided  profits  or 
surplus,  and  shall  constitute  a  part  of  the  annual  income  of  the 
distributee  for  the  year  in  which  received,  and  shall  be  taxed 
to  the  distributee  at  the  rates  prescribed  by  law  for  the  years 
in  which  such  profits  or  surplus  were  accumulated  by  the  cor- 
poration, ♦  ♦  *  but  nothing  herein  shall  be  construed  as  tax- 
ing any  earnings  or  profits  accrued  prior  to  March  first,  nineteen 
hundred  and  thirteen,  but  such  earnings  or  profits  may  be  dis- 
tributed in  stock  dividends  or  otherwise,  exempt  from  the  tax, 
after  the  distribution  of  earnings  and  profits  accrued  since  March 
first,  nineteen  hundred  and  thirteen,  has  been  made.  This  sub- 
division shall  not  apply  to  any  distribution  made  prior  to  August 
Bixth,  nineteen  hundred  and  seventeen,  out  of  earnings  or  profits 
accrued  prior  to  March  first,  nineteen  hundred  and  thirteen." 

1301 


receiving  dividends  declared  in  the  ordinary  way  of  business. 
Lynch,  collector,  v.  Turrish,  and  Southern  Pacific  Co.  v.  Lowe, 
collector,  this  day  decided,  rest  upon  their  special  facts  and 
are  plainly  distinguishable. 

It  results  from  what  we  have  said  that  it  was  erroneous 
to  award  a  return  of  the  tax  collected  from  the  respondent, 
and  that  the  judgment  should  be 

Reversed,  and  the  cause  remanded  to  the  District  Court  for 
further  proceedings  in  conformity  with  this  opinion. 


(T.  D.  2732.) 

Income  Tax  Act  of  October  3,  1913 — Decision  of  the 
Supreme  Court — 

1.  Taxable  Income. 

A  dividend  declared  and  paid  by  a  going  corporation 
partly  in  cash  and  partly  in  assets  of  the  corporation,  is 
subject  to  the  additional  tax  imposed  by  the  act  of  Octobei 
3,  1913,  when  received  by  an  individual  stockholder,  al- 
though declared  from  a  surplus  which  was  in  part  accumu- 
-  lated  before  March  1,  1913. — Southern  Pacific  Co.  v.  Lowe 
collector,  decided  by  the  Supreme  Court  the  same  day. 
distinguished. 

2.  Rights  of  Stockholders  Before  Dividends  Declared. 

An  ordinary  stockliolder,  before  the  declaration  of  a  divi 
dend,  has  only  the  right  to  have  the  assets  of  the  cor- 
poration devoted  to  its  proper  business,  and  to  receive  such 
dividends  as  the  directors  may  in  their  discretion  declare— 
a  very  different  interest  from  his  interest  after  a  divi- 
dend is  declared. — Lynch,  collector,  v.  Hornby,  decided  bj 
the  Supreme  Court  the  same  day,  is  controlling. 

3.  Meaning  of  "Stock  Dividend." 

A  dividend  declared  and  paid  by  one  corporation  in  the 
stock  of  another  is  not  a  "stock  dividend"  within  the  ac- 
cepted meaning  of  that  term. 

4.  Judgment  Affirmed. 

The  judgment  of  the  District  Court  is  affirmed. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue 

Washington,  D.  C. 

The  appended  decision  of  the  United  States  Supreme  Court 
in  the  case  of  Charles  A.  Peabody  v.  Mark  Eisner,  as  col- 
lector of  internal  revenue,  is  published  for  the  information  ot 
internal -revenue  officers  and  others  concerned. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved  June  11,  1918 : 
L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 

1302 


SUPREME  COURT  OF  THE  UNITED  STATES. 
NO.  705.    OCTOBER  TERM,  1917. 

Charles  A.  Peabody,  plaintiff  in  error,  v.  Mark  Eisner,  collector 
of  Internal  Revenue. 

In  Error  to  the  District  Court  of  the  United  States  for  the 
Southern  District  of  New  York. 

[June  3,  1918.] 
Mr.  Justice  Pitney  delivered  the  opinion  of  the  court: 
This  case  arose  under  the  Federal  income-tax  act  of  October 
3,  1913  (Ch.  16,  38  Stat.,  114,  166).  The  controversy  is  over 
the  first  cause  of  action  set  up  by  plaintiff  in  error  in  a  suit 
against  the  collector  for  the  recovery  of  an  additional  tax 
exacted  in  respect  of  a  certain  dividend  received  by  plaintiff 
in  the  year  1914,  the  facts  being  as  follows:  On  and  prior 
to  March  1,  1913,  and  thenceforward  until  payment  of  the 
dividend  in  question,  petitioner  was  owner  of  1,100  shares 
(out  of  a  total  of  2,000,000  shares  outstanding)  of  common 
stock  of  the  Union  Pacific  Railroad  Co.,  of  the  par  value  of 
$100  each,  and  during  the  same  period  the  company  had  large 
holdings  of  the  common  and  preferred  stocks  of  the  Baltimore 
&  Ohio  Railroad  Co.  On  March  2,  1914,  the  Union  Pacific 
declared  and  paid  an  extra  dividend  upon  each  share  of  its 
common  stock,  amounting  to  $3  in  cash,  $12  in  par  value 
of  preferred  stock  of  the  Baltimore  &  Ohio,  and  $22.50  in 
par  value  of  the  common  stock  of  the  same  company;  the 
result  being  that  petitioner  received  as  his  dividend  upon  his 
holding  of  Union  Pacific  common  stock  $3,300  in  cash,  132 
shares  of  Baltimore  &  Ohio  preferred  and  2471/2  shares  of 
Baltimore  &  Ohio  common  stock.  In  his  income  return  for 
1914  he  included  as  taxable  mcome  $4.12  per  share  of  this 
dividend,  or  $4,532  in  all,  and  paid  his  tax  upon  the  basis  of 
this  return.  Afterwards  he  was  subjected  to  an  additional 
assessment  upon  a  valuation  of  the  balance  of  his  dividend, 
and  this,  having  been  paid  under  protest,  is  the  subject  of 
the  present  suit,  the  theory  of  which  is  that  the  entire  earn- 
ings, income,  gains,  and  profits  from  all  sources  realized  by 
the  Union  Pacific  Railroad  Co.  from  March  1,  1913,  to  March 
2,  1914,  remaining  after  the  payment  of  prior  charges,  did 
not  exceed  $4.12  per  share  of  the  Union  Pacific  common  stock, 
and  that  the  cash  and  Baltimore  &  Ohio  stock  disposed  of  in 
the  extra  dividend  (so  far  as  they  exceeded  the  value  of  $4.12 
per  share  of  Union  Pacific)  did  not  constitute  a  gain,  profit, 
or  income  of  the  Union  Pacific,  and  therefore  did  not  con- 
stitute a  gain,  profit,  or  income  of  the  plaintiff  arising  or 
accruing  either  in  or  for  the  year  1914  or  for  any  period 
subsequent  to  March  1,  1913,  the  date  when  the  income-tax 
law  took  effect.  The  District  Court  overruled  this  contention 
upon  the  authority  of  Southern  Pacific  Co.  v.  Lowe,  collector 
(238  Fed.,  847),  and  Towne  v.  Eisner,  collector  (242  Fed., 
702).  The  latter  case  has  since  been  reversed  (245  U.  S., 
418),  but  only  upon  the  ground  that  it  related  to  a  stock 
dividend  which  in  fact  took  nothing  from  the  property  of  the 
corporation  and  added  nothing  to  the  interest  of  the  share- 
holder, but  merely  changed  the  evidence  which  represented 
that  interest.  Southern  Pacific  Co.  v.  Lowe,  collector,  has 
been  reversed  this  day,  but  only  upon  the  ground  that  the 
Central  Pacific  Railway  Co.,  which  paid  the  dividend,  and 
the  Southern  Pacific  Co.,  which  received  it,  were  in  substance 
identical  corporations  because  of  the  complete  ownership  and 

1303 


control  which  the  latter  possessed  over  the  former  as  stock- 
holder and  in  other  capacities,  so  that  while  the  two  com- 
panies were  separate  legal  entities,  yet  in  fact  and  for  all 
practical  purposes  the  former  was  but  a  part  of  the  latter, 
acting  merely  as  its  agent  and  subject  in  all  things  to  its 
direction  and  control;  and  for  the  further  reason  that  the 
funds  represented  by  the  dividend  were  in  the  actual  posses- 
sion and  control  of  the  Southern  Pacific  Co.  as  well  before 
as  after  the  declaration  of  the  dividend.  In  this  case  the 
plaintiif  in  error  stands  in  the  position  of  the  ordinary  stock- 
holder, whose  interest  in  the  accumulated  earnings  and  sur- 
plus of  the  company  are  not  the  same  before  aa  after  the 
declaration  of  a  dividend;  his  right  being  merely  to  have  the 
assets  devoted  to  the  proper  business  of  the  corporation  and 
to  receive  from  the  current  earnings  or  accumulated  surplus 
such  dividends  as  the  directors  in  their  discretion  may  declare; 
and  without  right  or  power  on  his  part  to  control  that  dis- 
cretion. 

It  hardly  is  necessary  to  say  that  this  case  is  not  ruled  by 
our  decision  in  Towne  v.  Eisner,  since  the  dividend  of  Balti- 
more &  Ohio  shares  was  not  a  stock  dividend  but  a  distribu- 
tion in  specie  of  a  portion  of  the  assets  of  the  Union  Pacific, 
and  is  to  be  governed  for  all  present  purposes  by  the  same 
rule  applicable  to  the  distribution  of  a  like  value  in  money. 
It  is  controlled  by  Lynch,  collector,  t.  Hornby,  this  day 
decided. 

Judgment  afiirmed. 


(T.  D.  2733.) 
Form  for  Instruments  Required  Under  T.  D.  2706 — 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  others  concerned: 

The  following  form  is  prescribed  to  facilitate  compliance 
with  T.  D.  2706  regarding  the  establishment  of  a  replacement 
fund  in  the  case  of  property  requisitioned  for  war  uses  or 
lost  or  destroyed  in  whole  or  in  part  through  war  hazards: 

Form  1114.  U.  S.  Internal  Revenue. 

INCOME    AND    EXCESS    PROFITS    TAXES. 

Application    Under    T.    D.    2706    for    Permission    to    Establish    * 

Replacement  Fund. 

TO  THE  COMMISSIONER  OF  INTERNAL  REVENUE: 

1.  The  undersigned  (individual)  (partnership)  (corporation) 
represents  that  as  a  result  of  suit  or  otherwise  he  has  secured  pay- 
ment by  way  of  damages  or  compensation  for  property  title  to 
which  has  been  requisitioned  for  war  uses,  or  property  which 
has  been  lost  or  destroyed  in  whole  or  in  part  through  war 
hazards,  to  an  amount  in  excess  of  the  value  of  the  property  on 
March  1,  1913,  or  of  its  cost  if  acquired  after  that  date,  and  that 
he  desires  and  intends  to  use  the  entire  sum  receivd  as  com- 
pensation for  the  replacement  in  kind  of  the  lost  or  damaiged 
property. 

2.  It  being  Impracticable  owing  to  war  conditions  to  make 
Buch  a  replacement  for  a  considerable  time,  the  undersigned 
hereby  makes  application  for  permission  to  establish  a  replace- 
ment fund  In  which  the  entire  amount  of  the  compensation  so 
received  will  be  held  (unless  the  property  requisitioned,  lost  or 
damaged,  constituted  all  or  part  of  the  security  under  a  mortgage 

1304 


or  trust  Indenture,  in  which  event  the  amount  carried  to  the 
replacement  fund  will,  subject  to  the  approval  of  the  Commis- 
sioner of  Internal  Itevenue,  be  the  amount  of  compensation 
rceived,  less  the  amount,  if  any,  which  bcomes  payable  out  of 
such  compensation  under  the  terms  of  such  instrument  or  the 
obligations  thereby  secured). 

3.  Attached  hereto  as  Schedule  A  and  made  a  part  hereof  is  a 
statement  reciting  all  the  facts  relating  to  the  transaction,  includ- 
ing the  nature  of  the  property,  the  character  and  extent  of  the 
loss,  the  manner  and  date  of  securing  compensation,  the  date  of 
acauisition  of  the  property  and  its  cost  or  fair  value  on  March  1, 
1913,  the  amount  of  compensation,  the  amount  necessary  to  make 
the  damage  igood,  a  description  of  the  replacement  intended  and 
the  steps  already  taken  to  that  end,  the  probable  date  of  com- 
pletion, the  estimated  additional  excess  profits  and  income  taxes 
assessable  upon  the  income  carried  to  the  replacement  fund,  and 
ftll  other  matters  which  might  affect  a  determination. 

4.  The  undersigned  (a)  has  executed  and  will  cause  to  be 
executed  by  a  surety  company  in  good  standing  the  bond  hereto 
annexed  as  Schedule  B  in  an  amount  not  less  than  the  estimated 
additional  excess  profits  and  income  taxes  assessable  by  the 
United  States  upon  the  income  carried  to  the  replacement  fund, 
or  (b)  has  executed  the  agreement  hereto  annexed  as  Schedule  C 
and  will  deposit  as  security  for  such  estimated  additional  amount 
of  tax  obligations  of  the  United  States  issued  after  September  1, 
1917,  to  at  least  an  equal  amount,  to  be  held  in  trust  as  such 
security  in  a  bank  or  trust  company  approved  by  the  Commis- 
sioner of  Internal  Revenue. 

5.  The  undersigned  undertakes  that  he  will  proceed  as  expedi- 
tiously as  possible  to  replace  or  restore  such  property,  and 
covenants  that  when  the  replacement  or  restoration  is  made,  the 
new  or  restored  property  will  be  valued  in  his  accounts  at  an 
amount  in  excess  of  that  at  which  the  requisitioned,  damaged  or 
destroyed  property  was  carried,  except  and  to  the  extent  that 
such  new  or  restored  property  has  an  increased  productive 
capacity. 

IN  WITNESS  WHEREOF  the  undersigned  Individual  has  here- 
unto set  his  hand  and  seal,  or  the  undersigned  partnership  has 
executed  this  instrument  under  the  hand  and  seal  of  one  of  its 
members,  or  the  undersigned  corporation  has  caused  these  presents 
to  be  subscribed  by  one  of  its  officers  and  its  corporate  seal  to  be 

hereunto  affixed,  all  the day  of ,  19 ,  in 

triplicate. 

.._. (L.  S.) 

(L.  S.) 

State  of ) 

County  of ]  s^. 

,  beimg  duly  sworn,  deposes 

and  says  that  he  is  the  individual  applicant  above-named,  or  is  a 
member  of  the  partnership  above-named,  or  is  an  officer  of  the 
corporation  above-named,  and  that  the  statements  made  in  the 
foregoing  application  are  true  to  the  best  of  deponent's  knowledge, 
information  and  belief. 
Subscribed  and  sworn 

before  me 


vorn  to  \ 


SCHEDULE  A. 
STATEMENT  OF  FACTS. 

Name  of  applicant 

Address  

Business   

Nature  of  property  involved 

How  requisitioned,  lost  or  destroyed 


How  compensation  secured 

Date  of  rceipt  of  payment 

Date  of  acquisition  of  property 

Cost  (or  fair  value  on  March  1,  1913) $_. 

Amount  of  compensation $_. 

Excess  ovijr  cost  or  value  on  March  1,  1913 |_ 

1305 


Amount  necessary  to  make  damage  good f- 

Nature  of  replacement  intended 


Steps  already  taken — 


Probable  date  of  completion  of  replacement 

Amount  deductible  from  replacement  fund  pursuant  to 

any    mortgage | 

Estimated  additional  excess  profits  tax $ 

Estimated  additional  income  tax $ 

Surety  on  bond  or  bank  for  deposit  of  securities 


SCHEDULE    B. 
BONDS. 


KNOW  ALL  MEN  BY  THESE  PRESENTS  that  

,  as  principal,  and 

,  as  surety,  are  held  and  firmly 

bound  unto  the  United  States  of  America  in  the  sum  of 

dollars,  lawful  money  of  the  United  States, 

for  the  payment  whereof  we  bind  ourselves,  our  heirs,  executors, 
administrators,  successors  and  assigns,  jointly  and  severally, 
firmly  by  these  presents. 

WHEREAS  the  above-bounden  principal  has  made  application 
to  the  Commissioner  of  Internal  Revenue  for  permission  to  estab- 
lish a  replacement  fund  pursuant  to  Treasury  Decision  2706  of 
April  25,  1918,  and  it  appears  that  the  amount  of  this  bond  is  not 
less  than  the  estimated  additional  excess  profits  and  Income  taxes 
assessable  by  the  United  States  upon  the  income  to  be  carried  to 
the   replacement  fund ; 

NOW,  THEREFORE,  the  condition  of  the  foregoing  obligation 
Is  such  that  if  the  principal  shall  either  dispose  of  said  replace- 
ment fund,  as  specified  in  said  application  and  complete  said 
replacement  on  or  before  the  final  date  set  in  the  permit  granted 
by  the  Commissioner  of  Internal  Revenue,  or  account  for  and  pay 
the  additional  excess  profits  and  Income  taxes  assessable  upon 
the  income  so  carried  to  the  replacement  fund  at  the  rate  of  tax 
In  force  at  the  time  of  the  original  receipt  of  such  Income,  and 
shall  otherwise  well  and  truly  perform  and  observe  all  the 
covenants  and  conditions  contained  In  the  instruments  annexed 
hereto  and  all  the  provisions  of  law  and  the  regulations,  then 
this  obligation  Is  to  be  void,  but  otherwise  to  remain  in  full  force 
and  virtue. 

WITNESS  our  hands  and  seals  In  triplicate  this day  of 

,  19 

Signed,    sealed        (L.  S.) 

and  delivered        (L.  S.) 

in    the    pres-  Principal. . 

ence  of 

(T^.  S.) 

(L.  S.) 

Surety. 

BOND  APPROVED  this day  of ,  19 

Commissioner  of  fnternal  Revenue. 


SCHEDULE   C. 
DEPOSIT   AGREEMENT. 

AN  AGREEMENT  between  of 

,  party  of  the  first  part,  and 

a  corporation  of  the  State  of ,  party  of  the  second 

part. 

WHEREAS  the  party  of  the  first  part  has  made  application  to 
the  Commissioner  of  Internal  Revenue  for  permission  to  establish 
a  replacement  fund  under  Treasury  Decision  2706  of  April  25,  1918, 
In  accordance  with  the  Instrument  hereto  annexed,  and  has  elected 
in  lieu  of  a  bond  to  deposit  as  security  for  the  estimated  addi- 
tional excess  profits  and  income  taxes  assessable  by  the  United 
States  upon  the  Income  to  be  carried  to  the  replacement  fnnd 
obligations  of  the  United  States  Issued  after  September  1,  1917; 

1306 


NOW,  THEREFORE,  In  consiaeranon  of  a  valuable  considera- 
tion to  each  of  the  parties  hereto  in  hand  paid  by  the  other,  the 
receipt  whereof  is  hereby  acknowledged,  it  is  covenanted  and 
agreed  as  follows: 

1.  The  party  of  the  first  part  has  deposited  with  the  party  of 
the  second  part  obligations  of  the  United  States  issued  after 
September  1,  1917,  for  a  principal  amount  not  less  than  the  esti- 
mated taxes  aforesaid,  in  bearer  form  or  with  transfer  power 
attached,  described  as  follows : 

No.  Name  Denomination  Total 


$- 


$ § 

Aggregate  total,  $ —. 

2.  Such  obligations  are  to  be  held  in  trust  by  the  party  of  the 
second  part  as  security  for  the  payment  of  the  additional  excess 
profits  and  income  taxes  assessable  by  the  United  States  upon  the 
income  carried  to  said  replacement  fund  at  the  rate  of  tax  in 
force  at  the  time  of  the  original  receipt  of  such  income;  provided 
the  party  of  the  first  part  shall  not  dispose  of  said  replacement 
fund  as  specified  in  said  application  and  complete  said  replace- 
ment on  or  before  the  final  date  set  in  the  permit  hereto  annexed 
granted  by  the  Commissioner  of  Internal  Revenue. 

3.  If  on  or  before  the  date  set  in  said  permit  said  replacement 
shall  be  completed,  as  evidenced  by  an  acknowledgment  in  writing 
to  such  effect  signed  by  the  Commissioner  of  Internal  Revenue, 
the  party  of  the  second  part  shall  thereupon  surrender  said 
obligations  to  the  party  of  the  first  part  or  upon  his  order,  and 
the  receipt  therefor  of  the  party  of  the  first  part  shall  constitute 
full  satisfaction  and  discharge  of  any  liability  of  the  party  of 
the  second  part  hereunder.  The  Commissioner  of  Internal 
Revenue  may  similarly  at  any  time  and  fi'om  time  to  time  author- 
ize the  surrender  of  such  portion  of  said  obligations  as  in  his 
judgment  the  progress  of  said  replacement  shall  justify. 

4.  If  on  the  date  set  in  said  permit  the  party  of  the  second 
part  shall  not  have  received  such  final  written  acknowledgment 
from  the  Commissioner  of  Internal  Revenue,  it  shall  hold  and 
deliver  said  obligations,  or  the  remainder  of  them,  in  all  respects 
subject  to  the  order  of  the  Commissioner  of  Internal  Revenue, 
and  at  his  direction  shall  proceed  to  sell  said  obligations  at  public 
or  private  sale,  with  or  without  notice  thereof,  and  shall  apply 
the  proceeds  thereof  to  the  payment  of  said  taxes  and  any  other 
taxes  due  from  the  party  of  the  first  part,  and  interest,  penalties 
and  expenses  of  the  sale,  paying  the  residue,  if  any,  to  the  party 
of  the  first  part.  After  said  date  the  receipt  of  the  Commissioner 
of  Internal  Revenue  shall  constitute  full  satisfaction  and  discharge 
of  any  liability  of  the  party  of  the  second  part  hereunder. 

5.  The  party  of  the  second  part  accepts  the  trust  hereunder 
and  acknowledges  the  receipt  and  deposit  of  said  obligations. 


Signed,    sealed 
and  delivered 

19 

(L 

S.) 

(L 

in    the    pres- 
ence of 

(L.  S.^ 

:_..  (l: 

S.) 

AGREEMENT 

'  APPROVED  this 

day  of  -  — 

19 

Commissioner  of  Internal  Revenue. 

PERMIT   TO   ESTABI.ISH   I1EPI.ACEMENT    FUND. 

Treasury   Department, 
OflJce  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C,  -^ ,  19 . 

UPON  the  application  and  schedules  hereto  annexed  the  Com- 
missioner of  Internal  Revenue  hereby  grants  permission  to  establish 
a  replacement  fund  pursuant  thereto,  and  directs  that  pending 
the  disposition  of  the  amount  held  therein  the  accountin.g  for 
gain  or  loss  thereupon  may  be  deferred  for  the  period  of  time 
ending ,  19 ,  or  such  further  date  as  he  may 

1307 


determine  to  be  reasonable  and  endorse  hereupon.  This  permit, 
however,  is  expressly  conditioned  upon  the  applicant  forthwith 
furnishing  a  bond  in  the  prescribed  form  approved  by  the  Com- 
missioner of  Internal  Revenue,  or  executing  an  agreement  in  the 
prescribed  form  and  depositing  subject  thereto  obligations  of  the 
United  States  Issued  after  September  1,  1917,  in  an  amount  and 
in  a  bank  or  trust  company  approved  by  the  Commissioner  of 
Internal    lievenue. 

Commissioner  of  Internal  Revenue. 


Instructions. 


1.  The  applicant  should  execute  the  form  of  application  in 
triplicate  and  fill  out  Schedule  A.  He  should  also  attach  to 
Schedule  A  a  statement  of  any  other  special  features  of  the  situ- 
ation which  might  help  the  Commissioner  In  arriving  at  a 
decision. 

2.  The  applicant  should  execute  the  bond  (Schedule  B)  or  the 
deposit  agreement  (Schedule  C)  in  triplicate,  inserting  the  amount 
and  indicating  the  surety  or  bank  proposed. 

3.  The  applicant  should  then  forward  all  three  copies  of  the 
form  to  the  Commissioner  of  Internal  Revenue,  who  will  consider 
the  application  and  if  he  igrants  it  will  sign  the  permit  and 
return  the  form   of  the  applicant. 

4.  The  applicant  should  then  forthwith  procure  the  completion 
of  the  bond  or  deposit  agreement  in  triplicate  and  submit  it  for 
approval  by  the  Commissioner,  which  must  be  given  before  the 
permit  will  become  effective. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  June  17,  1918. 
L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 

Printed  copies  will  be  furnished  upon  request. 


(T.  D.  2734.) 


Determination  of  the  amount  of  gain  or  loss  on  a  sale  of 
stock  received  as  a  stock  dividend — Revision  of  paragraphs 
28  and  60  of  the  Income  Tax  Regulations — 

Treasury  Department, 

Oflfice  of  Commissioner  of  Internal  Revenue, 

♦  Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

By  Sections  2(a)  and  31(a)  of  the  Income  Tax  Act  of  Sep- 
tember 8,  1916,  as  amended,  taxable  income  includes  stock 
dividends  paid  by  a  corporation  in  1916  or  subsequent  years 
out  of  its  earnings  or  profits  accrued  since  March  1,  1913,  to 
the  amount  of  the  earnings  or  profits  so  distributed,  and  ex- 
cludes stock  dividends  paid  in  1916  or  subsequent  years  out  of 
surplus  other  than  earnings  or  profits  accrued  since  March  1, 
1913.  In  Towne  v.  Eisner,  245  U.  S.  418,  stock  dividends  paid 
in  1913,  1914  and  1915  out  of  surplus  however  created  were 
held  not  to  be  taxable  income  under  the' Income  Tax  Act  of 
October  3,  1913. 

Section  31(b)  of  the  Act  of  September  8,  1916,  as  amended, 
Article  107  of  the  Income  Tax  Regulations,  and  Treasury  De- 
cisions 2659  of  February  28,  1918,  and  2678  of  March  23,  1918, 
provide  the  method  of  determining  out  of  what  earninga  or 

1308 


profits  a  dividend  declared  in  1917  or  subsequent  years  is 
deemed  to  have  been  paid. 

For  the  purpose  of  ascertaining  under  the  Income  Tax  Act 
the  gain  or  loss  derived  from  the  sale  of  stock  or  other  prop- 
erty, its  cost,  or  if  acquired  before  March  1,  1913,  its  fair  mar- 
ket price  or  value  as  of  March  1,  1913,  is  evidently  the  basis 
to  be  sought.  Such  basis  once  found,  the  problem  is  resolved 
into  a  matter  of  subtraction.  To  avoid  unnecessary  complica- 
tion "cost"  is  used  herein  to  include  also,  where  required,  "fair 
market  price  or  value  as  of  March  1,  1913." 

For  the  purpose,  then  of  ascertaining  the  gain  or  loss  de- 
rived from  the  sale  of  stock  of  a  corporation  received  as  a 
dividend,  or  from  the  sale  of  the  stock  in  respect  of  which  such 
dividend  was  paid,  the  cost  of  such  stock  is  to  be  determined 
in  accordance  with  the  following  rules: 

1.  In  the  case  of  stock  (a)  received  as  a  dividend  in  1913, 
1914  or  1915  out  of  surplus  however  created,  or  (b)  received 
as  a  dividend  in  1916  or  subsequent  years  out  of  surplus  other 
than  earnings  or  profits  accrued  since  March  1,  1913,  the  cost 
of  each  share  of  new  stock  is  the  quotient  of  the  cost  of  the 
old  stock  divided  by  the  number  of  old  and  new  shares  added 
together. 

2.  In  the  case  of  the  stock  in  respect  of  which  any  stock 
dividend  was  paid  as  described  under  1,  the  cost  of  each  share 
of  old  stock  is  similarly  the  quotient  of  the  cost  of  the  old 
stock  divided  by  the  number  of  old  and  new  shares. 

3.  In  the  case  of  stock  received  as  a  dividend  in  1916  or  sub- 
sequent years  out  of  surplus  earnings  or  profits  accrued  since 
March  1,  1913,  the  cost  of  each  share  is  the  valuation  at  which 
it  was  returnable  as  income,  as  shown  by  the  transfer  of 
surplus  to  capital  account  on  the  books  of  the  corporation, 
usually  its  par  value. 

4.  In  the  case  of  the  stock  in  respect  of  which  any  stock 
dividend  was  paid  as  described  under  3,  the  cost  of  each  share 
is  its  original  cost,  regardless  of  any  stock  dividend. 

Paragraph  28  of  Regulations  No.  33  (revised)  is  hereby 
amended  to  read  as  follows: 

Stock  Dividends. — Stock  dividends  declared  from  earnings 
or  profits  accrued  prior  to  March  1,  1913,  or  from  surplus 
created  by  the  revaluation  of  capital  assets  or  by  placing 
a  value  upon  trademarks,  goodwill,  etc.,  do  not  represent  a 
distribution  of  earnings  or  profits  subject  to  tax  as  a  divi- 
dend in  the  hands  of  the  recipient  shareholder.  When  stock 
received  in  payment  of  such  a  dividend,  or  stock  in  respect 
of  which  any  such  dividend  was  paid,  is  sold,  the  cost  of  each 
share  of  stock,  whether  old  or  new,  for  the  purpose  of  ascer- 
taining the  gain  or  loss  resulting  from  its  sale,  is  the  quotient 
of  the  cost  of  the  old  stock,  if  acquired  on  or  after  March  1, 
1913,  or  its  fair  market  price  or  value  as  of  that  date  if  ac- 
quired prior  thereto,  divided  by  the  number  of  old  and  new 
shares  added  together.  The  profit  so  ascertained  from  the 
sale  of  such  stock  is  income  subject  to  both  normal  and  ad- 
ditional tax  and  shall  be  accounted  for  in  the  shareholder's 
return  rendered  for  the  year  in  which  the  sale  is  made. 

Paragraph  60  of  Regulations  No.  33  (revised)  is  hereby 
amended  to  read  as  follows: 

Profit  From  the  Sale  of  Stock.— When  stock  is  sold  from 
lots  purchased  at  different  times  and  at  different  prices  and 
the  identity  of  the  lots  can  not  be  determined  as  to  the  dates 
of  purchase,  the  stock  sold  shall  be  charged  against  the  earli- 

1309 


est  purchases  of  such  stock.  The  excess  of  the  amount  real- 
ized on  the  sale  over  the  cost  of  the  stock,  or  its  fair  market 
price  or  value  as  of  March  1,  1913,  if  purchased  before  that 
date,  will  be  the  profit  to  be  accounted  for  as  income.  In  the 
case  of  stock  received  as  a  stock  dividend  out  of  surplus  other 
than  earnings  or  profits  accrued  since  March  1,  1913,  or  of 
stock  in  respect  of  which  any  such  dividend  was  paid,  the 
cost  of  each  share  of  such  stock  shall  be  ascertained  as  speci- 
fied in  paragraph  28  hereof. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved,  June  17,  1918. 
L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 

Printed  copies  will  be  furnished  upon  request. 


(T.  D.  2735.) 


Real  estate  located  outside  of  the  United  States  belonging  to 
a  decedent  resident  within  the  United  States  should  not  be 
included  in  the  gross  estate  of  such  decedent  for  estate 
tax  purposes. 

Treasury  Department, 
Ofi'ice  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

The  following  ruling  is  based  upon  an  opinion  of  the  At- 
torney General,  dated  May  14,  1918: 

The  value  of  real  estate,  belong  to  a  decedent  resident 
within  the  United  States  at  the  time  of  his  death,  located  out- 
side of  the  United  States,  meaning  thereby  the  States'  Terri- 
tories of  Alaska  and  Hawaii^i  and  the  District  of  Columbia, 
should  not  be  included  in  determining  the  value  of  the  gross 
estate  of  such  decedent  for  the  purpose  of  the  tax  imposed  by 
Title  II.  of  the  Revenue  Act  of  September  8,, 1916. 

DANTIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 
Approved,  June  17,  1918. 
L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 


(T.  D.  2736.) 


Tax  on  undistributed  net  income  of  corporations,  joint  stock 
companies  and  associations,  and  insurance  companies. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

1.  Statute.— Section  10(b)  added  to  Title  I  of  the  Revenue 
Act  of  September  8,  1916,  by  Section  1206  of  Title  XII  of  the 
War  Revenue  Act  of  October  3,  1917,  is  as  follows: 

In  addition  to  tlie  Income  tax  imposed  by  subdivision 
(a)  of  this  section  tiiere  siiall  be  levied,  assessed,  collected, 

1310 


and  paid  annually  an  additional  tax  of  ten  per  centum 
upon  the  amount,  remaining  undistributed  six  months 
after  the  end  of  each  calendar  or  fiscal  year,  of  the  total 
net  income  of  every  corporation,  joint-stock  company  or 
association,  or  insurance  company,  received  during  the 
year,  as  determined  for  the  purposes  of  the  tax  imposed 
by  such  subdivision  (a),  but  not  including  the  amount 
of  any  income  taxes  paid  by  it  within  the  year  imposed 
by  the  authority  of  the  United  States. 

The  tax  imposed  by  this  subdivision  shall  not  apply 
to  that  portion  of  such  undistributed  net  income  which  is 
actually  invested  and  employed  in  the  business  or  is  re- 
tained for  employment  in  the  reasonable  requirements  of 
the  business  or  is  invested  in  obligations  of  the  United 
States  issued  after  September  first,  nineteen  hundred  and 
seventeen:  Provided,  That  if  the  Secretary  of  the  Treas- 
ury ascertains  and  finds  that  any  portion  of  such  amount 
so  retained  at  any  time  for  employment  in  the  business  is 
not  so  employed  or  is  not  reasonably  required  in  the 
business  a  tax  of  fifteen  per  centum  shall  be  levied,  as- 
sessed, collected,  and  paid  thereon. 

The  foregoing  tax  rates  shall  apply  to  the  undistributed 
net  income  received  by  every  taxable  corporation,  joint- 
stock  company  or  association,  or  insurance  company  in 
the  calendar  year  nineteen  hundred  and  seventeen  and  in 
each  year  thereafter,  except  that  if  it  has  fixed  its  own 
fiscal  year  under  the  provision  of  existing  law.  the  fore- 
going rates  shall  apply  to  the  proportion  of  the  taxable 
undistributed  net  income  returned  for  the  fiscal  year  end- 
ing prior  to  December  thirty-first,  nineteen  hundred  and 
•eventeen,  which  the  period  between  January  first,  nine- 
teen hundred  and  seventeen,  and  the  end  of  such  fiscal 
year  bears  to  the  whole  of  such  fiscal  year. 

2.  Definitions,  Corporation. — The  term  "corporation"  or  "cor- 
porations" as  used  in  this  Treasury  Decision  shall  be  con- 
strued to  include  all  corporations,  joint-stock  companies  and 
associations,  and  insurance  companies,  coming  within  the 
terms  of  Title  I  of  the  Act  of  September  8,  1916,  as  amended 
by  Title  XII  of  the  Act  of  October  3,  1917. 

Taxable  Year. — The  term  "taxable  year"  as  used  in  this 
Treasury  Decision  contemplates  the  calendar  year  1917  and 
each  calendar  year  thereafter,  or  in  the  case  of  a  corporation 
properly  filing  its  income  returns  upon  the  basis  of  a  fiscal 
year  other  than  the  calendar  year,  the  fiscal  year  ending  in 
1917  and  each  fiscal  year  thereafter. 

3.  Corporation  Subject  to  Tax. — Every  corporation,  domestic 
or  foreign,  which  was  subject  to  taxation  upon  the  total  net 
income  received  by  it  during  the  preceding  taxable  year  is 
subject  to  the  provisions  of  Section  10(b)  added  to  the  Act  of 
September  8,  1916,  by  "Section  1206  of  the  Act  of  October  3, 
1917,  which  impose  a  tax  upon  undistributed  net  income. 
Corporations  which  are  exempt  under  the  provisions  of  Sec- 
tion 11(a)  of  the  Act  of  September  8,  1916,  from  tax  upon 
total  net  income  are  not  taxable  upon  undistributed  net  in- 
come under  said  Section  10(b). 

4.  Returns. — Every  corporation  which  is  required  by  the 
provisions  of  the  Act  of  September  8,  1916,  as  amended  by 
the  Act  of  October  3,  1917,  to  make  a  return  of  its  annual 
net  income,  and  which  had  a  taxable  net  income  for  the 
preceding  taxable  year,  shall  make  a  return  of  the  amount 
of  such  net  income  received  during  such  taxable  year  re- 
maining undistributed  six  months  after  the  end  of  such  tax- 
able year.  The  return  shall  be  made  upon  Form  1112,  shall 
be  sworn  to  by  the  president,  vice-president  or  other  principal 
officer,  and  by  the  treasurer  or  assistant  treasurer  of  the  cor- 
poration and  shall  be  made  to  the  Collector  of  Internal  Rev- 
enue of  the  district  in  which  its  return  of  annual  net  income 
is  required  to  be  filed.    Such  return  shall  be  made  within  sixty 

1311 


days  after  the  expiration  of  six  months  after  the  end  of  such 
taxable  year,  except  that  any  corporation  which  would  other- 
wise be  required  to  make  a  return  on  or  before  a  date  earlier 
than  August  1,  1918,  may  make  such  return  on  or  before 
August  1,  1918. 

5.  Rate  of  Tax. — Taxes  are  imposed  by  Section  10(b)  of  the 
Act  of  September  8,  1916,  as  amended,  at  two  different  rates, 
ten  per  cent  and  fifteen  per  cent. 

6.  Income  Subject  to  the  Ten  Per  Cent  Tax. — The  amount 
of  income  subject  to  the  ten  per  cent  tax  is  to  be  ascertained 
in  the  following  manner: 

From  the  total  net  income  received  by  a  corporation  during 
its  taxable  year  as  determined  for  the  purposes  of  the  annual 
tax  imposed  thereon  by  subdivision  (a)  of  Section  10  of  the 
Act  of  September  8,  1916,  as  amended,  which  remains  undis- 
tributed six  months  after  the  end  of  such  taxable  year,  are 
to  be  deducted  (1)  the  amount  of  any  income  taxes  imposed 
by  the  authority  of  the  United  States  paid  by  the  corporation 
within  such  taxable  year  from  income  of  that  year,  (2)  such 
part  of  the  undistributed  income  as  is  actually  invested  and 
employed  in  the  business,  or  (3)  is  retained  for  employment 
in  the  reasonable  requirements  of  the  business,  or  (4)  is  in- 
vested in  obligations  of  the  United  States  issued  after  Sep- 
tember 1,  1917.  If  the  taxable  year  began  on  or  after  Janu- 
ary 1,  1917,  the  remainder  is  the  amount  upon  which  the  tax 
is  assessed.  If  the  taxable  year  began  before  January  1,  1917, 
the  proportion  of  such  remainder  which  the  period  between 
January  1,  1917,  and  the  end  of  such  taxable  year  bears  to 
the  whole  of  such  taxable  year  is  the  amount  upon  which  the 
tax  is  assessed.  Income  received  by  a  corporation  before  the 
beginning  of  a  taxable  year  ending  in  1917  is  not  subject  to 
the  tax  even  though  remaining  undistributed  six  months  after 
the  end  of  such  taxable  year. 

7.  Time  of  Determining  Amount  of  Undistributed  Income 
Subject  to  Ten  Per  Cent  Tax. — The  amount  of  undistributed 
net  income  subject  to  ten  per  cent  tax  is  to  be  determined  as 
of  a  date  six  months  after  the  end  of  the  taxable  year. 
Changes  in  the  amount  of  such  undistributed  income  after 
such  date  do  not  change  the  amount  subject  to  ten  per  cent 
tax.  The  Commissioner  of  Internal  Revenue  has  no  authority 
to  change  the  date  as  of  which  the  amount  of  undistributed 
net  income  subject  to  ten  per  cent  tax  is  determined,  either 
in  the  case  of  a  taxable  year  ending  before  October  3,  1917, 
or  of  any  other  taxable  year. 

8.  Undistributed  Income. — The  net  income  received  by  a  cor- 
poration during  its  taxable  year  remains  undistributed  until 
it  is  distributed  in  the  form  of  dividends,  whether  it  is  repre- 
sented by  liquid  assets  or  otherwise.  Income  distributed  in 
the  form  of  dividends  is  subject  to  the  provisions  of  Section 
31(b)  added  to  the  Act  of  September  8,  1916,  by  Section  1211 
of  the  Act  of  October  3,  1917,  which  provides  in  part  as 
follows : 

Any  distribution  made  to  the  shareholders  or  members 
of  a  corporation,  joint-stock  company,  or  association,  or 
insurance  company,  in  the  year  nlijetoen  hundred  and 
seventeen,  or  subsequent  tax  years,  shall  be  deemed  to 
have  been  made  from  the  most  recently  accumulated  un- 
divided profits  or  surplus.     •     ♦    ♦ 

The  burden  is  upon  the  corporation  seeking  to  establish 
a  distribution  in  the  current  year  of  profits  of  the  preceding 
taxable  year  to  show  that  all  the  earnings  of  the  current 

1313 


year  have  been  first  distributed.  In  determining  the  source 
of  earnings  from  which  a  particular  distribution  is  made  a 
corporation  is,  however,  permitted  to  treat  the  undivided 
profits  and  surplus  of  the  current  year  as  reduced  by  pay- 
ments for  income  and  excess-profits  taxes,  or  if  keeping  its 
accounts  on  an  accrual  basis  by  proper  reserves  for  such  taxes, 
although  such  payments  or  reserves  are  not  deductible  in  com- 
puting the  income  of  the  corporation  for  income  and  excess- 
profits  taxes.  (Treasury  Decision  2700.  See  also  Treasury 
Decision  2659,  and  Treasury  Decision  2678). 

9.  "The  Business"  of  a  Corporation. — "The  business"  of  a 
corporation  is  not  limited  to  the  business  which  the  corpora- 
tion has  previously  carried  on  but  includes  any  line  of  busi- 
ness which  the  corporation  may  legitimately  undertake. 

When  one  corporation  owns  the  stock  of  another  corporation 
in  the  same  or  a  related  line  of  business  and  in  effect  operates 
the  other  corporation,  the  business  of  the  other  corporation 
falling  within  the  general  scope  of  the  powers  of  the  first, 
that  business  may  be  in  effect  although  not  in  legal  form  the 
business  of  the  first  corporation.  Income  of  the  first  corpora- 
tion may  be  put  into  the  second  through  the  purchase  of 
stock  or  otherwise  and  might,  if  the  subsidiary  relationship 
is  established,  constitute  employment  of  the  income  in  its 
own  business.  For  such  employment  to  fall  within  the  ex- 
ception it  would  be  essential  for  the  corporation  to  show  the 
same  facts  with  reference  to  the  actual  utilization  of  the 
funds  so  employed,  or  their  retention  for  its  reasonable  re- 
quirements which  it  would  be  necessary  for  the  corporation 
to  show  with  reference  to  funds  employed  or  retained  directly 
by  it. 

Investment  by  a  corporation  of  income  in  securities  of  an- 
other corporation  is  not,  without  more,  to  be  regarded  as  em- 
ployment of  the  income  in  "the  business."  The  business  of 
one  corporation  may  not  be  regarded  as  including  the  busi- 
ness of  another,  within  the  meaning  of  that  exception,  unless 
the  other  corporation  is  a  mere  instrumentality  of  the  first; 
to  establish  this  it  is  ordinarily  essential  that  the  first  cor- 
poration own  all  of  the  stock  of  the  second. 

10.  Undistributed  Income  "Actually  Invested  and  Employed 
in  the  Business." — The  portion  of  undistributed  net  income 
which  is  "actually  invested  and  employed  in  the  business"  is 
not  subject  to  the  ten  per  cent  tax.  No  attempt  is  here  made 
to  enumerate  all  the  ways  in  which  such  undistributed  in- 
come may  be  so  invested  and  employed.  Undistributed  income 
i»  used  or  employed  in  the  business  if  invested  in  increased 
inventories  or  additions  to  plant  reasonably  required  by  the 
business;  if  used  for  the  payment  of  income  and  excess- 
profits  taxes  for  the  taxable  year,  provided  the  amounts  so 
paid  are  designated  upon  the  books  of  the  corporation  as 
made  from  the  income  of  such  taxable  year;  if  used  to  make 
good  an  impairment  of  capital  when  such  income  is  by  law 
required  to  be  so  used;  or  if  used  to  retire  the  whole  or  any 
part  of  the  capital  stock  of  the  corporation,  but  reserves  set 
up  for  this  purpose  are  neither  invested  and  employed  in  the 
business,  nor  retained  for  employment  in  the  reasonable  re- 
quirements of  the  business.  In  the  case  of  a  banking  institu- 
tion the  business  of  which  is  to  receive  and  loan  money,  using 
capital,  surplus  and  deposits  for  this  purpose,  undistributed 
income  actually  represented  by  loans  is  invested  and  employed 
in  the  business. 

1313 


11.  Undistributed  Income  "Retained  for  Employment  in  the 
Reasonable  Requirements  of  the  Business." — The  portion  of 
undistributed  net  income  which  is  "retained  for  employment 
in  the  reasonable  requirements  of  the  business"  is  not  subject 
to  the  ten  per  cent  tax.  No  attempt  is  here  made  to  enumer- 
ate all  the  ways  in  which  such  undistributed  income  may  be 
retained.  Undistributed  income  is  retained  for  employment  in 
the  reasonable  requirements  of  the  business  if  to  a  reasonable 
amount  it  is  retained  to  make  good  an  impairment  of  capital 
when  such  income  is  by  law  required  to  be  so  used;  or  in  ac- 
cordance with  contract  requirements  placed  in  the  credit  of  a 
sinking  fund  for  the  purpose  of  retiring  bonds  issued  by  the 
corporation;  or  retained  for  working  capital  required  by  the 
business.  In  the  case  of  a  banking  institution  the  business 
of  %\hich  is  to  receive  and  loan  money,  using  capital,  surplus 
and  deposits  for  this  purpose,  such  reasonable  amounts  of  un- 
distributed net  income  as  are  retained  for  future  loans  are 
not  subject  to  the  ten  per  cent  tax. 

12.  Undistributed  Income  "Invested  in  Obligations  of  the 
United  States  Issued  After  September  First,  Nineteen  Hundred 
and  Seventeen." — ^Undistributed  net  income  "invested  in  obli- 
gations of  the  United  States  issued  after  September  first, 
nineteen  hundred  and  seventeen"  is  not  subject  to  the  ten 
per  cent  tax.  This  is  not  true  of  obligations  of  the  United 
States  issued  before  September  1,  1917. 

The  restrictions  as  to  the  distribution  of  earnings  of  previ- 
ous taxable  years  resulting  from  the  presumption  that  all 
current  distributions  are  from  current  earnings  do  not  apply 
to  the  use  of  earnings  for  investments  by  corporations.  There 
is  in  the  statutes  no  limitation  or  restriction  as  to  the  source 
from  which  may  be  taken  earnings  used  for  this  purpose. 
Amounts  invested  in  obligations  of  the  United  States  issued 
after  September  1,  1917,  may  thus  be  treated  as  made  from 
such  earnings  as  the  corporation  may  designate.  (Treasury 
Decision  2700). 

13.  Income  Subject  to  Fifteen  Per  Cent  Tax.— If  the  Secre- 
tary of  the  Treasury  ascertains  and  finds  that  any  portion  of 
the  undistributed  net  income  retained  at  any  time  for  em- 
ployment in  the  business  is  not  so  employed,  or  is  not  reason- 
ably required  in  the  business,  it  is  subject  to  a  tax  of  fifteen 
per  cent.  The  liability  of  undistributed  net  income  to  the  ten 
per  cent  tax  depends  upon  the  manner  in  which  it  is  invested 
on  the  date  six  months  after  the  end  of  the  taxable  year. 
However,  the  status  of  the  income  is  not  lost  by  the  invest- 
ment, but  persists  for  the  possible  application  of  the  fifteen 
per  cent  tax.  Amounts  of  undistributed  net  income  not  sub- 
ject to  the  ten  per  cent  tax  because  of  employment  in  the 
business,  retention  for  such  employment  or  investment  in  cer- 
tain obligations  of  the  United  States,  become  subject  to  the 
fifteen  per  cent  tax  if  retained  after  such  investment,  employ- 
ment or  retention  for  employment  in  the  reasonable  require- 
ments of  the  business  has  ceased. 

14.  Penalty  for  Nonpayment.— If  the  tax  assessed  on  un- 
distributed net  income  is  not  paid  within  ten  days  after  the 
date  of  notice  and  demand  therefor  it*  shall  be  the  duty  of 
the  collector  to  collect  said  tax  with  a  penalty  of  five  per 
cent  additional  upon  the  amount  thereof  and  interest  at  the 
rate  of  one  per  cent  a  month. 

15.  Other  Penalties. — In  case  of  any  failure  to  make  and 
file  a  return  within  the  time  prescribed  by  law  fifty  per  cent 

1314 


of  the  amount  of  the  tax  shall  be  added  thereto,  except  that 
when  a  return  is  voluntarily  and  without  notice  from  the  col- 
lector filed  after  such  time,  and  it  is  shown  that  the  failure 
to  file  it  was  due  to  reasonable  cause  and  not  to  wilful  neglect 
no  such  addition  shall  be  made  to  the  tax.  In  case  a  false  or 
fraudulent  return  is  wilfully  made  one  hundred  per  cent  of 
the  amount  of  the  tax  shall  be  added  thereto.  Corporations, 
officers  thereof  and  other  individuals  required  to  make,  render, 
sign  or  verify  returns  of  corporations  shall  be  subject  to  the 
specific  penalties  provided  by  law  for  refusal  or  neglect  to 
make  such  returns  and  for  making  false  or  fraudulent  returns. 

16.  Extension  of  Regulations  No.  33  (Revised). — ^Regulations 
No.  33  (Revised),  dated  January  2,  1918,  and  all  subsequent 
Treasury  Decisions  so  far  as  they  are  applicable  to  the  taxes 
imposed  by  subdivision  (b)  added  to  Section  10  of  the  Act  of 
September  8,  1916,  by  'Section  1206  of  the  Act  of  October  3, 
1917,  are  hereby  extended  and  made  a  part  of  this  Treasury 
Decision  in  so  far  as  they  do  not  conflict  with  the  rulings 
contained  herein.  Article  238  of  said  Regulations  No.  33  (Re- 
vised) is  hereby  revoked. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved,  June  18,  1918. 
L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 

Printed  copies  will  be  furnished  upon  request. 


(T.  D.  2737.) 

Co-operative  merchandising  organizations  are  subject  to  the 
provisions  of  the  Act  of  September  8,  1916,  as  amended 
by  the  Act  of  October  3,  1917.  Periodical  refunds  made 
to  purchasers  are  to  be  regarded  as  discounts,  reducing 
the  organization's  net  income.  The  recipient  need  not 
return  them  as  income,  but  should  treat  sums  so  received 
as  rebates,  reducing  the  cost  to  him  of  the  purchases  on 
which  the  refund  is  based. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

Co-operative  societies,  associations  or  corporations  which 
make  a  periodical  refund — sometimes  called  a  dividend — to 
members  or  to  prospective  members  or  to  patrons  generally, 
in  proportion  to  the  purchases  made  by  the  recipient,  are  not 
within  any  of  the  exceptions  or  exemptions  of  the  Act  of 
September  8,  1916,  as  amended  by  the  Act  of  October  3,  1917, 
and  are  subject  to  its  provisions. 

Where  such  refund  payments  are  made  in  accordance  with 
by-laws  or  published  rules  regularly  adhered  to,  they  are  to 
be  regarded  as  discounts  or  rebates  tending  to  reduce  the 
taxable  net  income  of  the  organization.  Like  discounts  gen- 
erally, they  should  appear  as  an  added  item  of  cost  in  the 
detailed  schedule  of  cost  items  submitted  with  the  organiza- 
tion's return  of  income. 
This  ruling  is  in  accordance  with   settled  practice  in  the 

1315 


administration  of  the  income  tax  laws,  adopted  because  the 
real  purpose  of  such  organizations  is  to  fuiuish  goods  at  cost. 
So-called  "dividends"  of  this  character  are  wholly  different 
from  ordinary  dividends  based  on  stock-holdings,  and  they 
need  not  be  listed  as  income  by  the  recipient.  However,  if 
the  recipient  is  claiming  the  right  to  deduct  as  business  ex- 
penses any  expenditure  on  which  the  refund  is  based  in  whole 
or  in  part,  the  sum  claimed  as  a  deduction  must  be  reduced 
in  proportion  to  the  refund  received. 

DxlNIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved  June  19,  1918: 
L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 


(T.  D.  2740.) 

Corporation  Excise  Tax  and  Income  Taxes. 

Digest  of  Recent  Decision  of  the  Supreme  Court  of  the  United 
States. 

Treasury  Department, 

OflB.ce  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

The  following  propositions  of  law,  stated  for  the  informa- 
tion and  guidance  of  internal  revenue  officers  and  others  con- 
cerned, are  expressed  or  implied  in  the  recent  decisions  of 
the  Supreme  Court  of  the  United  States  in  United  States  v. 
Biwabik  Mining  Company  (T.  D.  2721),  Goldfield  Consolidated 
Mines  Company  v.  Scott  (T.  D.  2722),  Doyle  v.  Mitchell  Bros. 
Co.  (T.  D.  2723),  Hays  v.  Gauley  Mountain  Coal  Company 
(T.  D.  2724),  United  States  v.  Cleveland,  Cincinnati,  Chicago 
&  St.  Louis  Railway  Company  (T.  D.  2725),  William  E.  Peck 
&  Co.  (Inc.)  V.  Lowe  (T.  D.  2726),  Lynch  v.  Turrish  (T.  D. 
2729),  Southern  Pacific  Company  v.  Lowe  (T.  D.  2730),  Lynch 
V.  Hornby  (T.  D.  2731),  and  Peabody  v.  Eisner  (T.  D.  2732): 

1.  In  the  determination  of  net  income  the  Excise  Tax  Act 
of  August  5,  1909,  permitted  the  deduction  from  gross  income 
of  "a  reasonable  allowance  for  depreciation  of  property,  if 
any;"  the  Income  Tax  Act  of  October  3,  1913,  permitted  "a 
reasonable  allowance  for  the  exhaustion,  wear  and  tear  of 
property  arising  out  of  its  use  or  employment  in  the  busi- 
ness, not  to  exceed,  in  the  case  of  mines,  5  per  centum  of 
the  gross  value  at  the  mine  of  the  output  for  the  year  for 
which  the  computation  is  made;"  and  the  Income  Tax  Act 
of  September  8,  1916,  as  amended,  permits  "in  the  case  of 
mines  a  reasonable  allowance  for  depletion  thereof  not  to 
exceed  the  market  value  in  the  mine  of  the  product  thereof 
which  has  been  mined  and  sold  during  -the  year  for  which 
the  return  and  computation  are  made." 

(a)  As  mining  leases  are  not  conveyances  of  the  ore  in 
place,  but  are  grants  of  the  privilege  of  entering  upon  the 
premises  and  mining  and  removing  the  ore,  under  none  of 
the  Acts  of  1909,  1913  or  1916  may  a  lessee  of  mining  prop- 

1316 


erty  deduct  as  so  much  depletion  of  capital  assets  the  pro- 
portionate value  in  place  on  January  1,  1909,  or  any  other 
date,  of  each  ton  of  ore  mined  during  the  taxable  year. 
See  T.  D.  1606  (75);  Article  145  of  Regulations  No.  33;  and 
Articles  8,  171  and  173  of  Regulations  No.  33  (revised). 
(United  States  v.  Biwabik  Mining  Company.  See  Von  Baum- 
bach  V.  Sargent  Land  Company,  242  U.  S.  503.) 

(b)  Under  the  Act  of  1909  a  mining  corporation  owning  its 
mine  is  not  entitled  to  a  deduction  from  its  gross  income 
of  any  amount  whatever  on  account  of  depletion  or  ex- 
haustion of  the  ore  bodies  caused  by  its  operations  for  the 
year  for  which  the  tax  is  assessed,  nor  to  a  deduction  against 
the  gross  proceeds  frjom  the  mining  and  treatment  of  ores 
to  the  extent  of  the  cost  value  of  the  ore  in  the  ground  before 
it  was  mined.  T.  D.  1675  (80-89)  and  T.  D.  1742  (96-106) 
are  modified  accordingly.  In  view  of  their  different  provisions 
this  rule  is  inapplicable  to  situations  arising  under  the  Acts 
of  1913  and  1916.  See  Articles  141  and  142  of  Regulations  No. 
33;  and  Articles  8, 171  and  172  of  Regulations  No.  33  (revised). 
(Goldfield  Consolidated  Mines  Company  v.  Scott.  See  Strat- 
ton's  Independence  v.  Howbert,  231  U.  S.,  399;  Stanton  y. 
Baltic  Mining  Company,  240  U.  S.,  103.) 

2.  The  Excise  Tax  Act  of  August  5,  1909,  measured  the 
tax  by  the  net  income  of  a  corporation  "received"  by  it  from 
all  sources  during  the  taxable  year;  the  Income  Tax  Act  of 
October  3,  1913,  imposed  the  tax  upon  the  net  income  "arising 
or  accruing"  from  all  sources  during  the  taxable  year;  and 
the  Income  Tax  Act  of  September  8,  1916,  as  amended,  upon 
the  net  income  "received"  from  all  sources  during  the  taxable 
year. 

(a)  Where  property  is  acquired  by  a  corporation  and  sub- 
sequently sold  for  a  higher  price,  under  all  three  Acts  the 
gain  on  the  sale  is  income  to  the  corporation.  If,  however, 
the  property  was  acquired  before  January  1,  1909,  only  such 
portion  of  the  gain  as  accrued  subsequent  to  December  31, 
1908,  was  taxable  under  the  Act  of  1909,  and  if  it  was  ac- 
quired before  March  1,  1913,  only  such  portion  of  the  gain 
as  accrued  subsequent  to  February  28,  1913,  was  taxable 
under  the  Act  of  1913  or  is  taxable  under  the  Act  of  1916. 
See  Regulations  No.  31,  T.  D.  1606  (40,  50,  76),  T.  D.  1675 
(37,  48,  75),  T.  D.  1742  ]43,  55,  91);  and  Articles  88,  101  and 
116  of  Regulations  No.  33  (revised).  (Doyle  v.  Mitchell  Bros. 
Company;  Hays  v.  Gauley  Mountain  Coal  Company;  United 
States  V.  Cleveland,  Cincinnati,  Chicago  and  St.  Louis  Rail- 
way Company.) 

(b)  In  order  to  determine  whether  there  has  been  gain  or 
loss  on  a  sale,  and  the  amount  of  the  gain,  if  any,  in  general 
under  all  three  Acts  an  amount  must  be  withdrawn  from 
the  gross  proceeds  sufficient  to  restore  the  cost  of  the  prop- 
erty or  the  capital  value  that  existed  at  the  commencement 
of  the  period  imder  consideration  (either  January  1,  1909,  or 
March  1,  1913).  Interest  should  not  be  added  to  the  purchase 
price  in  order  to  ascertain  the  cost  of  the  property.  In  ap- 
portioning the  profits  derived  from  a  disposition  of  property 
acquired  before  and  sold  after  January  1,  1909,  for  the  pur- 
pose of  the  Act  of  1909,  or  acquired  before  and  sold  after 
March  1,  1913,  for  the  purpose  of  the  Act  of  1913,  the  division 
may  be  pro  rata  according  to  the  time  elapsed  or  may  be 
based  on  an  appraisal  or  inventory  taken  as  of  December  31, 
1908,  or  February  28,  1913.    This  is  a  matter  of  detail,  to  be 

1317 


settled  according  to  the  best  evidence  obtainable  and  in  ac- 
cordance with  valid  departmental  regulations.  For  the  pur- 
pose of  the  Act  of  1916,  however,  the  fair  market  price  or 
value  as  of  March  1,  1913,  to  be  ascertained  in  any  practic- 
able manner,  is  the  statutory  basis  for  determining  the  amount 
of  gain  on  a  sale  of  property  acquired  before  that  date.  See 
Regulations  No.  31,  T.  D.  1578,  T.  D.  1588,  T.  D.  1606  (37, 
71),  T.  D.  1675  (36,  55,  69),  T.  D.  1742  (42,  62,  86);  Articles 
4,  90,  91,  92,  93,  101,  109,  111,  112  and  116  of  Regulations 
No.  33  (revised),  and  T.  D.  2649.  (Doyle  v.  Mitchell  Brothers 
Company;  Hays  v.  Gauley  Mountain  Coal  Company;  United 
States  V.  Cleveland,  Cincinnati,  Chicago  and  St.  Louis  Rail- 
way Company.) 

(c)  The  Act  of  1913  is  valid  and  constitutional  in  taxing 
net  income  derived  from  sales  in  foreign  commerce.  The  same 
principle  applies  to  the  Acts  of  1909  and  1916.  (William  E. 
Peck  and  Company  (Inc.)  v.  Lowe.) 

(d)  Where  a  stockholder  in  a  corporation  receives  as  a 
liquidation  dividend,  representing  his  share  in  the  distribution 
of  the  proceeds  of  the  sale  of  the  property  of  the  corporation 
upon  dissolution,  a  sum  greater  than  the  cost  of  his  stock 
under  the  Acts  of  both  1913  and  1916  the  gain  is  income  to 
the  stockholder.  If,  however,  he  acquired  the  stock  before 
March  1,  1913,  only  such  portion  of  the  gain  as  accrued  subse- 
quent to  February  28,  1913,  was  taxable  under  the  Act  of 
1913  or  is  taxable  under  the  Act  of  1916.  Compare  the  case 
of  a  dividend  in  ordinaiy  course  in  paragraph  (f)  below.  See 
the  citations  in  paragraphs  (a)  and  (b)  above.  (Lynch  v. 
Turrish.) 

(e)  Wliere  a  corporation  owns  all  the  stock  and  operates 
under  a  lease  all  the  property  and  business  of  another  cor- 
poration, acting  as  banker  for  it,  and  the  two  corporations 
being  in  substance  identical  and  merged  for  all  practical  pur- 
poses, under  the  Acts  of  both  1913  and  1916  surplus  of  the 
lessor  corporation  accrues  as  income  to  the  lessee  corporation 
as  and  when  accumulated  by  the  lessor  corporation,  notwith- 
standing the  formal  distribution  of  such  surplus  in  dividends 
to  the  lessee  corporation  may  not  occur  during  the  taxable 
year.  This  special  situation  forms  an  exception  to  the  gen- 
eral rule  stated  in  paragraph  (f)  below.  See  Articles  125, 
207  and  208  of  Regulations  No.  33  (revised).  (Southern 
Pacific  Company  v.  Lowe.) 

(f)  Where  a  stockholder  of  a  corporation  receives  dividends 
paid  in  the  ordinary  course  of  business,  even  though  extra- 
ordinary in  amount,  under  the  Acts  of  both  1913  and  1916 
such  dividends  are  income  in  the  year  in  which  they  are 
received  by  the  stockholder.  If  paid  out  of  surplus  accrued 
to  the  corporation  prior  to  March  1,  1913,  they  were  subject 
to  tax  imder  the  Act  of  1913,  although  expressly  exempt 
from  tax  under  the  Act  of  1916.  A  dividend  paid  by  a  going 
corporation  out  of  current  earnings  or  accumulated  surplus 
when  declared  by  the  directors  in  their  discretion,  being  in 
the  nature  of  a  recurrent  return  upon  the  stock,  is  distinguish- 
able from  a  so-called  dividend  in  liquidation  of  the  entire 
assets  and  business  of  the  corporation,  which  is  a  return  to 
the  stockholder  of  the  value  of  his  stock  upon  the  surrender 
of  his  entire  interest  in  the  corporation.  Compare  the  case 
of  a  liquidation  dividend  in  paragraph  (d)  above.  See  Articles 
105,  106  and  107  of  Regulations  No.  33  (revised),  T.  D.  2659 
and  T.  D.  2678.     (Lynch  v.  Hornby;  Peabody  v.  Eisner.) 

1318 


(g)  A  dividend  in  ordinary  course  paid  on  stock  of  a  cor- 
poration in  property  or  stock  other  than  its  own  is  income 
to  the  stocldiolders  to  the  amount  of  its  cash  value  when 
received  under  the  Acts  of  both  1913  and  1916.  A  dividend 
paid  in  stock  of  another  corporation  is  not  a  stock  dividend. 
See  Articles  4  and  106  of  Regulations  No.  33  (revised). 
(Peabody  v.  Eisner;  compare  Towne  v.  Eisner,  245  U.  S.,  418.) 

DANIEL  C.  ROPER, 

Commissioner. 
Approved  June  24,  1918: 
L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 


(T.  D.  No.  2744.) 

Returns  made  upon  the  basis  of  "cost  or  market  value, 
whichever  is  lower"  to  be  accepted;  T.  D.  2609  as  supple- 
mented by  T.  D.  2649  affirmed. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

To  Collectors  of  Internal  Revenue,  Revenue  Agents  and  Others 
Concerned : 
As  question  had  arisen  as  to  the  legality  of  the  authorization 
by  Treasury  Decision  No.  2609  of  returns  for  income  and 
excess  profits  tax  purposes  upon  the  basis  of  inventories  taken 
"at  cost  or  market  value,  whichever  is  lower,"  the  matter  was 
referred  to  the  Attorney-General.  (See  T.  D.  2649.)  The 
Attorney-General  has  advised  upon  the  basis  of  a  recent  deci- 
sion of  the  Supreme  Court  (Doyle  v.  Mitchell  Brothers,  decided 
May  20th  last),  that  the  methods  of  taking  inventories  au- 
thorized by  Treasury  Decision  No.  2609  are  permissible.  That 
decision  supplemented  by  the  last  paragraph  of  Treasury  De- 
cision No.  2649  defining  "a  dealer  in  securities"  therefore  con- 
tinues to  stand  as  a  regulation  of  the  Department. 

DANIEL  C.  ROPER, 
Commissioner    of    Internal    Revenue. 

Approved:  July  3,  1918. 
L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 


(T.  D.  2747.) 

Proceeds  of  Accident  Insurance  Policies  Received  by  Indi- 
viduals on  Account  of  Personal  Injuries  Sustained  Through 
Accident. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue^ 

Washington,  T>.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

The  Attorney  General  has  advised  upon  the  basis  of  recent 
decisions  of  the  Supreme  Court   (Doyle  v.  Mitchell  Brother i 

1319 


Company,  decided  May  20,  last;  Lynch  v.  Hornby,  Lynch  v. 
Turrish  and  Southern  Pacific  Company  v.  Lowe,  decided  June 
3,  last)  and  it  is  accordingly  held  that  the  proceeds  of  an 
accident  insurance  policy  received  by  an  individual  on  account 
of  personal  injuries  sustained  by  him  through  accident  are 
not  income  taxable  under  the  provisions  of  Title  I.  of  the  Act 
of  September  8,  1916,  as  amended  by  Title  XII.  of  the  Act  of 
October  3,  1917,  and  of  Title  L  of  the  Act  of  October  3,  1917. 

It  is  held  upon  similar  principles  that  an  amount  received 
by  an  individual  as  the  result  of  a  suit  or  compromise  for 
personal  injuries  sustained  by  him  through  accident  is  not 
Income  taxable  under  the  provisions  of  said  Titles. 

Such  provisions  of  Treasury  Decisions  and  of  Regulations 
No.  33  (Revised)  as  are  inconsistent  herewith  are  hereby  re- 
voked. 

DANIEL  C.  ROPER, 

Commissioner. 
Approved:  July  12,  1918. 

L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 


(T.  D.  2754) 

Basis  of  Allowances  for  Depreciation — 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  others  concerned: 

Section  12(a)  of  the  Act  of  September  8,  1916,  as  amended, 
to  which  Section  5(a)  is  similar,  provides  that  net  income  shall 
be  ascertained  by  deducting  from  gross  income,  among  other 
things : 

"Second.  All  losses  actually  sustained  and  charged 
oflf  within  the  year  and  not  compensated  by  insur- 
ance or  otherwise,  including  a  reasonable  allowance 
for  the  exliaustion,  wear  and  tear  of  property  arising 
out  of  its  use  or  employment  in  the  business  or  trade." 

A  reasonable  allowance  for  the  wear  and  tear  of  property 
arising  out  of  its  use  or  employment  in  the  business  or  trade 
is  to  be  based  on  the  cost  of  such  property  or  on  its  fair  market 
price  or  value  as  of  March  1,  1913,  if  acquired  prior  thereto.  In 
the  absence  of  proof  to  the  contrary  it  will  be  assumed  that 
such  value  as  of  March  1,  1913,  is  the  cost  of  the  property,  less 
depreciation  up  to  that  date. 

This  decision  is  supplemental  to  Article  159  to  169  inclusive 
of  Regulations  No.  33  (revised),  which  to  any  necessary  extent 
are  modified  accordingly. 

(Signed)  D'ANIEL  C.  ROPER, 
Commissioner. 
Approved:  August  23,  1918. 

(Signed)    JAMES  H.   MOYLE, 
Acting  Secretary  of  the  Treasiury. 

1320 


(T.  D.  2755) 

Depositaries  and  Sureties  Acceptable  Under  T.  D.  2706  and 
T.  D.  2733— 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  others  concerned: 

To  facilitate  compliance  with  the  provisions  of  T.  D.  2706, 
which  permits  the  establishment  of  a  replacement  fund  in  the 
case  of  property  requisitioned  for  war  uses  or  lost  or  de- 
stroyed in  whole  or  in  part  through  war  hazards,  applicants 
are  notified  that  only  active  depositaries  of  public  moneys 
and  surety  companies  holding  certificates  of  authority  from 
the  Secretary  of  the  Treasury  as  acceptable  sureties  on  Fed- 
eral bonds  will  be  approved  as  sureties  or  depositaries  under 
Schedule  B  and  C  of  form  1114,  prescribed  by  T.  D.  2733. 

(Signed)  DANIEL  C.  ROPER, 
Commissioner. 
Approved:  August  26,  1918. 

(Signed)    JAMES  H.   MOYLE, 
Acting  Secretary  of  the  Treasury. 


(T.  D.  2756.) 


(1)  Conditions  under  which  five  per  cent  discount  may  be 
allowed  for  advance  payment  of  estate  tax. 

(2)  Conditions  under  which  a  tentative  return  may  be  filed. 

(3)  Granting  of  extension  in  which  to  file  final  return. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 
FIVE  PER  CENT  DISCOUNT. 

Section  204  of  the  Estate  Tax  Law  (Act  of  September  8, 
1916)  provides  that  estate  tax  shall  be  due  one  year  after 
decedent's  death,  and  if  the  tax  is  paid  before  it  is  due  a 
discount  at  the  rate  of  five  per  centum  per  annum,  calculated 
from  the  time  payment  is  made  to  the  date  when  the  tax  is 
due,  shall  be  dediicted.  Discount  is  not  allowable  unless  the 
total  tax  be  determined  and  advance  payment  made  in  full. 

It  is  not  contemplated  by  the  Act  that  immediately  after 
a  decedent's  death,  or  at  any  time  before  the  expiration  of 
the  year,  the  executor  may  make  partial  payment  on  account 
of  the  tax  and  receive  credit  for  the  discount  because  of  ad- 
vance payment.  If  advance  payment  is  to  be  made  before  the 
due  date  of  the  tax,  the  estate  must  be  in  a  position  to  tile 
a  final  return  on  Form  706  showing  the  value  of  all  assets 
as  of  the  date  of  decedent's  death  and  the  alloAvable  deduc- 
tions to  which  the  estate  is  entitled  under  Section  203  of  the 
Act,  the  value  of  the  net  estate  and  the  determined  tax  be- 
cause of  the  transfer  of  the  net  estate. 

1321 


Final  return  must  be  filed  wherever  advance  payment  is  de- 
sired and  the  amount  paid  should  be  entered  upon  the  col- 
lector's assessment  list  for  the  month  in  which  paid  as  advance 
collection. 

TENTATIVE  RETURN. 

Section  207  of  the  Estate  Tax  Act  provides  that  if  for  any 
reason  the  amount  of  the  tax  cannot  be  determined  the  pay- 
ment of  a  sum  of  money  sufficient  in  the  opinion  of  the  col- 
lector to  discharge  the  tax  shall  be  deemed  payment  in  full 
of  the  tax,  etc.  This  provision  clearly  relates  to  the  time 
when  the  tax  is  due.  The  collector  is  not  required  to  exercise 
his  discretion  as  to  what  amount  will  satisfy  the  tax  until 
the  due  date  thereof.  It  is  obvious  that  no  discount  is  allow- 
able upon  such  payment,  as  necessarily  the  payment  cannot 
be  made  before  the  expiration  of  a  year  following  decedent's 
death. 

The  following  regulations  govern  the  above  payments: 
If  at  the  end  of  the  year  following  decedent's  death  the 
executor  represents  and  the  collector  is  satisfied  that  the 
amount  of  tax  upon  the  estate  cannot  be  determined,  a  return 
may  be  filed  by  the  executor  setting  forth  the  then  known 
assets  of  the  estate  and  the  actual  value  thereof  as  of  date 
of  decedent's  death,  the  determined  and  allowable  deductions 
to  which  the  estate  is  entitled,  the  value  of  the  net  estate 
thus  disclosed  and  the  tax  due  thereon.  This  return  will  be 
designated  "tentative."  The  tax  shown  to  be  due  upon  the 
tentative  return  should  be  paid  and  entered  upon  the  collec- 
tor's assessment  list  for  the  month  in  which  paid. 

As  further  provided  in  Section  207  of  the  Act,  if  the  amount 
of  tax  as  finally  determined  is  less  than  the  amount  paid 
upon  the  basis  of  the  tentative  return  the  Commissioner  will, 
upon  filing  claim  on  Form  46,  make  refund  of  the  excess  pay- 
ment. If  the  amount  of  tax  as  finally  determined  exceeds 
the  amount  so  paid  the  Commissioner  will  notify  the  executor 
of  such  excess.  From  the  time  of  such  notification  to  the  time 
of  final  payment  of  such  excess  part  of  the  tax  interest  will 
be  added  thereto  at  the  rate  of  ten  per  centum  per  annum. 

EXTENSION  FOR  FILING  FINAL  RETURN. 

At  the  time  the  "tentative"  return  is  filed  an  extension 
not  to  exceed  ninety  days  may  be  granted  by  the  collector 
in  which  to  file  a  final  return.  If  at  the  expiration  of  the 
extension  granted  the  executor  represents  that  he  is  still 
unable  to  determine  the  tax  and  file  final  return  a  detailed 
statement  as  to  the  reason  preventing  the  determination  of 
the  tax  should  be  transmitted  to  the  Bureau  for  considera- 
tion as  to  whether  an  additional  extension  should  be  granted. 

In  every  case  where  a  tentative  return  is  filed  it  should  be 
plainly  so  designated  and  a  duplicate  thereof  transmitted  to 
the  Bureau  with  a  statement  by  the  collector  as  to  the  period 
of  extension  granted. 

All  regulations  and  treasury  decisions  inconsistent  with  the 
ruling  contained  herein  are  hereby  modified. 

DANIEL  C.  ROPER, 

Commissioner. 
Approved:    September  5,  1918. 

L.  S.  ROWE, 
Acting  Secretary  of  the  Treasurv. 

1323 


(T.  D.  2759.) 

Amending  Article  35,  Regulations  No.  33,  Revised,  and  Treas- 
ury Decision  2716,  by  providing  that  the  first  collecting 
bank  or  agent  shall  be  the  source  of  information  in  all 
cases  of  foreign  items  except  where  the  item  is  an  interest 
item;  that,  where  a  foreign  country  or  corporation  issuing 
the  interest -bearing  obligations  has  a  paying  agent  in  this 
country,  such  paying  agent  shall  be  the  source  of  informa- 
tion; and  that,  if  no  such  agent  has  been  appointed  then 
the  last  bank  or  collecting  agent  in  this  country  which 
handles  the  interest  item  shall  be  the  source  of  informa- 
tion. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  0. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

1.    Article  35,  regulations  No.  33,  Revised,  as  amended  by 
Treasury  Decision  2716,  is  hereby  amended  to  read  as  follows: 

Article  35.  Such  returns  of  information  shall  be  re- 
quired, regardless  of  amount,  in  the  case  of  payments  of 
interest  upon  bonds,  mortgages,  or  deeds  of  trust  or  other 
similar  obligations  of  domestic  or  resident  corporations, 
joint-stock  companies,  associations,  and  insurance  com- 
panies, and  in  the  case  of  foreign  items.  The  original 
ownership  certificates  when  duly  filed,  shall  constitute  and 
be  treated  as  returns  of  information. 

The  term  "foreign  item,"  as  used  in  this  Article,  means 
any  dividend  upon  the  stock  of  a  foreign  corporation,  or 
any  item  of  interest  upon  the  bonds  of  foreign  countries 
or  foreign  corporations,  whether  or  not  such  dividend  or 
interest  is  paid  in  the  United  States,  or  by  check  drawn 
on  a  domestic  bank.  The  term  "foreign  corporation"  as 
uged  in  this  article,  means  one  not  organized  and  existing 
under  the  laws  of  the  United  States  or  of  any  State  or 
Territory  thereof,  or  of  the  District  of  Columbia,  Porto 
Rico,  or  the  Philippine  Islands. 

Wherever  a  foreign  country  or  foreign  corporation  issu- 
ing bonds  has  appointed  a  paying  agent  in  this  country, 
charged  with  the  duty  of  paying  the  interest  upon  such 
bonds,  such  paying  agent  shall  be  the  source  of  informa- 
tion. If  such  foreign  country  or  foreign  corporation  has 
no  such  agent  then  the  last  bank  or  collecting  agent  in 
this  country  shall  be  the  source  of  information.  In  the 
case  of  dividends  on  the  stock  of  a  foreign  corporation, 
the  first  bank  or  collecting  agent  accepting  such  item  for 
collection   shall   be   the   source   of  information. 

Where  bonds  of  foreign  countries,  or  bonds  or  stocks 
of  foreign  corporations,  are  owned  by  citizens  or  resi- 
dents of  the  United  States,  individual  or  fiduciary,  or  by 
domestic  or  resident  corporations,  joint  stock  companies, 
associations,  Insurance  companies  or  partnerships,  owner- 
ship certificate  lOOlA  shall  be  executed  by  the  actual 
owner,  or  by  his  duly  authorized  agent,  when  presenting 
the  item  for  collection,  whether  such  item  is  a  dividend 
or  an  interest  payment,  except  in  the  case  of  a  foreign 
country  or  a  foreign  corporation  having  a  paying  agent  in 
this  country  and  issuing  bonds  which  contain  a  '^tax-free" 
covenant  clause.  In  such  cases  the  paying  agent  is  re- 
quired to  withhold  the  normal  tax  upon  the  interest  on 
such  bonds;  and  ownership  certificate.  Form  1000,  prop- 
erly modified  to  show  that  the  debtor  has  a  paying  agent 
in  this  country,  should  be  used,  unless  the  owner  desires 
to  claim  exemption ;  in  which  case  Form  lOOlA  should  be 
filed. 

Where  bonds  of  foreign  countries,  or  bonds  or  stocks 
of  foreign  corporations,  are  owned  by  nonresident  alien 
individuals,  or  foreign  corporations,  associations  or  part- 
nerships, ownership  certificate.  Form  1071,  Revised,  shall 

1323 


be  used  for  and  on  behalf  of  such  owners  by  any  respon- 
sible  bank  or   banker,   either  foreign   or   domestic. 

Banks  or  agents  collecting  foreign  items  are  required 
to  obtain  a  license  from  the  Commissioner  of  Internal 
Revenue  to  engage  in  such  business,  and  are  subject  to 
such  regulations  for  the  furnishing  of  Information  as  the 
Commissioner,  with  the  approval  of  the  Secretary  of  the 
Treasury,  shall  prescribe,  and  to  the  penalties  prescribed 
for  failure  to  obtain  such  license  (Act  of  September  8, 
1916,  Section  9  (f),  as  amended  by  Act  of  October  8,  1017, 
Section  120G).  A  blank  application  (Form  1017)  for  such 
license  may  be  obtained,  upon  request,  from  any  collector 
of  internal  revenue.     This  license  is  issued  without  cost. 

Foreign  items  shall  not  be  accepted  for  collection  by 
any  bank  or  collecting  agent  so  licensed  unless  endorsed 
as  hereinafter  provided  or  accompanied  by  proper  owner- 
ship certificates  (Form  1001-A,  Form  1000,  properly  modi- 
fied as  outlined  above,  or  Form  1071,  Revised,  as  the  case 
may  be),  giving  all  information  called  for  by  such  cer- 
tificate. In  all  cases  in  which  the  first  licensed  bank  or 
collecting  agent  is  the  source  of  information,  such  licensee 
shall  detach  the  ownership  certificate,  and  indorse  on  the 
item  the  words  "Certificate  detached  and  Information 
furnished,"  adding  his  name  and  address.  Where  an  in- 
terest coupon  is  received  for  collection,  the  ownership 
certificate  shall  accompany  the  coupon  to  the  paying  agent 
In  this  country,  or,  if  there  is  no  such  agent,  then  to  the 
last  bank  or  collecting  agent  handling  the  item  in  this 
country.  When  more  than  one  coupon  of  the  same  ma- 
turity is  received  at  one  time  from  the  same  owner  and 
from  the  same  issue  of  bonds,  a  single  certificate  may  be 
used  for  all  of  such  coupons.  When  foreign  items  have 
been  indorsed  as  above  prescribed,  the  certificates  shall 
be  detached  and  forwarded  to  the  Commissioner  of  In- 
ternal Revenue  (Sorting  Division),  Washington,  D.  C,  on 
or  before  the  20th  day  of  the  month  following  that  during 
which  the  items  were  accepted,  accompanied  by  a  letter 
of  transmittal,  showing  the  number  of  certificates,  and  the 
aggregate   amount    of   foreign   items    disclosed    thereon. 

In  all  cases  in  which  the  paying  agent  or  the  last  bank 
or  collecting  agent  in  this  country  is  the  source  of  in- 
formation, the  ownership  certificate  shall  accompany  the 
coupon  to  such  agent  or  source  of  Information,  who  shall 
forward  the  ownership  certificate  to  the  Commissioner 
of  Internal  Revenue,  in  the  manner  provided  where  such 
duty  is  placed  upon  the  licensee:  Provided,  however,  that, 
in  case  ownership  certificate.  Form  1000,  is  used  as  pro- 
vided above,  the  paying  agent  shall  make  return  on  Form 
1012  as  provided  in  the  Regulations. 

2.  In  order  that  these  requirements  may  be  complied  with, 
certificates  (Form  1001-A  and  Form  1071,  Revised)  will  be 
provided  by  the  Government  and  furnished  to  collectors  of 
internal  revenue  for  distribution  to  the  public.  Form  1001-A, 
as  hereby  revised,  shall  be  in  the  following  form: 

Form  1001-A  FOREIGN  ITEMS.  Names  must  be 

(Revised)  U.  S.  printed  or 

Internal  Revenue  written  plainly 

Ownership  Certificate— Tax  Not  to  Be  Paid  at  the  Source. 

(For  the  use  of  citizen  or  resident  owners  of  stock  of  all 
foreign  corporations,  and  citizen  or  resident  owners  of  bonds  of 
foreign  countries  or  foreign  corporations  not  having  a  paying 
agent  in  the  United  States.) 

Debtor  Organization.  Owner  of  Bonds  or   Stocks. 

Name   Name  

Address    Address    


(On  line  above  give  full  description  of  foreign   Item,  date  of 
dividend,  or  maturity  of  interest.) 


1324 


I    certify   that   the   owner   of  If  owner  is  an  individual,  Is 

the  bonds  or  stock  upon  which      he   married? 

the  above-described  income  ac-  jf  ^ot,   is   he  the  head   of   a 

crued  falls  within  the  class  of      family' 

persons  or  organizations  oppo-  *  rTTnM' 

site  which   such   income  is   en-  nmxTtro  «f    ^.L^i 

tered,  and  Is  entitled  to  receive  ,  O^NER.  est    dends 

the    income    reported    without       ^  ^\  ^"if^",,  °^tt  f^  i 
deduction  of  tax.  gent     of     the     United 

States,    individual    or 

fiduciary    

(Signature  of  owner  or  agent.)       * — * — 

2.  Domestic  or  resi- 
^^^^    corporation,   as- 

Address  sociation  or  partner- 
ship     

of  agent  ^ — ^ — 

Fiduciaries  must  enter  under 
"Owner  of  Bonds  or  Stocks" 
the  name  of  estate,  trust  er 
beneficiary  on  behalf  of  whom 
this  certificate  is  made. 

If  securities  art  owned  joint- 
ly by  several  persona,  one  may 
sign,  and  the  names,  addresses, 
and  proportion  of  ownership  of 
each  indorsed  on  the  back 
hereof. 


NOTE. — The  first  licensed  bank  or  collecting  a«gent  receiving 
this  certificate  is  required  to  detach  and  forward  it  to  the  Com- 
missioner of  Internal  Revenue  (Sorting  Division),  Washington, 
D.  C,  accompanied  by  a  letter  of  transmittal  showing  the  number 
of  certificates  and  the  aggregate  amount  of  foreign  items  dis- 
closed thereon ;  except  that  in  the  case  of  interest  on  bonds,  the 
coupon  accompanied  by  the  proper  ownership  certificate  shall  be 
forwarded  to  the  paying  agent  in  this  country,  if  one  has  been  ap- 
pointed, and  in  cases  where  there  is  no  such  agent  the  csrtiflcate 
shall  accompany  the  coupon  to  the  last  bank  or  collecting  a«gent 
handling  the  item  in  this  country.  The  certificate  shall  be  de- 
tached by  the  paying  agent  and  forwarded  to  the  Commissioner 
of  Internal  Revenue  with  a  letter  of  transmittal.  If  the  debtor 
has  no  paying  agent  in  this  country,  the  last  bank  or  collecting 
agent  handling  the  interest  item  shall  detach  the  certlllcate  and 
forward  same  to  the  Commissioner  of  Internal  Revenue  in  the 
same  manner  as  prescribed  in  the  case  the  first  licensed  bank  or 
collecting  agent  is  the  source.  When  the  certificate  is  detached 
by  the  first  licensed  bank  or  collecting  aigent  such  bank  or  agent 
shall  indorse  upon  the  foreign  item,  "Certificate  detached  and  in- 
formation furnished" 

(Name  and  address  of  licensee.) 

Date    


Treasury  Decision  2716,  and  other  rulings  by  this  ofTiee  in 
conflict  herewith,  are  hereby  superseded  and  repealed. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:   October  2,  1918. 

L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 

132S 


(T.  D.  2762) 

Exemption  of  Interest  on  Liberty  Bonds  Held  or  Subscribed 
for  by  Trustees,  Partnerships  and  Corporations  Under 
Supplement  to  Second  Liberty  Bond  Act — 

Treasury  Department, 

Office  cf  Comiiiissioner  of  Internal  Revenue, 

Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

Questions  have  arisen  with  regard  to  the  exemption  of  in- 
terest on  bonds  held  or  subscribed  for  by  trustees,  partner- 
ships or  corporations  under  Section  1  of  the  Supplement  to 
Second  Liberty  Bond  Act,  approved  September  24,  1918.  This 
section  is  as  follows: 

That  until  the  expiration  of  two  years  after  the  date  of 
the  termination  of  the  war  between  the  United  States  and 
the  Imperial  German  Government,  as  fixed  by  proclama- 
tion of  the  President — 

(1)  That  interest  on  an  amount  of  bonds  of  the  Fourth 
Liberty  Loan  the  principal  of  which  does  not  exceed 
$30,000,  owned  by  any  individual,  partnership,  associa- 
tion, or  corporation,  shall  be  exempt  from  graduated  addi- 
tional income  taxes,  commonly  known  as  surtaxes,  and 
excess  and  war-profits  taxes,  now  or  hereafter  Imposed 
by  the  United  States,  upon  the  income  or  profits  of  indi- 
viduals, partnerships,  associations,  or  corporations; 

(2)  The  interest  received  after  January  1,  1918,  on  an 
amount  of  bonds  of  the  First  Liberty  Loan  Converted, 
dated  either  November  15,  1917,  or  May  9,  1918,  the  Second 
Liberty  Loan,  converted  and  unconverted,  and  the  Third 
Liberty  Loan,  the  principal  of  which  does  not  exceed 
$45,000  in  the  aggregate,  owned  by  any  individual,  part- 
nership, association,  or  corporation,  shall  be  exempt  from 
such  taxes :  Provided,  however,  That  no  owner  of  such 
bonds  shall  be  entitled  to  such  exemption  In  respect  to 
the  interest  on  an  aggregate  principal  amount  of  such 
bonds  exceeding  one  and  one-half  times  the  principal 
amount  of  bonds  of  the  Fourth  Liberty  Loan  originally 
subscribed  for  by  such  owner  and  still  owned  by  him  at 
the  date  of  his  tax  return ;  and 

(3)  The  Interest  on  an  amount  of  bonds,  the  principal 
of  which  does  not  exceed  $30,000,  owned  by  any  indi- 
vidual, partnership,  association,  or  corporation,  Issued 
upon  conversion  of  3%  per  centum  bonds  of  the  First 
Liberty  Loan  in  the  exercise  of  any  privilege  arising  as 
a  consequence  of  the  issue  of  bonds  of  the  Fourth  Liberty 
Loan,  shall   be  exempt  from  such   taxes. 

The  exemption  provided  in  this  section  shall  be  In  addi- 
tion to  the  exemption  provided  in  section  7  of  the  Second 
Liberty  Bond  Act  In  respect  to  the  Interest  on  an  amount 
of  bonds  and  certificates,  authorized  by  siich  Act  and 
amendments  thereto,  the  principal  of  which  does  not  ex- 
ceed In  the  aggregate  $5,000,  and  in  addition  to  all  other 
exemptions  provided  In  the  Second  Liberty  Bond  Act. 

The  exemptions  authorized  by  subdivisions  1  and  3  of  thif 
Section  are  conferred  by  reason  of  the  ownership  of  bond 
therein  referred  to,  while  the  exemption  authorized  by  sub- 
division 2  is  a  collateral  exemption  conferred  upon  the  bonds 
therein  referred  to  by  reason  of  the  original  subscription  for 
and  continued  holding  of  Fourth  Liberty  Loan  Bonds. 

(1)  Trusts. — When  income  as  such  is  taxable  to  bene- 
ficiaries, as  in  the  case,  under  the  present  income  tax  law, 
of  a  trust  the  income  of  which  is  to  be  distributed  annually 
or  regularly  between  existing  beneficiaries,  each  beneficiary 
is  regarded  as  the  owner  of  a  proportionate  part  of  the  bonds 
held  in  trust  and  is  entitled  to  exemption  on  account  of  such 
ownership  as  if  he  owned  such  proportionate  part  of  the  bonds 

1326 


directly.  In  such  a  case  a  subscription  by  a  trustee  for  bonds 
of  the  Fourth  Liberty  Loan  constitutes  each  beneficiary  exist- 
ing at  the  time  of  such  subscription  an  original  subscriber 
for  his  proportionate  part  of  such  bonds  and  entitles  such 
beneficiary,  to  the  collateral  exemption  of  interest  on  bonds  of 
previous  issues,  whether  owned  by  such  beneficiary  or  by  the 
trustee,  as  if  the  beneficiary  had  himself  originally  sub«cribed 
for  such  proportionate  part  of  the  bonds,  and  a  subscription 
by  such  beneficiary  for  bonds  of  the  Fourth  Liberty  Loan 
entitles  him  to  the  collateral  exemption  of  interest  on  bonds 
of  previous  issues  held  by  the  trustees.  When  income  is  tax- 
able to  the  trustee,  as  in  the  case,  under  the  present  income 
tax  law,  of  a  trust  the  income  of  which  is  accumulated  for 
the  benefit  of  unborn  or  unascertained  persons,  the  trustee  is 
regarded  as  the  owner  of  all  the  bonds  held  in  trust  and  the 
trust  is  entitled  to  exemption  on  account  of  such  ownership. 
In  such  a  case  a  subscription  by  a  trustee  constitutes  the 
trustee  as  such  the  original  subscriber  and  entitled  the  trust, 
on  account  of  such  subscription,  to  the  collateral  exemption 
of  interest  on  bonds  of  previous  issues. 

(2)  Partnerships. — ^When  income  of  a  partnership  is  taxable 
to  the  individual  partners,  as  under  the  present  income  tax 
law,  each  partner  is  treated  as  the  owner  of  a  proportionate 
part  of  the  bonds  held  by  the  partnership  and  entitled  to 
exemption  on  account  of  such  ownership  as  if  such  partner 
owned  such  proportionate  part  of  the  bonds  directly.  When 
the  income  of  a  partnership  is  taxable  to  the  partnership  as 
such,  as  under  the  present  excess  profits  tax  law,  the  partner- 
ship is  treated  as  the  owner  of  the  bonds  held  by  it  and 
entitled  to  exemption  from  taxes  assessed  upon  the  income 
of  the  partnership  as  such.  With  reference  to  a  tax  assessed 
upon  an  individual  partner  on  his  share  of  the  partnership 
income  such  partner,  if  a  partner  at  the  time  of  the  original 
subscription  by  the  partnership  for  bonds  of  the  Fourth 
Liberty  Loan,  is  treated  as  an  original  subscriber  for  a  pro- 
portionate part  of  such  bonds  subscribed  for  by  the  partner- 
ship and  as  entitled  to  the  collateral  exemption  of  interest 
on  bonds  of  previous  issues  on  account  of  such  original  sub- 
scription for  bonds  of  the  Fourth  Liberty  Loan,  as  if  he  had 
subscribed  directly  for  such  proportionate  part  of  the  bonds. 
With  reference  to  a  tax  assessed  to  the  partnership  upon  the 
partnership  income  as  a  whole  such  partnership  is  the  original 
subscriber  and  entitled  to  the  collateral  exemption  of  interest 
on  bonds  of  previous  issues  on  account  of  such  original  sub- 
scription for  bonds  of  the  Fourth  Liberty  Loan. 

(3)  Corporations. — Income  of  a  corporation  as  such  is  tax- 
able to  the  corporation  and  is  not  taxable  to  the  stockholders. 
The  corporation,  and  not  the  stockholders,  is  regarded  as  the 
owner  of  the  bonds  held  by  the  corporation  and  entitled  to 
exemption  on  account  of  such  ownership.  When  bonds  of 
the  Fourth  Liberty  Loan  are  subscribed  for  by  the  corpora- 
tion it,  and  not  the  stockholders,  is  the  original  subscriber 
and  entitled  to  the  collateral  exemption  of  interest  on  bonds 
of  previous  issues  on  account  of  such  original  subscription. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:    October  18,  1918. 
P.  0.  LEFFINGWELL, 
Acting  Secretary  of  the  Treasury. 

1337 


(T.  D.  2763) 

Tax  on  Undistributed  Net  Income  of  Corporations,  Joint- 
Stock  Companies  and  Associations,  and  Insurance  Com- 
panies— 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned : 

The  following  rulings  with  respect  to  the  tax  on  undis- 
tributed income  imposed  by  Section  10(b)  added  to  Title  I  of 
the  Revenue  Act  of  September  8,  1916,  by  Section  1206  of 
Title  Xn  of  the  War  Revenue  Act  of  October  3,  1917,  are 
additional  to  the  rulings  contained  in  Treasury  Decision  2736. 

1.  Undistributed  Net  Income  Subject  to  Tax. — In  determin- 
ing the  amount  of  net  income  of  the  taxable  year  "remaining 
undistributed"  six  months  after  its  close,  and  not  "invested 
and  employed  in  the  business,"  there  may  in  general  be 
subtracted  the  amount  of  any  interest  paid  by  the  corporation 
but  not  allowed  to  be  deducted  for  income  tax  purposes,  and 
also  the  amount  of  contributions  properly  made  for  charitable 
or  war  purposes. 

2.  Use  of  Balance  Sheets  to  Show  Employment  of  Undis- 
tributed Net  Income. — A  corporation  unable  to  show  by  tracing 
into  particular  assets  or  into  the  decrease  of  particular  liabili- 
ties, the  employment  of  undistributed  net  income  in  the 
business,  is  permitted  to  claim  a  benefit  of  what  may  be 
shown  by  a  balance  sheet  for  the  date  of  the  expiration 
of  six  months  after  the  taxable  year,  or  by  a  comparative 
balance  sheet  as  indicated  below. 

Thus,  if  the  balance  sheet  for  the  date  of  the  expiration 
of  the  six  months  period  shows  that  the  entire  surplus  and 
undivided  profits  of  the  corporation  are  represented  by  assets 
pertaining  directly  to  the  business,  such  as  plant,  equipment, 
inventories  and  accounts  receivable,  with  only  such  amount 
represented  by  cash  and  by  salable  securities  as  is  reasonably 
necessary  for  working  capital  or  other  established  business 
requirements,  the  inference  would  seem  warranted  that  the 
undistributed  net  income  for  the  taxable  year  has  been 
employed  either  for  an  increase  in  assets  needed  for  the 
business  or  for  a  reduction  of  the  business  liabilities. 

It  is  therefore  suggested  that  corporations  unable  to  estab- 
lish through  tracing  into  particular  assets  or  into  the  decrease 
of  particular  liabilities  the  use  of  undistributed  net  income 
for  employment  in  the  business,  may  submit  a  comparative 
balance  sheet  showing  in  reasonable  detail  the  assets  and 
liabilities  of  the  corporation  as  at  the  opening  and  the  close 
of  the  taxable  year  and  as  at  the  close  of  the  six  months 
period. 

3.  Net  Income  of  a  Corporation  During  the  Six  Months 
Period. — If  resort  is  made  to  the  balance  sheet  in  the  effort 
to  show  the  employment  in  the  business  of  all  undistributed 
net  income  of  the  taxable  year  or  its  retention  for  the  reason- 
able requirements  of  the  business,  the  net  income  for  the 
six  months  after  the  taxable  year  is  necessarily  to  be  taken 
into  account  and  it  must  be  shown  that  the  undistributed 
net  income  of  the  taxable  year  as  well  as  the  undistributed 
net  income  of  the  six  months  is  so  employed  or  retained. 

1328 


4.  Distribution  of  Current  Earnings  Designated  for  Particu- 
lar Investments.— Paragraph  12  of  T.  D.  2736  referring  to  the 
statement  that  corporations  may  designate  from  what  earn- 
ings an  investment  is  made  is  not  to  be  taken  as  in  any 
manner  altering  the  rule  relative  to  the  order  in  which 
earnings  are  to  be  treated  and  distributed  as  dividends  under 
the  provisions  of  Section  31(b)  of  the  Act  of  September  8, 
1916,  added  by  Section  1210  of  the  Act  of  October  3,  1917. 
It  is  there  specified  that  any  distribution  made  to  shareholders 
shall  be  deemed  to  have  been  made  from  the  most  recently 
accumulated  undivided  profits  or  surplus.  The  application  of 
this  provision  is  dealt  with  in  T.  D.  2659  and  T.  D.  2768. 
While  a  corporation  retains  profits  without  distribution  of 
dividends,  it  may  retain  them  in  such  form  as  it  may  elect, 
but  when  it  makes  any  distribution  of  dividends  the  distri- 
bution must  be  treated  as  made  from  the  most  recent  profits 
or  surplus  regardless  of  any  previous  designation  of  any 
portion  of  such  earnings  for  investment  purposes.  The  desig- 
nation of  an  investment  in  obligations  of  the  United  States 
issued  subsequent  to  September  1,  1917,  may  serve  to  prevent 
the  application  of  the  additional  tax  of  ten  per  cent  to  the 
amount  so  invested,  but  it  does  not  warrant  the  disregarding 
of  the  amount  of  net  income  for  the  taxable  year  so  invested 
in  determining  the  profits  or  surplus  from  which  any  dividends 
may  be  distributed. 

DAKIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:    October  21,  1918. 
W.  G.  McADOO, 

Secretary  of  the  Treasury. 


(T.  D.  2770.) 

The  time  of  notification  to  an  executor  of  the  amount  of 
"excess"  estate  tax  due  is  the  date  on  which  notice 
thereof  is  received  by  the  executor. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

Section  207  of  the  Estate  Tax  Law,  Title  II  of  the  Act  of 
September  8,  1916,  provides  in  part  as  follows: 

"That  the  executor  shall  pay  the  tax  to  the  collector  or 
deputy  collector.  If  for  any  reason  the  amount  of  the 
tax  cannot  be  determined,  the  payment  of  a  sum  of  money 
sufficient,  in  the  opinion  of  the  collector,  to  discharge  the 
tax  shall  be  deemed  payment  in  full  of  the  tax,  except  " 
as  in  this  section  otherwise  provided.  If  the  amount  so 
paid  exceeds  the  amount  of  the  tax  as  finally  determined, 
the  Commissioner  of  Internal  Revenue  shall  refund  such 
excess  to  the  executor.  If  the  amount  of  the  tax  as 
finally  determined  exceeds  the  amount  so  paid  the  Com- 
missioner shall  notify  the  executor  of  the  amount  of  such 
excess.  From  the  time  of  such  notification  to  the  time 
of  the  final  payment  of  such  excess  part  of  the  tax,  in- 
terest shall  be  added  thereto  at  the  rate  of  ten  per  centum 
per  annum,  and  the  amount  of  such  excess  shall  be  a 
lien  upon  the  entire  pross  estate,  except  such  part  thereof 
as  may  have  been  sold  to  a  bona  fide  purchaser  for  a  fair 
consideration  in   money  or  money's  worth." 

1329 


The  question  has  arisen  under  this  section  as  to  what  is 
the  "time  of  such  notification"  from  which  interest  is  to  be 
computed.  The  "time  of  such  notification"  is  the  date  on 
which  notice  of  the  amount  of  such  "excess  part  of  the  tax" 
ia  received  by  the  executor,  whether  such  notice  is  given  by 
mail  or  otherwise. 

All  regulations  and  rulings  inconsistent  herewith  are  modi- 
fied accordingly. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:    November  6,  1918. 
L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 


(T.  D.  2771.) 


Conditions  under  which  taxes  on  real  and  personal  prop- 
erty, and  on  income,  are  deductible  in  computing  the  net 
estate  of  a  decedent  for  purposes  of  taxation  under  Title 
II  of  the  Act  of  September  8,  1916. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

To  Collectors  of  Internal  Revenue,  Internal  Revenue  Agents 
and  Others  Concerned: 

The  Eitate  Tax  Law  (Act  of  September  8,  1916,  Section 
203a)  permits  the  deduction  of  "administration  expenses," 
"clairoa  against  the  estate"  and  "charges  against  the  estate," 
in  determining  the  value  of  the  net  estate.  Where  the  State 
sts.tus  makes  the  tax  a  lien  against  property,  it  is  deductible 
ao  a  "charge  against  the  estate."  Where  it  is  a  personal 
obligation  of  the  taxpayer,  it  is  deductible  as  a  "claim  against 
the  estate."  Taxes  are  never  deductible  as  "administration 
expenses." 

In  certain  jurisdictions  taxes,  upon  both  real  and  personal 
property,  are  assessed  prior  to  the  expiration  of  the  period 
for  which  the  tax  is  laid;  payment  is  not  required  until  a 
date  subsequent  to  the  assessment;  and  the  tax  liability  is 
created  as  of  a  date  prior  to  the  performance  by  the  tax 
officers  of  all  of  their  duties,  such  as  determining  the  exact 
amount  to  be  assessed  to  the  taxpayer,  and  giving  him  notice 
of  the  tax.  The  rule  for  determining  deductibility,  in  these 
and  other  cases,  is  as  follows:  If  the  tax  liability  is  created 
as  of  a  date  in  the  lifetime  of  the  decedent,  the  whole  tax 
is  deductible,  although  the  entire  period  for  which  the  tax  is 
laid  has  not  elapsed,  its  exact  amount  is  not  then  ascertain- 
able, and  payment  is  not  required  until  a  later  date.  On  the 
other  hand,  if  the  tax  liability  is  created  as  of  a  date  subse- 
quent to  the  decedent's  death,  no  part  of  it  is  deductible, 
although  part  of  the  period  for  which  the  tax  is  laid  elapsed 
in  the  decedent's  lifetime. 

The  foregoing  rules  also  apply  to  taxes  on  income,  whether 
imposed  by  State  statute  or  Act  of  Congress.  Where  the 
statute  creates  either  a  lien  or  personal  obligation,  as  of  a 
date  in  the  decedent's  lifetime,  the  tax  is  deductible.  Where 
the  lien  or  obligation  is  created  as  of  a  date  subsequent  to  the 
decedent's  death,  the  tax  is  not  deductible. 

1330 


The  Income  and  Excess  Profits  Taxes  imposed  by  the  Acts 
of  September  8,  1916,  and  October  3,  1917,  constitute  personal 
obligations  of  the  taxpayer,  and  are  deductible  in  accordance 
with  these  rules.  All  unpaid  taxes  for  years  prior  to  that  in 
which  the  decedent  died  are  deductible.  For  the  year  in  which 
the  decedent  died,  the  tax  upon  income  up  to  the  date  of  death 
is  deductible. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:    November  8,  1918. 
L.  S.  ROWE, 

Acting  Secretary  of  the  Treasury. 


(T.  D.  2772.) 


Securities  such  as  shares  of  stock  in  domestic  corporations 
which  are  property  within  the  United  States  within  the 
meaning  of  Section  202,  Title  II  of  the  Act  of  September 
8,  1916,  belonging  to  a  non-resident  decedent  and  de- 
posited with  the  British  Treasury,  for  which  certificates 
of  deposit  were  issued,  are  subject  to  estate  tax  on  the 
death  of  such  non-resident  decedent  if  the  certificates 
have  not  previously  been  transferred. 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

To  Collectors  of  Internal  Revenue,  Internal  Revenue  Agents 
and  Others  Concerned: 

Estate  tax  is  imposed  by  Title  II  of  the  Act  of  September 
8,  1916,  upon  all  property  of  a  non-resident  decedent  situated 
in  the  United  States.  (See  Sections  201,  202,  203,  205.  Sec- 
tion 202  provides  that  "for  the  purposes  of  this  title,  stock 
in  a  domestic  corporation  owned  and  held  by  a  non-resident 
decedent  shall  be  deemed  property  within  the  United  States." 
The  question  has  been  considered  whether  if  such  stock  in  a 
domestic  corporation,  or  other  security  which  if  owned  by  a 
non-resident  decedent  would  be  property  within  the  United 
States,  is  deposited  with  the  British  Treasury  and  a  certificate 
of  deposit  is  issued  therefor  such  stock  or  other  property  is 
upon  the  death  of  the  certificate  holder  a  part  of  his  gross 
estate  and  subject  to  estate  tax. 

The  holder  of  the  certificate  of  deposit  is  the  beneficial 
owner  of  the  stock  or  other  property  for  which  such  certifi- 
cate is  issued.  The  relation  of  the  British  government  to  a 
certificate  holder  is  substantially,  if  not  technically,  that  of  a 
trustee  to  a  beneficiary.  Upon  the  death  of  the  beneficiary 
of  a  trust  a  transfer  subject  to  estate  tax  takes  place  with 
reference  to  property  within  the  United  States  held  upon  trust 
for  such  beneficiary.  This  is  true  even  though  the  equitable 
title  to  such  stock  passes  without  the  recording  of  the  trans- 
fer upon  the  books  of  the  corporation.  For  the  purpose  of 
the  estate  tax  no  distinction  is  to  be  taken  between  the  rights 
of  a  deceased  certificate  holder  and  the  rights  of  a  deceased 
beneficiary  of  a  trust  of  which  an  individual  or  corporation 
is  trustee. 

It  is  held,  therefore,  that  securities  such  as  shares  of  stock 

1331 


in  domestic  corporations  which  are  property  within  the  United 
States  within  the  meaning  of  Title  II  of  the  Act  of  September 
8,  1916,  deposited  by  an  individual  not  resident  within  the 
United  States  with  the  British  Treasuiy,  and  for  which  cer- 
tificates of  deposit  were  issued,  are  at  the  death  of  such  non- 
resident, if  such  certificates  have  not  been  transferred,  a  part 
of  his  gross  estate  and  subject  to  estate  tax. 

DANIEL  C.  ROPER, 
Commissions  of  Int«mal  R«v«nua. 

Approved:    November  8,  1918. 

L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 


(T.  D.  2773.) 

Special  Excise  Tax  on  Corporations — Decision  of  Court. 

A  steamship  company  is  entitled  to  deduct  from  gross 
income  in  annual  tax  returns  required  by  action  88  of 
the  act  of  Aujust  5,  1909  (36  Stat.,  118),  amounts  paid 
out  for  ordinary  and  nectssary  repairs  in  the  maintenance 
and  operation  of  its  business  and  property  and  in  addition 
a  reasonable  allowance  for  depreciation  of  property,  if  any 

Treasury  Department, 

Office  of  Commissioner  of  Internal  Revenue, 

Washington,  D.  C. 

The  appended  decision  of  the  United  States  District  Court 
for  the  Southern  District  of  the  Northern  Division  of  Cali- 
fornia, in  the  case  of  the  San  Francisco  &  Portland  Steamship 
Co.  vs.  John  J.  Scott,  collector,  is  published  for  the  informa- 
tion of  internal  revenue  officers  and  others  concerned. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:   November  8,  1918. 

L.  S.  ROWE, 
Acting  Secretary  of  the  Treasury. 

In  the  District  Court  of  the  United  States  for  the  Southern 

Division   of  the   Northern   District  of   California,    Second 

Division.     No.  15,782. 
The   San  Francisco  &  Portland  Steamship  Co.,  plaintiff,  vs. 

John   J.    Scott,    collector    of   internal   revenue,   etc.,    and 

August  F.  Muenter,  defendants. 
(Memorandum  by  Bean,  District  Judge,  sitting  by  special 
assignment.) 

This  action  is  to  recover  certain  amounts  paid  by  the  plain- 
tiff under  protect  as  excise  taxes  levied  under  the  act  of 
Congress  August  5,  1909,  section  38  (36  Stat.  L.,  112)  for  the 
years  1910  and  1912. 

In  its  returns  plaintiff  included  in  its  deductions  for  ordi- 
nary and  necessary  expen.ses  paid  out  for  the  maintenance 
and  operation  of  its  business  and  property,  for  the  year  1910, 
$17,088.77  and  for  the  year  1912,   $25,371.40,   being  amounts 

1332 


•xpended  in  each  of  such  yearg  for  making  "ordinary  and 
necessary"  repairs  to  the  deck  department,  engine  department, 
and  commissary  department  of  its  steamers,  and  also 
$59,642.11  for  1910,  and  $79,350.96  for  1913  for  depreciation 
of  such  steamers,  being  5  per  cent,  of  the  book  value  thereof. 

It  is  admitted  that  the  deductions  for  depreciation  are  rea- 
sonable and  should  be  allowed,  but  the  commissioner  ruled 
that  the  cost  of  making  ordinary  and  necessary  repairs  was 
not  a  proper  item  to  be  included  in  the  operation  and  main- 
tenance expenses  but  was  covered  by  the  deductions  for  de- 
preciation and  required  plaintiff  to  pay  taxes  thereon,  which 
it  did  under  protest  and  hence  this  suit. 

The  question  thus  raised  does  not  seem  to  have  been  directly 
decided  in  any  reported  case  to  which  my  attention  has  been 
called  or  which  I  have  been  able  to  find,  although  the  cost 
of  repairs  and  upkeep  was  assumed  in  Grand  Rapids  and 
Indiana  Railway  vs.  Doyle  (245  Fed.,  792)  to  be  an  item  prop- 
erly included  in  operating  and  maintenance  expense. 

Under  the  law  the  tax  is  to  be  laid  on  net  income  and  such 
net  income  is  to  be  ascertained  by  deducting  from  the  gross 
income  (1)  all  the  ordinary  and  necessary  expenses  actually 
paid  within  the  year  out  of  income  in  the  "maintenance  and 
operation"  of  the  business  and  property;  (2)  losses  actually 
suffered  not  covered  by  insurance,  including  a  reasonaoie 
allowance  for  depreciation,  if  any.       «       »       * 

It  will  thus  be  seen  that  the  deductions  allowed  are  to 
include  not  only  ordinary  and  necessary  amounts  actually  paid 
out  in  the  operations  of  the  property  but  also  the  amounts 
paid  out  in  the  maintenance  thereof,  and  in  addition  a  rea- 
sonable sum  for  depreciation,  if  any.  Now,  th?  operation  of 
a  business  or  property  includes  payment  for  labor  and  ma- 
terials which  go  into  the  actual  operation  thereof,  while  main- 
tenance means  the  upkeep  or  preserving  the  condition  of  the 
property  to  be  operated  and  therefore,  in  my  judgment,  in- 
cludes the  cost  ordinary  repairs  necessary  and  proper  from 
time  to  time  for  that  purpose.  Depreciation  as  used  in  the 
statute  is  not  to  be  confused  with  ordinary  repairs.  It  is 
intended  to  cover  the  estimated  lessening  in  value  of  the  orig- 
inal property,  if  any,  due  to  wear  and  tear,  decay,  or  gradual 
decline  from  natural  causes,  inadequacy,  obsolescence,  etc., 
which  at  some  time  in  the  future  will  require  the  abandon- 
ment or  replacement  of  the  property  in  spite  of  ordinary  cur- 
rent repairs. 

It  follows  that  the  tax  complained  of  was  illegally  exacted 
and  the  plaintiff  is  entitled  to  judgment  for  its  recovery. 
Findings  may  be  prepared  accordingly. 


(T.  D.  2778.) 


Instructions  relative  to  acceptance  of  certificates  of  indebted- 
ness for  income  and  profits  taxes — 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

To  Collectors  of  Internal  Revenue  and  Others  Concerned: 

Collectors  of  Internal  Revenue  are  directed  to  receive  at  par 
United  States  Treasury  certificates  of  indebtedness  of  the 
Tax  Series  of  1919,  dated  August  20,  1918,  and  maturing  July 

1333 


15,  1919,  and  of  Series  T,  dated  November  7,  1918,  and  matur- 
ing March  15,  1919,  in  payment  of  income  and  profits  taxes 
when  payable  at  or  before  the  maturity  of  the  certificates. 
The  amount,  at  par,  of  the  Treasury  certificates  of  indebted- 
ness presented  by  any  taxpayer  in*  payment  of  income  and 
profits  taxes  must  not  exceed  the  amount  of  the  taxes  to  be 
paid  by  him.  Deposits  of  certificates  of  indebtedness  must  be 
made  by  collectors  with  the  Federal  Reserve  Banks  of  the 
districts  in  which  the  respective  collectors'  offices  are  located. 
Such  certificates  of  indebtedness  may  be  accepted  by  the  col- 
lector prior  to  the  date  the  tax  is  due  and  in  that  case  should 
be  forwarded  by  the  collector  to  the  Federal  Reserve  Bank 
to  be  held  for  account  of  the  collector  until  the  date  the  tax 
is  due  and  for  deposit  on  such  date.  Certificates  of  indebted- 
ness should  be  stamped  as  follows  by  the  collector  and  when 
so  stamped  transmitted  to  the  Federal  Reserve  Bank  by  reg- 
istered mail  uninsured: 

,    191—. 

This  certificate  has  been  accepted  in  payment  of  income  and 
profits  taxes  and  will  not  be  redeemed  by  the  United  States 
except  for  credit  of  the  undersigned. 


Collector  of  Internal  Revenue 

for  the district  of 

Each  unmatured  coupon  attached  to  each  such  certificate  ot 
indebtedness  must  be  stamped  across  the  face  by  the  collector 
as  follows:   "Paid." 

All  coupons  maturing  on  or  before  the  date  the  tax  is  due 
must  be  detached  by  the  taxpayer  and  collected  in  ordinary 
course;  but  all  other  coupons  must  be  attached  to  the  certifi- 
cates and  forwarded  to  the  Federal  Reserve  Bank.  Any 
accrued  interest  to  the  date  the  tax  is  due  not  covered  by 
coupons  detached  as  above  provided  will  be  remitted  to  the 
taxpayer  by  the  Federal  Reserve  Bank  by  check  and  the  col- 
lector must  furnish  to  the  Federal  Reserve  Bank  the 
name  and  address  of  the  taxpayer,  the  amount  and  serial 
numbers  of  the  certificates  presented  in  each  case,  the  date  of 
issue  of  the  certificates,  and  the  date  the  tax  was  due.  Col- 
lectors shall  in  no  case  pay  interest  on  such  certificates  nor 
accept  them  for  an  amount  other  or  gi-eater  than  their  face 
value.  Receipts  given  by  collectors  to  taxpayers  should  show 
the  amount  of  certificates  of  each  series  received  in  payment 
of  taxes. 

The  collectors  should  make  in  tabular  form  a  schedule  in 
duplicate  of  the  certificates  of  indebtedness  to  be  sent  to  the 
Federal  Reserve  Bank,  showing  the  serial  number  of  each  cer- 
tificate, date  of  issue,  and  face  value.  Certificates  of  indebted- 
ness accepted  prior  to  the  date  the  tax  is  due  must  be  sched- 
uled separately,  and  such  date  must  appear  on  the  schedule. 
At  the  bottom  of  the  schedule  there  should  be   written  or 

stamped   "Income   and   Profits   Taxes   $ ,"    which    must 

agree  with  the  total  shown  on  the  schedule.  Such  income  and 
profits  tax  deposits  must  in  all  cases  be  shown  on  the  face  of 
the  certificate  of  deposit  (National  Bank  Form  15),  separate 
and  distinct  from  the  item  of  miscellaneous  internal  revenue 
collections  (formerly  called  Ordinary),  but  it  is  not  necessary 
to  give  the  separation  into  corporation  income,  individual  in- 
come and  profits  taxes.  One  copy  of  this  schedule  must  ac- 
company the  certificates  sent  to  the  Federal  Reserve  Bank, 
and  the  other  be  retained  by  the  collector. 

1334 


Until  certificates  of  deposit  are  received  from  the  Federal 
Reserve  Banks,  the  amounts  must  be  carried  as  cash  on  hand, 
and  not  credited  as  collections,  as  the  dates  of  certificates  of 
deposit  determine  the  dates  of  collections. 

For  the  purpose  of  saving  taxpayers  the  expense  of  trans- 
mitting such  certificates  as  are  held  in  Federal  Reserve  cities 
to  the  off"ice  of  the  collector  in  whose  district  the  taxes  are 
payable,  taxpayers  desiring  to  pay  income  and  profits  taxes 
by  Treasury  certificates  of  indebtedness  acceptable  in  payment 
of  such  taxes,  should  communicate  with  the  collector  of  the 
district  in  which  the  taxes  are  payable  and  request  from  him 
authority  to  deposit  such  certificates  with  the  Federal  Re- 
serve Bank  in  the  city  in  which  the  certificates  are  held. 

Collectors  are  authorized  to  permit  deposits  of  Treasury  cer- 
tificates of  indebtedness  in  any  Federal  Reserve  Bank  with  the 
distinct  imderstanding  that  the  Federal  Reserve  Bank  is  to 
issue  a  certificate  of  deposit  in  the  collector's  name  covering 
the  amount  of  the  certificates  of  indebtedness  at  par  and  to 
state  on  the  face  of  the  certificate  of  deposit  that  the  amount 
represented  thereby  is  in  payment  of  income  and  profits  taxes. 
The  Federal  Reserve  Bank  should  forward  the  original  certifi- 
cate of  deposit  to  the  Treasurer  of  the  United  States,  with  its 
daily  transcript,  and  transmit  to  the  collector  the  duplicate 
and  triplicate,  accompanied  by  a  statement  giving  the  name 
of  the  taxpayer  for  whom  the  payment  is  made  in  order  that 
the  collector  may  make  the  necessary  record  and  forward  the 
duplicate  to  this  oflfice. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:  December  11,  1918. 

W.  G.  McADOO, 
Secretary  of  the  Treasury. 


(T.  D.  2783) 

INCOME  TAX  ACT  OF  OCTOBER  3,  1913— DECISION  OF 
THE  SUPREME  COURT. 

1.  Taxability  of  Dividends  from  Subsidiary  Corporations. 
Where  a  holding  company  owns  all  the  stock  of  its  subsidi- 
ary corporations  except  the  qualifying  shares  of  the  directors, 
and  the  subsidiary  corporations  together  with  the  holding 
company  constitute  a  single  enterprise,  the  accumulated  earn- 
ings and  surplus  of  the  subsidiary  corporations  used  by  them 
as  capital  prior  to  January  1,  1913,  do  not  become  taxable 
income  of  the  holding  company  when  formally  transferred  to 
it  as  dividends. 

2.  Effect  of  the  Decision. 

Though  the  holding  company  did  not  itself  do  the  business 
of  its  subsidiaries  and  have  possession  of  their  property  as 
in  the  Southern  Pacific  Company  v.  Lowe  (247  U.  S.  330) 
(T.  D.  2730),  the  principle  of  that  case  governs. 

3.  Judgment  Reversed. 

The  judgment  of  the  Circuit  Court  of  Appeals  (245  Fed.  1) 
(T.  D.  2542)  is  reversed. 

1335 


Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C. 

The  appended  decision  of  the  United  States  Supreme  Court 
in  the  case  of  the  Gulf  Oil  Corporation,  petitioner,  v.  C.  G. 
Lewellyn,  Collector  of  Internal  Revenue  for  the  23rd  District 
of  Pennsylvania,  is  published  for  the  information  of  Internal 
Reyenue  officers  and  others  concerned. 

DANIEL  C.  ROPER, 
Commissioner  of  Internal  Revenue. 

Approved:    January  7,  1919. 
CARTER  GLASS, 

Secretary  of  the  Treasury. 


SUPREME  COURT   OF  THE  UNITED   STATES. 
No.   310— October   Term,    1918. 


On  Writ  of  Certiorari  to  the 
United  States  Circuit  Court 
of  Appeals  for  the  Third 
Circuit. 


Gulf  Oil   Corporation,   Petitioner, 
vs. 

C.  G.  Lewellyn,  Collector  of  In- 
ternal Revenue  for  the  Twenty- 
third  District  of  Pennsylvania. 

(December   9,    1918.) 

Mr.  Justice  HOLMES  delivered  the  opinion  of  the  Court. 

This  is  a  suit  to  recover  a  tax  levied  upon  certain  dividends 
as  income,  under  the  Act  of  October  3,  1913,  c.  16,  Section  II  38 
Stat.  114,  166.  The  District  Court  gave  judgment  for  the  plaintiff, 
242  Fed.  Rep.  709,  but  this  judgment  was  reversed  by  the  Circuit 
Court  of  Appeals.     245  Fed.  Rep.  1,  158.     C.  C.  A.  1. 

The  facts  may  be  abridged  from  the  findings  below  as  follows. 
The  petitioner  was  a  holding  company  owning  all  the  stock  in 
the  other  corporations  concerned  except  the  qualifying  shares  held 
by  directors.  These  companies  with  others  constituted  a  single 
enterprise,  carried  on  by  the  petitioner,  of  producing,  buying, 
transporting,  refining  and  selling  oil.  The  subsidiary  companies 
had  retained  their  earnings,  although  making  some  loans  inter  se, 
and  all  their  funds  were  invested  in  properties  or  actually 
required  to  carry  on  the  business,  so  that  the  debtor  companies 
had  no  money  available  to  pay  their  debts.    In  January,  1913,  the 

f)etitioner  decided  to  take  over  the  previously  accumulated  earn- 
ngs  and  surplus  and  did  so  in  that  year  by  votes  of  the  com- 
panies that  it  controlled.  B\jt,  disregarding  the  forms  gone 
through,  the  result  was  merely  that  the  petitioner  became  the 
holder  of  the  debts  previously  due  from  one  of  its  companies 
to  another.  It  was  no  richer  than  before,  but  its  property 
now  was  represented  by  stock  in  and  debts  due  from  its  sub- 
sidiaries, whereas  formerly  it  was  represented  by  the  stock 
alone,  the  change  being  effected  by  entries  upon  the  respective 
companies'  books.  The  earnings  thus  transferred  had  been 
accumulated  and  had  been  used  as  capital  before  the  taxing  year. 
Lynch  v.  Turrish,  247  U.  S.  221,  228. 

We  are  of  opinion  that  the  decision  of  the  District  Court  was 
right.  It  is  true  that  the  petitioner  and  its  subsidiaries  were 
distinct  beings  in  contemplation  of  law,  but  the  facts  that  they 
w^ere  related  as  parts  of  one  enterprise,  all  owned  by  the 
petitioner,  that  the  debts  were  all  enterprise  debts  due  to 
members,  and  that  the  dividends  represented  earnings  that  had 
been  made  in  former  years  and  that  practically  had  been  con- 
verted into  capital,  unite  to  convince  us  that  the  transaction 
should  be  regarded  as  bookkeeping  rather  than  as  "dividends 
declared  and  paid  in  the  ordinary  course  by  a  corporation." 
Lynch  v.  Hornby,  247  U.  S.  339,  346.  The  petitioner  did  not 
Itself  do  the  business  of  its  subsidiaries  and  have  possession 
of  their  property  as  in  Southern  Pacific  Co.  v.  Lowe,  247  U,  S.  330, 
but  the  principle  ot  that  case  must  be  taken  to  cover  this.  By 
Section  II,  G,  (c),  38  Stat.  174,  and  S.  id.  202,  the  tax  from 
January  1  to  February  28,  1913,  is  levied  as  a  special  excise 
tax,  but  in  view  of  our  decision  that  the  dividends  here  con- 
cerned were  not  Income  it  is  unnecessarv  to  discuss  the  further 
question  that  has  been  raised  under  the  latter  clause  as  to  the 
effect  of  the  fact  that  excise  taxes  upon  the  subsidiary  corpora- 
tions had   been   paid. 

Judgment  reversed. 
Clerk  Supreme  Court,  U.  S. 
A  true  copy. 
Test: 

1336 


(I.  T.— CIS.  Mim.  1795.) 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  February  26,  1918. 

To  Collectors  of  Internal  Revenue: 

In  order  to  complete  claim*  for  the  refunding  of  income  tax 
collected  under  the  Act  of  October  S,  1913,  on  stock  dividends; 
that  is,  claims  based  upon  the  decision  of  the  Supreme  Court 
in  the  case  of  Towne  vs.  Eisner,  the  following  evid«nca  is 
required : 

An  affidavit  showing — 

1.  The  name  of  the  corporation  which  declared  and  paid 
the  stock  dividend. 

3.  The  date  of  declaration  of  the  stock  dividend  and  date 
of  receipt  by  claimant. 

3.  In  which  year's  return  of  annual  net  income  did  the 

claimant  include  this  stock  dividend? 

4.  Under  what  item  on  the  return  was  the  value  of  the 

stock  dividend  included,  and  what  was  the  valuation 
placed  upon  the  dividend  in  the  return? 

5.  Has  the  stock  thus  received  and  returned  as  a  dividend 

been  sold  by  the  claimant,  and  if  so,  what  was  the 
date  of  sale;  how  much  did  claimant  receive  from 
the  sale;  and  what  part  of  the  total  amount  received 
from  the  sale  was  included  by  the  claimant  in  its  re- 
turn of  annual  net  income  for  the  year  in  which  the 
sale  occurred? 

6.  Did  the  dividend  consist  of  stock  of  the  corporation  dis- 

tributing the  dividend  to  claimant,  or  did  it  consist 
of  stock  acquired  by  the  distributor  in  another  cor- 
poration ? 

ITote. — ^A  stock  dividend  is  a  distribution  by  a  corporation 
to  its  stockholders  of  capital  stock  of  the  distributing  cor- 
poration. A  distribution  of  capital  stock  other  than  that  of 
the  distributing  corporation  is  not  a  stock  dividend  but  a 
dividend  in  property. 

The  receipt  on  Form  No.  1  should  also  be  filed  with  the 
claim. 

In  giving  publicity  to  this  requirement  please  inform  tax- 
payers that  there  is  no  possible  advantage  in  the  employment 
of  special  attorneys  for  the  prosecution  of  claims.  Prepara- 
tions are  being  made  for  the  prompt  handling  of  these  cases 
and  it  is  believed  that  they  can  be  disposed  of  with  minimum 
delay  and  inconvenience  to  the  taxpayer.  Claims  filed  directly 
by  the  claimants  will  receive  in  every  respect  as  careful  and 
expeditious  consideration  as  those  filed  through  special 
attorneys. 

DANIEL  C.  ROPER, 

Commissioner, 


(I.  T.  MIM.  1866.) 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 
Washington,  D.  C,  April. 23,  1918. 

To  Collectors  of  Internal  Revenue: 

The  attention   of  collectors   is  directed  to   the   printed   in- 
structions contained  on  monthly  return  Form   1012,  Revised, 

1337 


1918,  to  the  effect  that  "each  class  of  payments  must  be 
listed  and  totaled  separately  under  the  heading  A,  B,  C  or  D." 

This  office  has  received  many  monthly  returns  on  which 
there  have  been  listed  by  debtor  corporations  and  withholding 
agents  payments  of  interest  falling  within  the  above  classes 
which  have  not  been  segregated  as  required.  Returns  pre- 
pared in  this  manner  can  not  be  satisfactorily  audited  by  this 
office.  The  co-operation  of  organizations  required  to  file 
monthly  returns  is  desired,  and  their  observance  of  all  in- 
structions in  this  connection  will,  in  the  opinion  of  this  office, 
not  only  serve  to  keep  their  own  records  more  clearly,  but 
will  facilitate  the  audit  of  such  returns. 

This  office  will  hereafter  require  that  monthly  returns  on 
Form  1012,  Revised,  be  rendered  by  debtor  corporations  and 
withholding  agents  strictly  according  to  the  printed  instruc- 
tions appearing  thereon.  Collectors  of  Internal  Revenue  are 
instructed,  therefore,  that  they  shall  return  to  the  debtor  cor- 
poration or  withholding  agent  concerned,  any  monthly  returns 
on  Form  1013,  Revised,  filed  subsequent  to  the  receipt  by  them 
of  this  letter,  which  are  not  rendered  in  accordance  with  the 
procedure  outlined  above,  and  require  such  debtor  corporation 
or  withholding  agent  to  file  amended  returns. 

DANIEL  C.  ROPER, 
Commissioner. 


Bonds  Containing  Tax-Free  Clause,  and  Certificate  to  be 
Filed  on  or  Before  February  1st — 

Treasury  Department, 
Washington,  D.  C,  February  26,  1918. 

Standard  Statistics  Co.,  Inc., 
47-49  West  St., 

New  York,  N.  Y. 
Sirs: 

Receipt  is  acknowledged  of  your  communication  dated  Jan- 
uary 16,  1918,  referring  to  the  provisions  of  subdivision  (c) 
of  Section  9  of  the  Act  of  September  8,  1916,  as  amended, 
and  requesting  that  in  view  of  the  considerable  difference 
of  opinion  which  exists  as  to  the  interpretation  placed  upon 
the  provision  thereof,  you  be  advised  whether  the  construc- 
tion placed  thereon  is  as  follows: 

"Where  bonds  contain  a  tax-free  clause,  will  it  be  neces- 
sary for  the  corporation  to  actually  withhold  the  tax  on  an 
amount  in  excess  of  the  exemption  claimed  or  does  the  cor- 
poration pay  the  interest  in  full  to  the  bondholder  and  as- 
sume the  liability  for  the  payment  of  the  tax.  Relative  to 
the  certificate  to  be  filed  with  the  withholding  agent  on  or 
before  February  first,  in  order  to  receive  the  benefit  of  ex- 
emption, is  this  interpreted  to  mean  that  if  an  individual 
entitled  to  an  exemption  of  $2,000  and  has  income  equivalent 
to  this  amount,  derived  entirely  from  tax-free  bonds  will 
have  the  tax  deducted  by  the  corporation,  if  a  certificate  is 
filed  not  claiming  exemption,  or  whether  the  individual  is 
privileged  to  substitute  an  exemption  certificate  for  non- 
exemption  certificate  up  until  February  first  of  the  follow- 
ing year,  during  which  the  income  was  earned?" 

In  reply  you  are  advised  that  under  the  provisions  of  the 
section  mentioned,  there  is  imposed  upon  the  debtor  corpora- 

1338 


tion  or  its  duly  accredited  withholding  agent  the  liability  for 
the  deduction,  withholding  and  payment  of  the  2%  normal 
tax  from  all  interest  payments  made  to  citizens  and  aliens, 
both  resident  and  non-resident,  upon  bonds,  containing  a  tax- 
free  clause  made  to  the  obligees  on  and  after  January  1, 
1917,  and  a  like  tax  of  6%  on  all  such  payments  made  to 
foreign  corporations  having  no  place  of  business  in  the 
United  States,  after  October  3,  1917. 

If  an  individual  has  an  income  of  the  amount  in  the  in- 
stance cited  by  you  and  files  a  certificate  claiming  no  ex- 
emption, the  debtor  corporation  will  be  held  liable  for  the 
withholding  of  the  normal  tax  on  the  full  amount  of  the 
interest  payment  due.  If,  however,  the  individual,  at  any 
time  prior  to  February  1st,  of  the  year  following  during 
which  the  income  was  paid,  substitutes  for  the  certificate 
previously  filed,  one  claiming  exemption,  the  debtor  corpora- 
tion will  not  be  required  to  withhold  tax  an  any  amount 
not  in  excess  of  the  exemption  claimed. 

Respectfully, 

L.  F.  SPEER, 
Deputy  Commissioner. 


Wife's  Income  Prior  to  Marriage  to  be  Included  in  Husband'i 
Return. 

Treasury  Department, 
Washington,  February  28,  1918. 
Mr.  C.  H.  Hubbell, 
Tax  Consultant, 
First  National  Bank, 
Cleveland,  Ohio. 

Sir:— 

Reference  is  made  to  your  letter  of  the  6th  instant  in  which 
you  ask  the  manner  in  which  an  individual  who  was  married 
during  the  year  should  render  his  income  tax  return.  You 
state  that  the  salary  for  the  year  of  the  individual  amounted 
to  $3,900.00,  and  that  his  wife  earned  during  the  year  and 
prior  to  their  marriage  $700.00.  You  ask  if  the  amount  earned 
by  the  wife  prior  to  her  marriage  should  be  included  in  the 
husband's  return,  and  what  exemption  should  be  claimed  by 
the  husband. 

In  reply  you  are  advised  that  unless  the  wife  has  a  separate 
estate  which  requires  her  to  file  a  separate  return  of  income, 
or  to  join  her  husband  in  a  return  which  shall  set  forth  her 
income  separately,  her  husband  should  include  in  his  return 
the  income  accruing  to  the  wife  from  services  rendered  by  her 
whether  such  income  accrued  prior  or  subsequent  to  their 
marriage. 

An  exemption  of  $2,000.00  should  then  be  taken  by  the 
husband. 

Respectfully, 

(Signed)     L.  F.  SPEER, 
Deputy  Commissioner. 
By  courtesy  of 
First  National  Bank, 
Cleveland,  Ohio. 

1339 


March  13,  1918. 

DANIEL  C.  ROPER, 

Commissioner  of  Internal  lleveniie, 
Washington,  D.  C. 

(INQUIRY.) 

We  understand  partnership  income  tax  return,  Form  1065, 
is  required  from  domestic  partnerships  having  $6,000  or  more 
without  deducting  salaries  or  interest  paid  to  partners.  Are 
we  to  read  paragraph  2,  Partnership  Excess  Profits  Tax  Re- 
turn, Form  1102,  as  though  the  words  six  thousand  dollars 
or  more  were  followed  by  the  phrase  "without  deducting  sal- 
aries or  interest  paid  to  partners"? 

Is  an  individual  having  net  income  from  trade  or  business 
three  thousand  dollars  and  from  rents  and  dividends  outside 
of  his  trade  or  business  four  thousand  dollars  required  to 
make  individual  excess  profits  tax  return?  Please  wire 
answer  collect  to  Loudonville. 

FARMERS  BANK, 

Loudonville,  Ohio. 


(REPLY.) 

"Replying  to  your  telegram  March  14.  If  salary  and  inter- 
est payment  covered  Articles  32  and  33  Regulations  41  are 
fully  explained  on  Form  1065;  return  on  Form  1102  will  not 
be  required  when  partnership  net  income  after  deduction  of 
salaries  and  interest  is  less  than  six  thousand  dollars  unless 
specially  called  for. 

"In  case  of  individual  submitted  by  you  he  would  not  be 
required  to  file  excess  profits  tax  return  unless  the  manage- 
ment of  rental  properties  constitute  a  trade  or  business  as 
defined  by  Article  8,  Regulations  41,  and  the  combined  income 
from  his  several  trades  and  businesses  amounts  to  six 
thousand  dollars  or  more." 


FLOOR  TAX  AS  A  DEDUCTION. 

Treasury  Department, 
Washington,  March  15,  1918. 

Mr.  Chas.  H.  Hubbell,  Tax  Consultant, 

First  National  Bank,  Cleveland,  Ohio. 

Sir: 

Receipt  is  acknowledged  of  your  letter  of  the  20th  ultimo,  m 
which  you  ask  for  information  in  behalf  of  the  Wm.  J.  Gal- 
lagher Company,  of  Cleveland,  Ohio.  The  information  desired 
is  in  regard  to  the  so-called  floor  tax  on  liquor  imposed  by 
Section  303  of  the  Act  of  October  3,  1917.  You  ask  to  be  ad- 
vised whether  such  floor  tax  should  be  considered  as  a  part 
of  the  cost  of  the  goods,  or  should  such  tax  be  included  as  a 
deduction  in  arriving  at  the  net  income  of  the  corporation. 

In  reply  you  are  informed  that  the  floor  taxes  actually  paid 
or  set  up  as  a  liability  as  discussed  hereinafter  may  be  de- 
ducted from  gross  income  as  taxes  paid. 

1340 


Floor  taxes  paid  on  specific  articles  under  the  provisiont  of 
the  Act  of  October  3,  1917,  cannot  be  treated  by  the  owner  of 
the  articles  as  a  part  of  the  cost  of  such  articles. 

With  reference  to  your  inquiry  in  regard  to  any  distinction 
to  be  made  between  floor  taxes  paid  and  floor  taxet  for  which 
ft  bond  has  been  given,  in  the  case  of  a  concern  keeping  its 
books  on  an  accrual  basis,  you  are  informed  that  a  corpora- 
tion keeping  accounts  upon  any  other  basis  than  that  of  actual 
receipts  and  disbursements  may  make  its  returns  upon  th» 
basis  upon  which  its  accounts  are  kept.  It  therefore  follows 
that  if  a  corporation  which  is  subject  to  the  tax  imposed  by 
Section  303  of  the  Act  of  October  3,  1917,  keeps  its  accounts 
upon  a  basis  other  than  actual  receipts  and  disbursements,  and 
its  returns  of  annual  net  income  are  prepared  in  accordance 
with  Treasury  Decision  2433,  it  will  be  permitted  to  deduct, 
in  its  returns  of  annual  net  income  for  the  year  1917  the 
amount  of  floor  taxes  assessed  for  that  year,  and  for  which 
it  has  given  bonds  as  collateral  for  the  payment  of  the  tax 
to  the  Collector  of  Internal  Revenue.  If,  however,  the  cor- 
poration prepares  its  returns  upon  the  basis  of  actual  receipts 
and  disbursements,  and  not  in  accordance  with  Treasury  De- 
cision 2433,  it  will  not  be  permitted  to  deduct  as  taxes  paid, 
in  the  return  of  annual  net  income  for  the  year  1917,  the  taxes 
imposed  by  Section  303  of  the  Act  of  October  3,  1917,  which 
taxes  arc  paid  subsequent,  to  January  1,  1918. 

Respectfully, 

(Signed)  DANIEL  C.  ROPER.. 
Commissioner. 

By  courtesy  of  First  National  Bank,  Cleveland,  Ohio. 


March  19,  1918. 

Instructions  Issued  by  the  Alien  Property  Custodian  In 
Relation  to  Income  Taxes. 

By  a  Treasury  Decision  issued  March  18  (T.  D.  No.  2673) 
all  individuals,  firms  or  corporations  are  to  be  governed  as 
follows  in  respect  to  filing  Federal  income  tax  returns  oi 
paying  Federal  income  taxes  under  the  Income  Tax  Act  and 
the  War  Income  Tax  Act  on  any  money  or  other  property  of 
enemies,  as  defined  by  the  "Trading  with  the  Enemy  Act,** 
that  has  come  or  may  come  into  their  possession: 

I. 

For  the  Tear  1917. 

1.    Where  money  or  other  property  has  not  yet  been  de- 
livered to  the  Alien  Property  Custodian,  but  is  held 
subject  to  his  order. 
In  all  such  cases  it  is  necessary  to  file  returns  of  informa- 
tion and  income  in  respect  of  all  such  money  or  other  prop- 
erty for  such  period  as  may  elapse  prior  to  the  actual  delivery 
•f  the  money  or  other  property  to  the  custodian,  and  also  to 
withhold  and  to  pay  the  normal  tax  in  respect  of  any  income 
actually  paid  to  or  for  any  enemy  prior  to  October  6,  1917, 
the  date  when  the  "Trading  with  the  Enemy  Act"  became  a 
law. 

1341 


2.  Where  the  money  or  other  property  has  actually  been 
delivered  to  the  Alien  Property  Custodian. 

Where  the  money  or  other  property  has  actually  been  de- 
livered to  the  custodian,  return  of  income  is  still  required  to 
be  filed  in  due  course  in  respect  of  all  money  or  other  property 
for  the  period  that  has  elapsed  up  to  the  time  of  the  actual 
delivery  to  the  custodian,  and  payment  of  taxes  is  required 
to  be  made  in  cases,  but  only  in  such  cases,  where  there  has 
been  withheld  from  what  is  actually  delivered  to  the  custodian 
the  amount  of  the  normal  tax  in  respect  of  income  actually 
paid  over  to  or  for  the  enemy  prior  to  October  6,  1917. 

II. 
For  the  Year  1918  and  Subsequent  Years. 

Return  of  income  is  required  to  be  filed  in  due  course  ^n 
respect  of  all  money  or  other  property  for  such  part  of  the 
year  1918  or  any  subsequent  year  as  may  elapse  prior  to  the 
actual  delivery  of  the  money  or  other  property  to  the  Alien 
Property  Custodian,  but  no  withholding  or  the  payment  ot 
any  taxes  is  required. 

III. 

Requirements  in  respect  to  money  or  other  property  of  enemies 

held  or  utilized  under  authority  of  licenses 

issued  by  the  War  Trade  Board. 

Wherever  money  or  other  property  is  held  or  utilized  unuer 
authority  of  a  license  issued  by  the  War  Trade  Board,  the 
obligation  upon  every  individual,  firm  or  corporation  holding 
such  license  to  withhold  or  return  or  pay  income  taxes  for  the 
duration  of  such  license,  is  not  affected  in  any  way  by  this 
Treasury  Decision. 

IV. 

Requirements  in  respect  to  depositaries  and  agents  appointed 

by  the  Alien  Property  Custodian. 

Depositaries  and  agents  appointed  by  the  Alien  Property 
Custodian  to  represent  him  in  relation  to  any  money  or  other 
property  are  not  required  to  make  any  deductions,  or  to  file 
any  returns,  or  to  make  any  payments  in  respect  to  any  in- 
come taxes  for  the  year  1917  or  subsequent  years  on  any 
money  or  other  property  that  may  come  into  their  hands. 
The  obligation,  if  any,  to  make  the  same  rests,  as  above  ex- 
plained, upon  the  individual,  firm  or  corporation  from  whom 
the  depositaries  or  agents  receive  the  money  or  other  property 
for  the  account  of  the  Alien  Property  Custodian. 

V. 

Requirements  as  to  licenses,  ownership  certificates,  etc.,  for 
collection  of  coupons. 

Nothing  in  the  above  is  to  be  construed  as  relieving  any 
individual,  firm  or  corporation  from  complying  before  col- 
lection of  coupons  for  or  on  account  of  enemies  with  the 
requirments  (1)  of  the  War  Trade  Board  in  respect  to  license 
before  such  collection;  (2)  of  the  Alien  Property  Custodian 
in  respect  to  any  rules  and  regulations  relatmg  to  such  col- 
lection; (3)  of  the  Federal  Reserve  Board  in  respect  to  regis- 
tration certificates;  and  (4)  of  the  Internal  Revenue  Depart- 
ment in  respect  to  ownership  certificates  to  accompany  such 
coupons.  Of  these  requirements  only  the  fourth  applies  to 
depositaries  and  agents  appointed  by  the  Alien  Property  Cus- 

1342 


todian.  United  States  Internal  Revenue  Forms  No.  1000  and 
No.  1001,  as  revised  January,  1918,  are  to  be  used  by  such 
depositaries  and  agents  in  collecting  coupons  for  the  account 
of  the  Alien  Property  Custodian  and  such  certificates  are  to 
be  signed  as  follows: 


(Name  of  enemy)  Trust. 

by 

(Alien  Property  Custodian  Depositary.) 


Treasury  Department, 
Washington,  July  1»,  1918. 

Tax  on  Undistributed  Net  Income — 

L.  &  A.  U.  Zinke, 
290  Broadway, 

New  York,  N.  Y. 

Sirs: 

Replying  to  your  letter  of  the  11th  instant,  you  are  in- 
formed that  a  corporation  having  a  fiscal  year  ended  within 
the  calendar  year,  1917,  which  is  required  to  file  its  return  on 
Form  1112,  should  file  such  return  with  the  Collector  of 
Internal  Revenue  on  or  before  August  1,  1918. 

A  corporation  which  files  its  return  on  the  basis  of  the 
calendar  year  is  not  required  to  file  such  return  until  sixty 
(60)  days  after  the  expiration  of  six  months  from  the  close 
of  its  taxable  year.  Therefore,  in  such  a  case  the  return  Is 
not  due  until  August  29,  1918. 

Respectfully, 

L.  F.  SPEER, 
Deputy  Commissioner. 
By  courtesy  of 

L.  &  A.  U.  Zinke, 
New  York. 


TAX  CERTIFICATES,  SERIES  OF  1919— 

Announcement  of  the  Secretary  of  the  Treasury  Relating  to 
United  States  Treasury  Certificates  of  Indebtedness,  Re- 
ceivable  for  Income   and   Excess   Profits   Taxes.     Dated 
August  20,  1918,  Payable  July  15,  1919—4%  Interest- 
August  19,  1918. 

To  the  Banks,  Trust  Companies  and  the  Public  of  the 
Fifth  Federal  Reserve  District: 
"The  Secretary  of  the  Treasury  under  authority  of  Act 
approved  September  24,  1917,  as  amended  by  Act  approved 
April  4,  1918,  offers  for  subscription  at  par  and  accrued  in- 
terest Treasury  Certificates  of  Indebtedness  of  the  United 
States,  tax  series  of  1919,  dated  and  bearing  interest  from 

1343 


August  20,  1918,  payable  July  15,  1919,  bearing  interest  at 
the  rate  of  4%  per  annum.  Applications  will  be  received 
at  the  Federal  Reserve  Banks. 

Subscription  books  will  close  at  close  of  business  August 
30,  1918. 

Bearer  certificates  with  interest  coupons  attached  will  be 
issued  in  denominations  of  $500,  $1,000,  $5,000,  $10,000  and 
$100,000. 

Tax  Exemption  Features. — Said  certificates  shall  be  exempt 
both  as  to  principal  and  interest  from  all  taxation  now  or 
hereafter  imposed  by  the  United  States,  any  State  or  any  of 
the  possessions  of  the  United  States,  or  by  any  local  taxing 
authority,  except: 

(a)  Estate  or  inheritance  taxes,  and, 

(b)  Graduated  additional  income  taxes,  commonly  known 
as  surtaxes,  and  excess  profits  and  war  profits  taxes  now  or 
hereafter  imposed  by  the  United  States  upon  the  income  or 
profits  of  individuals,  partnerships,  associations  or  corpora- 
tions. 

(They  carry  exemptions  from  the  increased  income  taxes 
that  are  in  contemplation  by  Congiess.) 

The  interest  on  an  amount  of  bonds  and  certificates  au- 
thorized by  said  Act,  approved  September  24,^1917,  or  by  said 
Act  as  amended  by  said  Act  approved  April  4,  1918,  or  by  the 
Act  approved  July  9,  1918,  the  principal  of  which  does  not 
exceed  in  the  aggregate  $5,000  owned  by  any  individual, 
partnership,  association  or  corporation,  shall  be  exempt  from 
the  taxes  provided  for  in  clause  (b)  above. 

Receivable  in  Payment  of  Income  and  Excess  Profits  Taxes. 
— The  certificates  of  this  series  will  be  accepted  at  par  v.ith 
adjustment  of  accrued  interest  under  rules  and  regulations 
to  be  prescribed  by  the  Secretary  of  the  Treasury,  in  pay- 
ment of  income  and  excess  profits  taxes  when  payable  at  or 
before  the  maturity  of  the  certificates. 

The  certificates  of  this  series  do  not  bear  the  circulation 
privilege  and  will  not  be  accepted  in  payment  on  bond  sub- 
scriptions. 

The  right  is  reserved  to  reject  any  subscription  and  to  allot 
less  than  the  amount  of  certificates  applied  for,  and  to  close 
the  subscriptions  at  any  time  without  notice. 

Time  of  Payment. — Payment  at  par  ana  accrued  interest 
for  certificates  allotted  must  be  made  on  allotment.  After 
allotment  and  upon  payment  Federal  Reserve  Banks  will  issue 
interim  receipts  pending  delivery  of  the  definitive  certificates. 

Payment  by  Credit. — Qualified  depositaries  will  be  permitted 
to  make  payment  by  credit  for  certificates  allotted  to  them 
for  themselves  and  their  customers  up  to  an  amount  for 
which  each  shall  have  been  qualified  in  excess  of  existing  de- 
posits, when  so  notified  by  Federal  Reserve  Banks. 

(Application  to  become  depositaries,  or  to  increase  the 
amount  for  which  any  bank  or  trust  company  may  have  been 
designated  as  a  depositary,  will  be  received  and  promptly 
acted  upon.) 

As  Fiscal  Agents  of  the  United  States,  Federal  Reserve 
Banks  are  authorized  and  requested  to  receive  subscriptions 
and  to  make  allotment  in  full  in  the  order  of  the  receipt  of 
subscriptions  until  further  notice. 

1344 


I 


Certificates  of  series  IV-A,  IV-B,  IV-C  and  IV-D  will  be 
accepted  at  par  with  an  adjustment  of  accrued  interest  in 
payment  for  any  certificates  of  the  series  now  ofiered  which 
shall  be  subscribed  for  and  allotted  not  later  than  August 
30,  1918." 

Respectfully, 

FEDERAL  RESERVE  BANK  OF  RICHMOND, 
Fiscal  Agent  of  the  United  States. 


Office  of 

Commissioner  of  Internal  Revenue. 

Treasury  Department. 

Washington,  December  24,  1918. 

Standard  Statistics  Company,  Inc., 
47  West  Street,  New  York  City. 

Gentlemen : 

Reference  is  made  to  your  letter  of  December  12,  1918,  which 
is  quoted  as  follows: 

"Under  an  unofficial  ruling  your  office  has  held  that 
the  Government  cannot  accept  payment  of  taxes  by  a 
corporation  in  behalf  of  a  bondholder  where  such  bond 
does  not  contain  a  tax-free  covenant. 

"Corporation  *A'  issuing  bonds  without  a  tax-free  cove- 
nant voluntarily  pays  its  coupons  at  102%  of  face  valua 
for  the  purpose  of  reimbursing  its  bondholders  for  a  por- 
tion of  the  normal  tax  assessed  against  income  from 
interest. 

"Thus,  bondholder  'B,'  holding  coupons  to  the  face  value 
of  $1,000,  receives  $1,020  from  the  corporation. 

"Is  the  $20  extra  received  from  the  corporation  income 
to  the  bondholder  subject  to  tax,  or  should  it  be  classitiea 
as  a  gift,  the  principal  of  which  is  exempt  from  tax?" 

In  reply  you  are  advised  that  if  a  corporation  contracts  with 
its  bondholders  to  pay  the  income  tax  to  be  imposed  on  its 
bonds,  and  if  such  agreement  is  not  embodied  in  the  form  of  a 
"tax-free  covenant"  in  such  bonds,  then  any  amount  paid  to 
the  bondholders  by  virtue  of  such  contract  constitutes  income 
for  the  year  in  which  received.  The  contract  so  entered  into 
is  a  bargain,  as  between  the  debtor  corporation  and  its  bond- 
holders, of  which  this  office  does  not  take  cognizance. 

However,  if  there  is  no  prior  contract  or  agreement  or  under- 
standing in  the  matter  and  the  corporation  voluntarily  re- 
imbursed its  bondholders  for  a  portion  of  the  tax  to  be 
assessed  against  the  income  from  interest,  then  the  amount 
so  received  will  be  regarded  as  a  gift  to  the  bondholders,  and 
the  sum  so  paid  will  not  be  allowed  as  a  deduction  to  the 
corporation. 

Respectfully, 

DANIEL  C.  ROPER, 
Commissioner. 

1345 


STOCK  DIVIDENDS. 

Judge  Julius  M.  Mayer,  sitting  in  a  test  case  in  the  United 
States  District  Court,  decided  without  leaving  the  bench  that 
the  Supreme  Court  of  the  United  States  meant  what  it  said 
in  the  famous  Towne  Case,  and  that  stock  dividends  are  no 
more  subject  to  income  tax  under  the  1916  Law  than  they  were 
under  the  1913  Law,  which  was  the  subject  of  the  original  de- 
cision. 

The  Towne  Case  above  referred  to  was  the  case  of  Towne  vs. 
Eisner,  in  which  the  United  States  Supreme  Court  handed 
down  a  decision  on  January  7th,  1918.  Under  this  decision  it 
was  held  that  a  stock  dividend  declared  by  a  corporation  in 
January,  1914,  was  not  taxable  income.  As  the  Act  of  October 
3,  1913,  was  in  effect  for  the  years  1913-1914  and  1915;  this 
decision  only  affected  stock  dividends  paid  within  these  years. 
The  Income  Tax  Laws  of  September  8th,  1916,  and  October  3rd, 
1917,  as  well  as  the  present  Revenue  Bill  about  to  be  passed 
specifically  tax  stock  dividends. 

If  the  decision  handed  down  by  Judge  Mayer  is  upheld  by 
the  United  States  Supreme  Court,  it  will  mean  that  all  taxes 
which  have  been  paid  upon  stock  dividends  from  January  1st, 
1916,  will  have  to  be  refunded  to  taxpayers  upon  the  submis- 
sion of  proper  claims. 

The  opinion  in  the  above  case  consists  merely  of  an  endorse- 
ment on   the  demurrer,  as  follows : 

Demurrer  overruled  on  the  authority  of  Towne  v.  Eisner,  24.') 
U.  S.  418— see  also  Peabody  v.  Eisner,  247  U.  S.  347. 

JULIUS  M.  MAYER, 
District  Judge. 

Tax  on  Undistributed  Net  Income  of  Corporations. 
The  Act  of  September  8,  1916,  as  amended,  Section  10(b), 
provides  that — 

(b)  In  addition  to  the  income  tax  imposed  by  subdivision  (a) 
of  this  section  there  shall  be  levied,  assessed,  collected  and  paid 
annually  an  additional  tax  of  ten  per  centum  upon  the  amount 
remaining  undistributed  six  months  after  the  end  of  each  calendar 
or  fiscal  year  of  the  total  net  Income  of  every  corporation,  Joint- 
stock  company  or  association,  or  insurance  company,  received 
during  the  year,  as  determined  for  the  purposes  of  the  tax  im- 
posed by  such  subdivision  (a),  but  not  including  the  amount  of 
any  income  taxes  paid  by  It  within  the  year  imposed  by  the 
authority  of  the  United  States. 

The  tax  Imposed  by  this  subdivision  shall  not  apply  to  that 
portion  of  such  undistributed  net  income  which  is  actually  In- 
vested and  employed  in  the  business  or  Is  retained  for  employ- 
ment In  the  reasonable  requirements  of  the  business  or  is  invested 
in  the  obligations  of  the  United  States  Issued  after  September 
first,  nineteen  hundred  and  seventeen :  Provided,  That  if  the  Sec- 
retary of  the  Treasury  ascertains  and  finds  that  any  portion  of 
such  amount  so  retained  at  any  time  for  employment  in  the  busi- 
ness is  not  so  employed  or  is  not  reasonably  required  in  the  busi- 
ness a  tax  of  fifteen  per  centum  shall  be  levied,  assessed,  collected 
and  paid  thereon. 

The  foregoing  tax  rates  shall  apply  to  the  undistributed  net 
income  received  by  every  taxable  corporation,  joint-stock  com- 
pany, or  association,  or  insurance  company  in  the  calendar  year 
nineteen  hundred  and  seventeen  and  in  each  year  thereafter,  ex- 
cept that  if  It  baa  fixed  its  own  fiscal  year  under  the  provisions 
of  existing  law,  the  foregoing  rates  shall  apply  to  the  proportion 
of  the  taxable  undistributed  net  Income  returned  for  the  fiscal 
year  ending  prior  to  December  thirty-first,  nineteen  hundred  and 
seventeen,  which  the  period  between  January  first,  nineteen  hun- 
dred and  seventeen,  and  the  end  of  such  fiscal  year  bears  to  the 
whole  of  such  fiscal  year. 

The  period  of  six  months  after  the  end  of  each  calendar 
year  referred  to  for  corporations  who  closed  their  books  on 
December  thirty -first,  nineteen  hundred  and  seventeen,  is  from 

1346 


January  first,  nineteen  hundred  and  eighteen,  to  June  thir- 
tieth, nineteen  hundred  and  eighteen. 

Domestic  and  foreign  corporations  with  a  taxable  net  income 
as  shown  by  returns  rendered  for  the  year  nineteen  hundred 
and  seventeen  will  be  required  to  file  a  return  of  undistributed 
net  income  on  Form  1112,  as  prescribed  by  the  Government, 
and  the  time  for  filing  this  return  is  within  sixty  days  after 
the  expiration  of  six  months  (June  30,  1918)  from  the  close 
of  the  last  taxable  year  (that  is,  a  calendar  year  or  fiscal  year, 
if  diflferent  from  the  calendar  year). 

There  will  be  a  tax  of  ten  per  centum  on  the  undistributed 
net  income  and  a  tax  of  fifteen  per  centum,  if  any  portion  of 
the  net  income  of  the  taxable  year  reported  to  be  retained 
for  employment  in  the  reasonable  requirements  of  the  busi- 
ness was  not  80  employed.  The  time  for  the  payment  of  the 
tax  is  ten  days  after  the  day  of  notice  and  demand  of  tax 
assessed.  Otherwise  there  will  be  a  penalty  of  five  per  centum 
of  the  amount  thereof,  plus  one  per  centum  interest  per  month 
that  the  tax  remains  unpaid.  For  failure  to  file  the  return 
within  the  time  required  fifty  per  centum  penalty  of  the  tax 
will  attach  and  a  penalty  not  to  exceed  ten  thousand  dollars. 

Returns  in  this  connection  may  be  had  from  the  local 
internal  revenue  collector. 

STANDARD  STATISTICS  CO.,  Ipc 


Excess  Profits  Tax  Primer. 

Prepared  by  the  Bureau  of  Internal  Revenue  for  the 
Information  and  Assistance  of  Taxpayers. 


GENERAL  FEATURES. 
TAX  APPLIES  TO  TRADE  OR  BUSINESS. 

In  the  case  of  a  corporation  or  partnership  the  law  ex- 
pressly provides  (Sec.  201)  that  all  its  income,  from  what- 
ever source  derived,  shall  be  deemed  to  be  received  from  its 
trade  or  business.  In  this  case  there  is  one  business  and  one 
net  income. 

In  the  case  of  an  individual  the  excess  profits  tax  applies 
only  to  that  part  of  the  net  income  which  is  derived  from 
the  taxpayer's  trade,  business,  profession  or  occupation,  even 
though  the  taxpayer  may  have  other  income  subject  to  the 
ordinary  income  tax.  Unlike  a  corporation  or  partnership, 
an  individual  may  be  engaged  in  two  businesses,  one  with 
invested  capital,  one  with  no  invested  capital  or  only  a  nomi- 
nal capital.  If  he  has  more  than  one  business  with  invested 
capital,  they  will  all  be  regarded  as  one;  and  if  he  has  more 
than  one  business  with  no  invested  capital,  they  will  be  re- 
garded as  one.  If  he  has  both  kinds  of  business,  he  will 
be  regarded  as  having  two  businesses. 

It  is  an  Income  Tax. 
It  is  an  income  tax  in  addition  to  the  regular  income  tax 
of  September  8,  1916,  as  amended,  and  the  war  income  tax  of 
October  3,  1917.    It  is  more  than  a  tax  on  "war  profits";  it 

1347 


reaches  all  income  in  excess  of  a  stipulated  normal  deduc- 
tion.   The  tax  falls  into  two  classes: 

(a)  An  8  per  cent  tax  imposed  by  Section  209  upon  trades 
or  businesses  having  no  invested  capital  or  merely  a  nominal 
capital,  e.  g.,  doctors,  lawyers,  and  professional  or  salaried 
persons  in  general.  Domestic  corporations  under  this  sec- 
tion are  allowed  a  specific  deduction  of  $3,000;  domestic  part- 
nerships and  individual  citizens  or  residents  a  specific  deduc- 
tion of  $6,000.     (See  Articles  71-74  of  Regulations  No.  41.) 

(b)  A  graduated  tax  with  rates  rising  from  20  to  60  per 
cent  upon  the  net  income  in  excess  of  a  deduction  equal  to 
a  percentage  (varying  from  7  to  9  per  cent)  upon  invested 
capital,  plus  $6,000  in  the  case  of  an  individual  or  partner- 
ship or  $3,000  in  the  case  of  a  corporation.  Foreign  corpora- 
tions or  partnerships  and  non-resident  aliens  are  not  entitled 
to  the  specific  deductions  of  $3,000  or  $6,000,  respectively. 

An  exceedingly  important  sub-division  under  class  (b)  con- 
sists of  those  cases  in  which  the  invested  capital — or  the  net 
income  for  the  pre-war  period — can  not  be  satisfactorily  de- 
termined. In  such  cases  the  assessm.ent  is  based  largely 
upon  conditions  or  relations  existing  among  representative 
business  concerns  in  a  like  or  similar  trade  or  business.  (See 
Sections  205  and  210  of  the  law  and  Articles  18,  24  and  52 
of  Regulations  No.  41.) 

Classification  of  Taxpayers. 

In  the  case  of  a  corporation  or  partnership  all  of  its  income 
will  be  held  to  be  of  the  same  class  as  the  income  from  its 
principal  trade  or  business.  There  is  one  income  and  one  tax. 
(Article  14  of  Regulations  No.  41.) 

In  the  case  of  an  individual  there  may  be  income  subject 
to  the  8  per  cent  rate  and  income  subject  to  the  graduated 
rates,  in  which  case  there  will  be  two  deductions  and  two 
taxes — but  not  more  than  two.  (See  Articles  35  and  36  of 
Regulations  No.  41.) 

In  general,  the  taxpayer  can  not  decide  for  himself  whether 
he  is  subject  to  the  8  per  cent  tax  or  the  graduated  tax,  but 
must  fill  out  the  ordinary  form  so  far  as  possible  in  order 
that  the  department  may  decide  into  which  class  he  properly 
falls.  Exception,  however,  is  made  in  the  case  of  individuals 
whose  income  consists  wholly  of  salary  or  the  earnings  of 
personal  service  and  who  employ  no  invested  capital  in  their 
trade  or  business.  In  such  cases  the  excess  profits  tax  will 
be  computed  from  the  data  on  the  income  tax  return.  Form 
1040. 

INCOME  SUBJECT  TO  TAX— CORPORATIONS,  PARTNER- 
SHIPS, AND  INDIVIDUALS. 

1.  A  partnership  makes  |S0,G00,  one-fourth  of  which  is 
paid  to  a  special  or  sileat  partner  who  takes  no  real  part  in 
th«  ctnduct  of  the  business.  Is  the  partnership  taxable  with 
respect  to  the  $20,000  paid  to  the  silent  partner? 

Yts.  Th«  partnership  is  engaged  in  business  and  is  taxable 
upon  its  entire  net  income.  However,  no  member  of  the 
partnership  as  an  individual  is  subject  to  excess  profits  tax 
on  his  shart  of  the  partnership  profits.  (See  Article  41  of 
Regulations  No.  41.) 

8.  A  corporation  has  been  making  income  tax  returns  on 
the  basis  of  a  fiscal  year  ending  June  30.  Net  income  for  the 
last  six  months  of  1916  was  $1,000,000.     The  losses  for  the 

1348 


first  six  months  of  1917  were  $400,000.    Is  there  any  taxable 
income  subject  to  excess  profits  tax  for  the  year  1917? 

Yes.  The  profits  for  the  full  fiscal  year  were  $600,000. 
One-half  of  the  fiscal  year  falling  in  the  calendar  year  1917, 
the  corporation  will  be  taxable  on  a  proportionate  amount. 
The  corporation  should  make  a  return  for  the  full  fiscal  year, 
compute  the  tax  that  would  ordinarily  be  due  for  an  entire 
year,  and  then  take  a  proportionate  part  (in  this  case  one- 
half)  as  the  tax  to  be  paid.  (See  Article  19  of  Rejfulations 
No.  41.) 

3.  Is  a  "Massachusetts  tnist"  taxed  as  a  corporation  or 
partnership? 

As  a  corporation.  The  term  "corporation"  includes  joint- 
stock  companies  or  associations,  no  matter  how  created  or 
organized.     (See  Article  2  of  Regulations  No.  41.) 

4.  A.  B.,  an  attorney,  bought  a  house  and  lot  in  June,  1917, 
received  rent  from  it  until  October,  1917,  and  then  sold  it  at 
a  profit.    Does  he  pay  on  rentals  and  the  profit? 

An  attorney,  whose  business  is  of  a  purely  personal- service 
nature  is  taxable  at  8  per  cent  under  Section  209.  He  might 
buy  real  estate  for  investment  and  later  sell  it  at  a  consider- 
able profit,  but  this  being  an  isolated  transaction  and  not  a 
business,  the  income  and  profits  therefrom  would  not  be  sub- 
ject to  excess  profits  tax.  He  would  be  entitled  to  one  de- 
duction of  $6,000. 

5.  A  lawyer  with  a  considerable  income  from  his  practice, 
receives  fees  as  director  in  two  banks  and  an  insurance  com- 
pany.   Are  such  fees  taxable? 

Regular  service  as  a  director  constitutes  an  occupation  or 
business  and  the  fees  therefrom,  along  wdth  the  regular  in- 
come of  the  lawyer  from  his  practice,  are  taxable  at  8  per 
cent  under  Section  209,  with  one  deduction  of  $6,000. 

6.  A  landlord  renting  a  large  farm  on  shares,  which  re- 
quires considerable  attention,  employs  an  agent  to  look  after 
his  interest,  see  that  the  farm  buildings  are  kept  in  good 
repair,  collect  and  market  his  share  of  the  crops,  etc.  Is  the 
rental  taxable? 

Yes;  at  the  graduated  rates.  The  landlord  is  engaged  in 
business  with  respect  to  the  farm  and  the  fact  that  he  em- 
ploys an  agent  to  look  after  his  business  does  not  relieve  him 
frbm  the  tax  nor  entitle  him  to  th«  8  per  cisnt  rate. 

7.  John  Smith  owns  and  operates  a  dry  goods  store.  He 
also  owns  and  operates  a  shoe  store.  Is  he  allowed  to  re- 
port these  businesses  separately  with  a  separate  deduction 
for  each? 

No;  the  rule  is  that  there  may  be  one  deduction  for  a 
busineBS  with  no  invested  capital  or  merely  a  nominal  capital 
(personal  service),  and  another  deduction  for  an  imrelated 
business  having  invested  capital,  but  there  may  not  be  more 
than  one  deduction  for  businesses  taxed  under  Section  201, 
or  for  businesses  taxed  imder  Section  209. 

8.  I  conduct  two  entirely  separate  businesses  both  employ- 
ing invested  capital.  Should  I  make  a  combined  return  for 
the  two  businesses,  or  a  separate  return  for  each  ousiness? 

You  should  make  one  return  covering  the  two  businesses. 

9.  A  contractor  and  dealer  in  real  estate  also  lists  property 
owned  by  others  and  does  business  as  a  real  estate  agent  or 
broker.    How  is  he  taxed? 

1349 


These  activities  are  so  interrelated  as  to  constitute  one 
business.  If  the  individual  employs  in  this  real  estate  busi- 
ness a  considerable  amount  of  capital  he  is  taxable  at  the 
graduated  rates  under  Section  201. 

10.  I  am  a  doctor  and  also  manage  and  direct  a  small  fac- 
tory which  I  own.    How  am  I  taxed? 

You  will  pay  a  tax  of  8  per  cent  on  the  fees  from  your 
medical  practice  under  Section  209,  and  a  graduated  tax  on 
the  income  from  your  factory.  Under  Section  209  you  will  get 
a  deduction  of  $6,000;  under  Section  201  a  specific  deduction 
of  $6,000  plus  a  percentage  deduction  of  from  7  to  9  per  cent 
on  the  capital  invested  in  the  factory. 

11.  A  school  teacher  buys  a  farm  upon  which  oil  is  dis- 
covered, and  sells  the  farm  at  a  large  profit.  Is  such  profit 
subject  to  excess  profits  tax? 

Not  unless  the  teacher  is  also  a  farmer  or  buys  and  sells 
real  estate  with  sufficient  frequency  to  make  the  latter  one 
of  his  occupations.  The  teacher  may  have  an  occupation  or 
business  other  than  teaching  the  profits  from  which  would 
be  taxable,  but  if  he  buys  a  farm  simply  as  an  isolated  in- 
vestment and  does  not  run  it,  the  profits  from  its  sale  would 
not  be  subject  to  the  tax.     (See  question  12.) 

12.  A  manufacturer  who  has  been  in  business  for  many 
years  sells  his  factory  at  a  considerable  profit.  Is  such  profit 
subject  to  excess  profits  tax? 

Yes;  because  the  profit  in  this  and  similiar  cases  is  a  nor- 
mal result  of  winding  up  the  business;  it  is  part  of  the  busi- 
ness. On  the  other  hand,  if  the  manufacturer  had  bought  a 
farm  and  sold  it  at  a  profit,  the  profit  would  not — if  the 
transaction  were  isolated — be  taxable.  Profit  from  an  iso- 
lated transaction  outside  of  his  business  is  not  taxable.  Profit 
from  an  isolated  transaction  connected  with  his  business  is 
taxable. 

13.  I  am  a  traveling  salesman,  working  wholly  on  a  com- 
mission basis.  I  earn  $15,000.  My  traveling  expenses  are 
$3,000.  My  house  advances  me  $6,000  per  year,  giving  me  the 
rest  of  my  commissions  at  the  end  of  the  year.  May  I  con- 
sider that  I  am  in  business  and  allow  myself  a  salary  of 
$6,000,  leaving  a  profit  of  $6,000  for  the  business  itself?  In 
that  case  I  should  be  entitled  to  a  deduction  of  $6,000  for  the 
business  and  $6,000  against  my  salary  and  I  should  have  no 
excess  profits  tax  to  pay. 

No.  You  should  enter  the  $15,000  in  block  A  on  Form  1040, 
making  proper  deduction  for  expenses.  You  would  then  have 
a  net  income  of  $12,000,  of  which  $6,000  would  be  taxable  at 
the  8  per  cent  rate. 

14.  An  individual  who  received  a  salary  of  $8,000  during  the 
taxable  year  has  a  minor  son  who  earned  $800  during  the 
taxable  year  in  a  separate  occupation.  Must  the  $800  be  in- 
cluded in  the  income  of  the  parent  subject  to  excess  profits 
tax? 

No.  The  father  is  not  engaged  in  business  with  respect  to 
the  income  of  his  minor  children  earned  in  a  separate  and 
distinct  occupation. 

DEDUCTIONS. 

15.  A  corporation  had  a  net  income  of  $10,000  in  1911, 
$8,000  in  1912,  and  a  loss  of  $2,000  in  1913.  What  is  the 
"average  amount  of  the  annual  net  income  of  the  trade  or 

1350 


business  during  the  pre-war  period,"  for  the  purpose  of  de- 
termining the  percentage  deduction? 

Six  thousand  dollars  ($18,000  divided  by  three).  The  loss 
of  $2,000  is  disregarded  inasmuch  as  the  income  tax  law  does 
not  permit  the  loss  of  one  year  to  affect  or  reduce  the  profit 
of  another  year. 

16.  A  firm  commenced  business  April  1,  1911.  What  period 
should  it  use  to  determine  its  pre-war  earnings  and  invested 
capital? 

All  of  the  years  1912  and  1913.  The  year  1911  is  disre- 
garded, as  the  law  provides  that  only  entire  calendar  years 
shall  be  counted.     (See  Section  200.) 

17.  What  percentage  deduction  is  given  a  taxpayer  who 
started  in  business  after  January  1,  1913? 

Eight  per  cent  of  the  invested  capital.  (See  Section  204 
of  the  law  and  Article  21  of  Regulations  No.  41.) 

18.  Jones  was  in  the  hardware  business  during  the  pre-war 
period.  He  made  more  than  9  per  cent  on  his  invested  capital. 
In  1914  he  sold  the  hardware  business  and  established  a  fur- 
niture store  and  is  making  over  9  per  cent.  What  percentage 
deduction  does  he  get? 

■  Eight  per  cent,  since  he  is  now  carrying  on  a  business  in 
which  he  was  not  engaged  during  the  pre-war  period.  How- 
ever, if  he  had  bought  an  established  furniture  business  hav- 
ing pre-war  earnings  of  9  per  cent,  he  would  be  allowed  9  per 
cent,  the  business  being  a  continuation  of  a  business  with 
pre-war  experience.  (See  Section  204  of  the  law  and  Article 
22  of  Regulations  No.  41.) 

19.  Smith  bought  a  hotel  business  in  1914  which  had  been 
in  existence  during  the  pre-war  period,  but  he  is  unable  to 
ascertain  what  was  its  average  invested  capital  for  that 
period.    What  is  his  percentage  deduction? 

He  should  compute  the  tax  in  the  first  instance  on  the 
basis  of  a  7  per  cent  deduction,  but  may  file  a  claim  (with 
explanation)  for  final  assessment  under  the  provisions  of  Sec- 
tion 210  (Articles  24  and  52  of  Regulations  No.  41),  and  if 
the  Secretary  of  the  Treasury  is  unable  satisfactorily  to  de- 
termine the  invested  capital,  the  percentage  deduction  will 
be  computed  at  the  same  rate  per  cent  as  in  the  case  of  rep- 
resentative individuals  engaged  in  a  like  or  similar  business. 

20.  An  individual  is  engaged  in  the  manufacturing  business. 
He  makes  annual  contributions  to  a  near-by  hospital  in  which 
injured  employes  of  his  establishment  are  cared  for.  He  also 
makes  contributions  to  his  church  and  to  the  public  library. 
Is  he  allowed  to  deduct  these  contributions  in  computing  his 
net  income  for  purposes  of  the  excess  profits  tax? 

The  contributions  to  the  hospital  would  constitute  a  proper 
deduction,  since  they  have  a  reasonable  connection  with  his 
business,  and  may  be  considered  as  coming  from  the  business 
rather  than  from  the  individual  in  his  personal  capacity.  Such 
contributions  will  be  allowed  up  to  15  per  cent  of  the  income 
of  the  business. 

The  contributions  to  the  church  and  the  library  will  be  re- 
garded as  made  by  the  individual  in  his  personal  capacity  and 
are  not  allowable  deductions  from  the  income  of  the  trade  or 
business  for  the  purposes  of  the  excess  profits  tax.  (See 
Article  37  Regulations  No.  41.) 

1351 


21.  A  partnership  has  been  in  the  habit  of  making  contribu- 
tions to  various  churches,  local  charities  and  the  Y.  M.  C.  A., 
and  charging  the  amounts  off  to  profit  and  loss  at  the  end  of 
the  year.  Will  it  be  allowed  to  deduct  these  contributions  in 
computing  its  net  income  for  purposes  of  the  excess  profits 
tax? 

No.  These  contributions  are  not  connected  with  the  trade  or 
business.  The  same  rule  applies  in  the  case  of  a  partnership 
as  in  the  case  of  an  individual.  (See  Section  206  of  the  law 
and  Article  37  of  Regulations  No.  41.) 

22.  An  incorporated  department  store  occasionally  con- 
tributes to  local  charities,  hospitals,  etc.  Are  these  items  de- 
ductible? 

No.  Donations  which  do  not  have  in  them  the  element  of 
compensation  are  considered  gratuities  and  are  not  allowable 
deductions  from  gross  income  as  an  expense  of  operation  or 
maintenance  or  under  any  other  head.  (See  Articles  134  and 
135,  Regulations  No.  33,  Revised,  governing  the  collection  of 
the  income  tax.) 

23.  Several  of  our  regular  employes  have  enlisted  in  the  serv- 
ice of  the  United  States  in  different  capacities,  some  in  the 
Army,  others  in  the  Navy,  Food  Administration,  etc.  We 
have  continued  their  salaries  during  their  absence.  May  we 
charges  these  payments  as  expense  in  computing  our  profits? 

Yes. 

24.  Four  other  attorneys  and  mystelf  conduct  a  law  business 
under  a  partnership  arrangement.  There  is  no  invested  capital. 
It  is  our  custom  to  distribute  the  entire  net  income  to  the 
partners  as  salaries,  leaving  the  partnership  no  net  profits. 
May  we  continue  to  do  this?  If  the  partnership  makes  a 
return  it  will  be  entitled  to  a  deduction  of  $6,000  and  the 
several  partners  are  each  entitled  to  the  same  deduction.  In 
other  words,  if  we  make  a  separate  return  for  the  partnership 
there  will  be  a  total  of  six  $6,000  deductions,  whereas  if  all  the 
net  income  is  distributed  and  taxed  to  the  individual  partners 
there  will  be  only  five  such  deductions.  In  the  latter  case  the 
Government  will  collect  $480  more  tax.  We  prefer  not  to  make 
a  partnership  return. 

The  department  will  not  recognize  a  division  or  sharing  of 
the  entire  net  income  of  a  partnership  as  an  allowable  method 
of  determining  the  salaries  of  the  partners,  although  in  rare 
cases  the  salaries  may  exhaust  or  even  exceed  the  net  income 
of  the  partnership.  (See  Article  32  of  Regulation  No.  41.) 
Every  cTomestic  part^ership  having  a  net  income  of  $6,000  or 
more  without  deducting  salaries  or  interest  paid  to  partners 
must  make  a  return  of  income  on  Form  1065. 

CONCERNS  IN  OPERATION  ONLY  PART  OF  TAXABLE 
YEAR. 

25.  A  partnership  was  established  and  began  operations 
August  1,  1917.  The  capital  invested  was  $300,000  and  the 
net  income  for  the  five  remaining  months  of  1917  was  $60,000. 
What  is  the  tax? 

As  the  net  incom«  covers  only  five-twelfths  of  a  year,  the 
deduction  and  the  invested  capital  must  be  brought  to  the 
same  basis.  Five -twelfths  of  the  total  deduction  for  a  full 
year  is  $12,500.     (The  percentage  deduction  for  a  full  yea,r 

1352 


would  be  $24,000  and  the  specific  deduction  would  be  $6,000, 
a  total  of  30,000.  Five-twelfths  of  the  last  figure  is  $12,500.) 
Five-twelfths  of  the  total  invested  capital  is  $125,000.  Thus 
in  this  case  the  tax  would  be  computed  on  the  basis  of  an 
invested  capital  of  $125,000,  net  income  of  $60,000,  and  a 
total  deduction  of  $12,500.    The  tax  would  be  $20,750. 

26.  A  Corporation  organized  July  1,  1917,  makes  $2,400  in 
the  last  half  of  that  year.  Is  it  required  to  make  return  and 
pay  excess-profits  tax? 

Yes.  A  corporation  engaged  in  business  for  only  a  part  of 
the  year  must  make  return  if  its  net  income  is. at  the  rate  of 
$3,000  or  more  per  annum.  A  similar  rule  applies  to  an  in- 
dividual or  partnership  engaged  in  business  for  only  part  of 
the  taxable  year;  a  return  must  be  made  and  the  excess- 
profits  tax  paid  if  the  net  income  for  the  taxable  year  is  at 
the  rate  of  $6,000  or  more.  (This  answer  does  not  apply  in 
the  case  of  a  corporation  or  partnership  whose  first  fiscal  year 
ends  in  1918  and  which  has  secured  permission  to  make  its 
return  on  the  basis  of  its  fiscal  year.) 

INVESTED  CAPITAL. 

87.  Section  207  (clause  3)  authorizes  the  inclusion  in  in- 
vested capital  of  "paid  in  or  earned  surplus  and  undivided 
profits  used  or  employed  in  the  business."  Can  a  corporation 
or  partnership  have  any  surplus  or  undivided  profits  which 
for  purposes  of  the  excess-profits  tax  will  not  be  deemed  to  be 
used  or  employed  in  the  business? 

All  the  surplus  and  undivided  profits  of  a  corporation  or 
partnership  (exclusive  of  undivided  profits  earned  during  the 
year),  will,  unless  invested  in  assets  the  income  from  which 
Is  not  subject  to  the  excess-profits  tax,  be  deemed  to  be  used 
or  employed  in  the  business  and  may  be  included  in  the  in- 
vested capital.     (See  Article  62  of  Regulations  No.  41.) 

28.  A  corporation  balances  its  books  monthly,  carrying 
profits  into  surplus  account.  Is  the  capital  as  of  January  lat 
increased  for  the  purposes  of  the  excess-profits  tax  by  the 
addition  of  these  monthly  profits? 

No.  The  law  specifically  excludes  undivided  profits  earned 
during  the  taxable  year.  The  profits  accumulated  during  the 
year,  even  though  entered  on  the  books  as  surplus  before  the 
close  of  the  year,  can  not  be  counted  as  additions  to  the  capi- 
tal for  that  year.     (See  Article  61  of  Regulations  No.  41.) 

29.  In  computing  invested  capital  for  the  purposes  of  the 
excess-profits  tax,  may  a  corporation  take  as  the  value  of  its 
capital  stock  the  amount  fixed  by  the  department  for  the  pur- 
poses of  the  capital-stock  tax? 

No.  Each  return  must  be  prepared  in  accordance  with  the 
provisions  of  the  law  under  which  it  is  made. 

30.  According  to  Section  207,  bonds  (other  than  obligations 
of  the  United  States),  the  income  from  which  is  not  subject 
to  the  excess-profits  tax,  can  not  be  included  in  invested  capi- 
tal. Section  200  states  that  "The  term  'United  States*  means 
only  the  States,  the  Territories  of  Alaska  and  Hawaii  and  the 
District  of  Columbia."  May  State  bonds  be  included  in  in- 
vested capital? 

No.  The  above  defmition  applies  only  in  a  geographical 
sense.     The  term  "United  States"  in  the  parenthetical  clause 

1353 


above  is  not  used  in  a  geographical  sense.  Hence  the  term 
"obligations  of  the  United  States"  means  only  obligations  of 
the  Federal  Government. 

31.  In  1901  a  corporation  was  organized  and  took  over  the 
assets  of  a  dozen  going  concerns,  issuing  therefor  $25,000,000 
of  capital  stock  The  assets  consisted  of  various  plant  struc- 
tures, equipment,  real  estate,  patents,  and  good  will.  At  the 
time  of  the  transaction  all  of  these  items  were  entered  in  a 
lump  sum  and  no  attempt  was  made  to  indicate  the  specific 
amounts  of  stock  issued  for  the  respective  kinds  of  property. 
It  is  shown  that  at  that  time  the  tangible  property  was  worth 
$10,000,000,  the  patents  $2,000,000,  and  the  good  will  not  less 
than  $7,000,000.    How  is  the  invested  capital  to  be  computed? 

In  accordance  with  Article  59  of  Regulations  No.  41,  it  will 
be  presumed  that  $12,000,000  of  the  stock  was  issued  for  the 
tangible  property  and  the  patents  and  that  $13,000,000  was 
issued  for  good  will.  The  tangible  property  will  be  taken  at 
its  value  as  of  January  1,  1914,  but  not  to  exceed  $10,000,000, 
the  par  value  of  the  stock  deemed  to  have  been  issued  for  it. 
The  patents  will  be  taken  at  their  value  at  the  time  of  ac- 
quisition, namely,  $3,000,000.  Although  $13,000,000  of  stock 
was  issued  for  the  good  will,  it  can  be  taken  at  only  $5,000,000, 
i.  e.,  20  per  cent  of  the  total  stock  outstanding  on  March 
3,  1917. 

32.  A  banking  corporation  began  operations  in  1902.  In 
the  course  of  12  years,  for  reasons  of  conservatism,  the  bank 
charged  off  practically  the  entire  value  of  its  building,  and 
sihce  January  1,  1915,  has  been  carrying  it  on  its  books  at 
the  nominal  figure  of  $1.  Can  any  of  this  value  be  restored 
for  the  purpose  of  computing  invested  capital? 

Yes.  The  building  may  be  taken  at  cost,  less  a  fair  allow- 
ance for  depreciation.  However,  any  amounts  which  may  have 
been  allowed  as  a  deduction  for  depreciation  under  the  income- 
tax  law  can  not  be  restored. 

33.  A  farmer  bought  a  piece  of  land  December  1,  1913.  He 
has  put  no  new  money  in  the  business,  but  has  spent  all  his 
income  from  the  land  for  tile  and  ditching.  The  farm  cost 
originally  $4,000,  and  is  now  easily  worth  $10,000.  In  com- 
puting invested  capital  should  the  value  as  of  January  1,  1914, 
be  taken? 

No.  The  property  will  be  valued  at  cost,  less  depreciation 
(on  buildings,  etc.),  plus  the  amount  of  earnings  from  year 
to  year  invested  in  the  permanent  improvement  of  the  prop- 
erty. 

34.  Article  18  of  the  Regulations  says  that  when  the  de- 
duction is  determined  under  Artcile  24  a  "constructive"  capi- 
tal will  be  used  for  applying  the  rates  of  taxation.  It  may 
be  that  in  some  cases  it  will  be  impossible  to  determine  satis- 
factorily the  invested  capital  for  the  pre-war  period,  but  quite 
possible  to  determine  the  invested  capital  for  the  taxabl« 
year.  In  such  cases  the  deduction  will  be  determined  under 
Article  24.  Will  the  constructive  capital  described  in  Article 
18  be  used? 

No.  The  constructive  capital  is  to  be  used  only  in  cases 
where  it  is  impossible  to  determine  satisfactorily  the  invested 
capital  for  the  taxable  year. 

1354 


35.  In  1900  a  corporation  was  organzed  and  took  over  a 
mining  property  then  valued  at  $1,000,000.  For  this  property 
the  corporation  issued  stock  to  the  amount  of  $1,000,000.  Ai 
a  result  of  development,  the  discovery  of  new  ore  bodies^  etc., 
the  property  increased  in  value  until  in  1910  after  an  appraisal 
it  was  entered  on  the  books  at  $10,000,000  and  the  surplus 
was  increased  accordingly.  In  1917  another  appraisal  was 
had  and  the  value  of  the  property  was  then  fixed  at  $15,000,000. 
The  balance  sheet  of  the  corporation  now  shows  capital  stock 
of  $1,000,000  and  a  surplus  of  $20,000,000,  of  which  $14,000,000 
is  represented  by  the  appreciation  in  value  above  described. 
May  the  appraised  value  of  the  property  be  taken  as  the  basis 
for  computing  invested  capital? 

No.  The  excess-profits  tax  law  expressly  places  the  com- 
putation of  invested  capital  upon  the  basis  of  the  cash  and 
other  property  actually  put  into  the  business,  plus  the  earned 
surplus  and  undivided  profits,  and  not  upon  that  of  a  present 
valuation  or  appraisal  of  its  assets.  Returns  in  which  the 
invested  capital  includes  surplus  or  undivided  profits  com- 
puted upon  present  values  as  determined  by  an  appraisal  can 
not  be  accepted. 

36.  In  1907  a  corporation  acquired  a  manufacturing  plant 
valued  at  $500,000,  issuing  therefor  $500,000  of  capital  stock. 
The  books  of  the  corporation  on  December  31,  1916^  showed 
a  surplus  of  $1,000,000,  accumulated  through  the  earnings  of 
the  business.  Most  of  this  surplus  was  invested  in  increased 
plant  equipment,  etc.  In  December,  1917,  the  property  was 
appraised  (as  of  Jan.  1,  1917)  by  an  appraisal  company  and 
the  value  fixed  at  $2,500,000,  or  $1,000,000  more  than  the  values 
previously  shown  on  the  books.  This  increase  was  attributable 
mainly  to  increased  value  of  land  and  in  part  to  larger  values 
placed  by  the  appraisal  company  upon  the  machinery  and 
equipment.  May  this  appreciation  of  $1,000,000  be  regarded 
as  an  earned  surplus,  and  the  value  fixed  by  the  appraisal 
company  in  December,  1917,  be  taken  as  a  basis  for  computing 
invested  capital  for  that  year? 

No.  The  same  rule  applies  here  as  in  the  case  stated  in 
question  No.  35.  For  the  purposes  of  the  excess  profits  tax 
law  appreciation  in  the  value  of  property  will  not  be  regarded 
as  earned  surplus,  and  an  appraisal  of  property  upon  current 
values  will  not  be  accepted  as  a  basis  for  computing  invested 
capital. 

37.  A  proprietary  medicine  company  has  spent  large  sums 
in  advertising  and  has  thereby  built  up  a  good  wilL  May 
these  sums  be  included  as  expenditures  for  a  capital  asset? 

If  the  money  was  spent  from  original  capital  the  original 
capital  is  of  course  allowed.  But  if  these  advertising  bills 
were  paid  from  income  and  the  amounts  charged  to  general 
expense  they  can  not  be  included  as  capital.  Good  will  can 
be  included  only  when  bought  and  paid  for  specifically  as  such. 

RETURNS. 

38.  A  corporation  is  engaged  in  the  brokerage  business,  em- 
ploying only  a  nominal  capital.  According  to  Article  73  of 
the  Regulations,  it  is  taxable  at  the  8  per  cent  rate  under 
Section  209  of  the  law.  Its  income  tax  return  is  made  out  on 
Form  1031.  Must  it  also  make  out  a  return  on  Form  1103, 
which  apparently  relates  only  to  corporations  having  an  in- 
vested capital? 

1355 


Yes.  Every  corporation  claiming  to  have  only  a  nominal 
capital  must  file  a  return  on  Form  1103,  however  small  its 
capitalization  may  be. 

39.  If  a  corporation  claiming  to  have  only  a  nominal  capi- 
tal files  a  return  on  Form  1103,  will  this  not  be  construed  as 
an  admission  that  it  has  invested  capital  and  is  taxable  at  the 
graduated  rates  under  Section  201? 

No.  This  return  is  required  for  the  sake  of  information,  so 
as  to  enable  the  department  to  determine  the  justice  of  the 
claim.  The  two  forms  (1031  and  1103)  should  be  filed  to- 
gether and  should  be  accompanied  by  a  statement  describing 
the  nature  of  the  business,  the  purposes  for  which  the  capital 
is  employed,  and  any  other  facts  tending  to  show  that  the 
corporation  is  of  a  kind  properly  taxable  under  Section  209, 
at  the  8  per  cent  rate. 

40.  In  the  case  of  a  corporation  claiming  to  have  only  a 
nominal  capital,  on  which  form  and  under  what  schedule 
should  the  tax  at  the  8  per  cent  rate  be  computed? 

(a)  In  the  case  of  a  domestic  corporation,  take  the  net 
income  as  shown  in  item  6,  Schedule  I  of  Form  1103,  com- 
pute 8  per  cent  on  the  amount  thereof  in  excess  of  $3,000,  and 
enter  the  result  as  item  12  on  Form  1031.  (b)  In  the  case  of 
a  foreign  corporation,  if  the  net  income  shown  in  Item  6, 
Schedule  I  of  Form  1103  is  in  excess  of  $3,000  the  tax  will  be 
8  per  cent  upon  the  whole  amount  and  should  be  entered  as 
Item  12  on  Form  1031.  (c)  In  either  case  it  should  be  noted 
under  Item  12  that  the  tax  is  computed  at  the  8  per  cent  rate. 

41.  If  a  corporation  during  1917  made  less  than  7  per  cent 
on  its  invested  capital,  is  it  required  to  file  an  excess-profits 
return? 

Every  corporation  having  an  income  for  the  taxable  year 
of  $3,000  or  over  is  required  to  file  an  excess-profits  return, 
even  though  its  total  deduction  may  be  in  excess  of  its  net 
income. 

42.  On  Form  1065  (partnership -income  return)  it  is  stated 
on  page  1,  under  "6.  Excess  Profits  Tax,"  that  "if  the  partner- 
ship reports  any  income  from  sources  other  than  those  in- 
cluded under  A,  page  3,  it  must  make  a  return  and  compute 
the  amount  of  tax  (if  any)  on  Form  1102."  If  a  domestic  part- 
nership rendering  professional  or  personal  services  and  report- 
ing its  main  income  in  block  A  also  reports  a  small  amount 
of  interest  from  bank  balances,  etc.,  in  block  F,  will  it  be  re- 
quired to  make  a  return  on  Form  1102? 

No.  The  income  of  a  partnership  or  corporation  (unlike 
that  of  an  individual)  must  be  taxed  as  a  unit — all  under  the 
graduated  rates  or  all  at  8  per  cent.  (See  Article  14  of  Regu- 
lations No.  41.)  If  the  partnership  has  a  substantial  amount 
of  capital  (however  invested),  return  must  be  made  on  Form 
1102  for  purposes  of  information.  (See  answers  38  and  39 
above.)  But  if  the  partnership  has  only  a  small  capital  and 
Is  clearly  taxable  at  the  8  per  cent  rate  as  to  the  income  from 
its  principal  trade  or  business,  any  income  which  it  derives 
from  other  sources  will  be  taxed  in  the  same  manner  and 
there  will  be  no  occasion  for  a  return  of  invested  capital. 

43.  In  the  case  stated  in  question  No.  42,  how  should  the 
tax  be  computed? 

1356 


In  every  case  the  excess-projBts  tax  of  a  partnership  is  to 
bo  computed  upon  the  net  income,  as  shown  in  block  G,  page 
4,  of  Form  1065.  In  the  case  above  stated  this  will  consist 
of  the  sum  of  the  totals  reported  under  A  and  F.  The  tax 
will  be  8  per  cent  upon  the  amount  by  which  this  sum  exceeds 
$6,000.  (The  statement  on  page  4  of  Form  1065  that  the  ex- 
cess-profits tax  on  a  business  with  no  invested  capital,  or 
only  a  nominal  capital,  will  be  "8  per  cent  of  the  amount  by 
which  the  net  total  reported  under  A,  page  3,  exceeds  $6,000, 
or  in  the  case  of  a  foreign  partnership,  8  per  cent  of  the  entire 
net  total  reported  under  A"  applies  only  in  cases  where  the 
entire  net  income  falls  in  block  A.) 

44.  Will  every  partnership  reporting  income  from  business 
under  block  B,  page  3  of  Form  1065,  be  taxable  at  the  gradu- 
ated rates  under  Section  201? 

Not  necessarliy.  Every  partnership  reporting  income  under 
block  B  must  make  a  return  on  Form  1102.  But  if  it  is  clear 
that  its  principal  trade  or  business  consists  in  rendering  per- 
sonal service  (income  reported  under  block  A)  and  is  taxable 
at  the  8  per  cent  rate,  all  of  its  income  will  be  taxed  at  that 
rate  even  though  a  part  of  it  may  be  derived  from  "invested 
capital." 

45.  Block  C,  on  page  3  of  Form  1065,  provides  space  for 
entering  profits  from  sale  of  real  estate,  stocks,  bonds,  and 
other  property.  If  a  partnership  sustains  a  net  loss  from 
such  transactions  can  it  take  account  of  such  loss  in  computing 
its  net  income  subject  to  the  excess-profits  tax? 

Yes.  The  loss  should  be  entered  in  red  ink  or  as  a  negative 
quantity  in  block  C. 

46.  On  the  individual  excess-profits  tax  return  (Form  1101) 
there  appears  under  schedule  B  a  column  for  entering  the 
"Cost"  of  assets  acquired  except  "tangible  property  put  into 
the  business."  Where  should  the  value  of  tangible  property 
put  into  the  business  be  entered? 

In  the  same  column  (column  2,  headed  "Cost").  If  the 
property  was  put  in  before  January  1,  1914,  enter  the  value 
as  of  that  date;  if  put  in  on  or  before  that  date,  enter  the 
value  as  of  the  time  when  put  in.  In  all  such  cases  enter 
along  with  the  description  of  the  asset  the  date  when  it  was 
paid  in. 

47.  If  an  individual  who  keeps  books  reports  his  invested 
capital  in  schedule  A  on  Form  1101,  must  he  also  fill  out 
schedule  B? 

Not  necessarily.  If  invested  capital  is  reported  in  schedule 
A,  the  return  should  be  accompanied  by  a  statement  explaining 
adjustments.  In  many  cases,  however,  it  may  be  advisable 
to  fill  in  the  spaces  provided  in  schedule  B  for  the  description 
of  assets  and  their  proper  valuation.  This  may  be  useful  in 
connection  with  the  explanatory  statement. 

48.  Item  7  in  schedule  A  of  Form  1101  (individual  excess- 
profits  tax  return)  calls  for  the  excess  of  inadmissible  assets 
over  liabilities.  Should  an  individual  reporting  his  invested 
capital  in  schedule  A  specify  the  amount  of  liabilities  and  in- 
admissible assets  respectively  under  items  23  to  27  of  sched- 
ule B? 

Yes.  This  is  the  most  convenient  way  of  explaining  item 
7  of  schedule  A. 

1357 


49.  How  does  a  member  of  a  partnership,  in  making  his 
individual  income-tax  return,  report  his  credit  for  his  propor- 
tionate share  of  the  excess-profits  tax  assessed  against  the 
partnership?  Does  he  add  that  share  to  any  excess-profits 
tax  assessed  against  him  as  an  individual  and  report  this  sum 
in  block  L  on  Form  1040? 

No.  On  Form  1065,  page  4,  the  partnership  takes  credit  for 
its  excess-profits  fax  (block  J)  before  arriving  at  the  net  in- 
come to  be  shared  by  the  partners  (block  K).  So  the  indi- 
vidual partner  in  reporting  his  total  net  income  (Form  1040, 
block  K)  has  already  deducted  his  proportionate  share  of  the 
partnership  excess -profits  tax  and  he  may  not  again  include 
that  share  as  a  part  of  his  deduction  under  block  L  of  Form 
1040.  He  should  enter  in  that  space  only  the  amount  of  ex- 
cess-profits tax,  if  any,  assessed  against  his  as  an  individual. 

50.  On  page  2  of  Form  1065  (partnership-income  return), 
under  the  heading  "Other  expenses"  is  the  following  instruc- 
tion: "Do  not  deduct  salary  for  any  partner's  services  unless 
such  salary  is  paid  in  accordance  with  a  prior  agreement  prop- 
erly recorded  on  the  books  of  the  partnership."  Does  this  in- 
struction supersede  Article  32  of  the  Regulations? 

No.  With  respect  to  any  period  prior  to  March  1,  1918, 
a  salary  deduction  for  services  actually  rendered  will  be  al- 
lowed regardless  of  whether  a  previous  agreement  had  been 
made. 

51.  A  corporation  in  which  most  of  the  stock  is  owned  by 
its  officers  has  in  the  past  voted  to  its  officers  only  nominal 
salaries  as  drawing  accounts.  In  computing  net  income  for 
purposes  of  the  excess-profits  tax  may  the  corporation  deduct 
as  items  of  expense  amounts  which  would  constitute  reason- 
able compensation  for  the  services  actually  rendered  by  its 
officers? 

Yes,  if  a  satisfactory  explanation  is  given.  For  any  period 
prior  to  March  1,  1918,  reasonable  salaries  for  services  actually 
rendered  may  be  deducted,  even  though  the  full  amounts  had 
not  been  formally  voted  as  salaries  by  the  corporation. 


March  14,  1918. 

EXCESS  PROFITS  TAX  SERIES— Letter  No.  9. 

The  questions  in  Letters  1  to  8,  inclusive,  have  been  re- 
arranged according  to  their  subject  matter  and  published  in 
the  "'Excess  Profits  Tax  Primer."  This  and  subsequent  letters 
will  serve  as  supplements  to  the  Primer. 

52.  An  individual  is  in  the  habit  of  balancing  his  books  twice 
a  year,  on  June  30  and  on  December  31.  In  computing 
his  invested  capital  for  1917,  may  he  take  the  state- 
ments on  his  books  for  December  31,  L916,  June  30,  1917, 
and  December  31,  1917,  and  average  the  three? 
No.    He  should  ascertain  his  capital  as  of  December  31,  1916, 

and  as  of  December  31,  1917,  and  take  the  average  of  the  two. 

However,  he  may,  if  he  prefers,  ascertain  the  invested  capital 

once  each  month  and  compute  his  invested  capital  for  the  year 

by  the  monthly  average  method. 

1358 


53.  During  the  past  six  years  a  manufacturer  has  carried  a 
loan  of  $100,000  from  his  bank.  This  is  used  in  purchas- 
ing raw  materials.  For  practical  purposes  it  is  a  part 
of  his  working  capital.  May  he  include  it  in  his  invested 
capital? 

No.  It  is  borrowed  money  and  is  specifically  excluded  by 
the  law. 

54.  A  grocer  in  business  as  an  individual  pays  taxes  of 
$1,800  on  his  stock  and  store  building  and  $800  on  his 
(separate)  residence.  May  he  deduct  all  of  these  taxes 
in  computing  his  net  income  for  purposes  of  the  excess 
profits  tax? 

No.  The  taxes  on  his  store  and  stock,  being  incident  to  the 
business,  may  be  deducted;  but  the  tax  on  his  residence  is 
not  deductible  for  purposes  of  the  excess  profits  tax. 

55.  May  an  individual  working  on  a  salary  of  $10,000  deduct 
taxes  of  $500  on  his  residence  on  the  ground  that  the 
residence  is  necessary  to  his  personal  service  business? 

No. 

56.  An  individual  receives  a  salary  of  $10,000.  His  excess 
profits  tax  is  $320.  Does  he  pay  income  tax  on  the  full 
$10,000? 

No.  In  addition  to  his  personal  exemption  he  may  deduct 
the  $320  excess  profits  tax  before  computing  the  income  sub- 
ject to  income  tax. 

57.  My  invested  capital  is  $50,000;  my  net  income  $40,000; 
my  total  deduction  $10,000;  so  that  my  taxable  income 
is  $30,000.  How  do  I  apply  the  graduated  rates?  Should 
I  use  only  the  $30,000  in  determining  the  amount  of 
income  subject  to  the  various  rates? 

No.  Your  total  net  income  of  $40,000  should  be  used  for  this 
purpose.  The  deduction  comes  out  of  the  first  bracket,  but  if 
it  exceeds  the  amount  of  income  in  that  bracket,  then  the  rest 
of  the  deduction  is  allowed  under  the  second  and  succeeding 
brackets  until  it  is  exhausted.  In  the  above  case  the  deduction 
exceeds  15  per  cent  of  the  capital  (the  amount  of  the  net  in- 
come in  the  first  bracket,  $7,500)  and  also  absorbs  all  of  the 
income  in  the  second  bracket  ($3,500).'  This  leaves  $2,500  to 
be  taxed  at  the  35  per  cent  rate,  $4,000  at  the  45  per  cent  rate, 
and  $23,500  at  the  60  per  cent  rate.     The  total  tax  is  $16,775. 

58.  In  July,  1917,  a  patent  medicine  concern  with  a  capital 
stock  of  $100,000  and  owning  assets,  including  good  will, 
plainly  worth  $1,500,000,  transferred  its  assets  to  a  new 
corporation,  receiving  in  payment  therefor  the  total 
capital  stock  of  the  new  company  to  the  amount  of  $1,- 
600,000.  The  stock  of  the  old  company  was  then  can- 
celled, its  stockholders  receiving  in  exchange  therefor 
the  stock  of  the  new  corporation.  In  computing  invested 
capital  may  the  good  will  be  included  up  to  20  per  cent 
of  the  $1,500,000? 

No.  In  the  case  of  a  reorganization  after  March  3,  1917, 
where  the  control  of  the  business  remains  in  the  same  hands, 
nc  asset  transferred  to  the  new  company  may  be  included  at 
a  greater  value  than  would  have  been  allowed  to  the  old  com- 
pany, unless  the  asset  is  actually  purchased  with  cash  or  tan- 
gible property.  In  the  above  case,  if  the  good  will  is  allowed 
it  may  not  be  included  at  a  value  exceeding  20  per  cent  of  the 
$100,000  capital  stock  of  the  old  corporation, 

1359 


69.   A  manufacturing  corporation  owns  99  per  cent  of  the 
stock  of  another  corporation  which  has  title  to  certain 
buildings,  real  estate,  and  other  property  used  by  the 
manufacturing  corporation.    May  they  make  a  consoli- 
dated return? 
Yea.     An  associated  or  subsidiary  corporation  which  owns 
property  employed  in  the  business  of  another  corporation  will 
be  deemed  to  be  affiliated  with  the  latter  corporation  and  shall 
join  with  it  in  making  a  consolidated  return  for  purposes  of 
the  excess  profits  tax  if  the  controlling  corporation  owns  95  per 
cent  or  more  of  the  stock  of  the  subsidiary. 


March  15,  1918. 

EXCESS  PROFITS  TAX  SERIES— Letter  No.  10. 

60.  Two  partners  invested  $4,000  each,  with  the  understand- 
ing that  the  partners  would  pay  them  8  per  cent  on  this 
amount  before  distributing  any  other  profits.  Should 
the  partnership  deduct  as  expense  the  $640  so  paid? 

No.  It  was  a  division  of  profits.  However,  if  the  notes  of 
the  partnership  were  issued  for  money  actually  loaned  by  the 
partners,  the  interest  would  be  deductible  but  the  amount  of 
the  loan  could  not  be  included  in  the  invested  capital. 

61.  A  partnership  conducts  a  merchandising  business  in 
which  capital  is  employed.  It  also  does  a  commission 
business  entirely  separate  and  apart  from  the  merchan- 
dising business.  May  it  report  the  merchandising  busi- 
ness on  Form  1102,  computing  the  tax  at  the  graduated 
rates,  and  report  the  commission  business  in  Block  A 
of  Form  1065,  computing  the  tax  at  the  8  per  cent  rate? 

No.  All  the  trades  or  businesses  of  a  partnership  are  treated 
as  a  single  trade  or  business.  All  of  its  income  will  be  clas- 
sified and  taxed  according  to  the  nature  of  its  principal  trade 
or  business.  In  the  above  case  the  partnership  should  report 
all  of  its  income  under  the  proper  Blocks  on  Form  1065  and 
should  also  make  a  return  on  Form  1102.  If  the  merchandising 
business  is  its  principal  business,  then  the  tax  will  be  com- 
puted at  the  graduated  rates  on  Form  1102;  if  the  commission 
business  is  its  prmcipal  business,  the  tax  will  be  computed  at 
the  8  per  cent  rate  on  Form  1065.  In  either  case  the  tax 
should  be  computed  upon  the  net  income  shown  in  Item  G, 
page  4,  of  Form  1065. 

62.  A  corporation  has  an  authorized  capital  stock  ot  $500,- 
000.  $100,000  was  issued  for  cash.  In  February,  1917, 
another  $100,000  was  issued  for  notes.  The  balance  is 
unissued.  May  we  count  our  paid  up  capital  stock  as 
$200,000? 

Bnforeible  notes  or  other  evidences  of  indebtedness,  bearing 
a  reasonable  rate  of  interest,  bona  fide  and  lawfully  received 
by  a  corporation  in  payment  for  its  corporate  stock  may  be 
considered  as  tangible  property  in  computing  invested  capital. 
But  if  the  interest  on  the  notes  is  not  paid  within  the  taxable 
year  or  if  the  indebtedness  evidenced  thereby  is  not  paid 
within  a  reasonable  time,  the  obligations  will  be  presumed  to 
be  colorable  only  and  will  be  excluded  in  computing  invested 
capital.  If  there  is  any  agreement  or  understanding  that  such 
obligations  are  to  be  paid  out  of  tlie  earnings  of  the  corpora- 
tion when  distributed  in  the  form  of  dividends  or  otherwise, 

1360 


then  the  obligations  will  not  be  regarded  as  tangible  property 
paid  in  and  the  stock  issued  for  them  will  not  be  regarded  as 
paid  up  until  the  obligations  are  actually  paid. 

63.  On  December  15,  1916,  a  corporation  declared  a  dividend 
to  the  amount  of  $100,000,  payable  March  25,  1917.  Wai 
the  $100,000  in  question  part  of  the  invested  capital  on 
January  1,  1917? 

Yes.  It  may  be  treated  as  a  part  of  the  surplus  until  paid. 
If  at  the  time  of  payment  the  1917  profits  were  sufficient,  the 
dividend  will  be  deemed  to  have  been  paid  out  of  the  1917 
profits  and  the  surplus  carried  forward  from  1916  will  not  be 
reduced  on  account  of  this  dividend.  If,  however,  the  1917 
earnings  were  not  sufficient  to  pay  the  dividend,  the  surplus 
carried  forward  from  1916  will  be  reduced  by  the  amount 
thereof  required  for  the  payment  of  the  dividend. 

64.  A  conservatively  managed  manufacturing  plant  has  been 
charging  depreciation  on  its  machinery  at  the  rate  of  10 
per  cent  a  year.  A  considerable  portion  of  its  equip- 
ment has  been  entirely  charged  ofiE  on  its  books,  although 
the  machinery  is  in  use  and  at  present  prices  is  worth 
practically  all  it  originally  cost.  May  any  of  this  de- 
preciation be  restored  to  capital  account? 

Under  the  conditions  imposed  by  Article  64  of  Regulations 
No.  41,  a  taxpayer  may,  in  computing  invested  capital,  restore 
to  capital  account  any  depreciation  upon  property  still  in  use 
which  was  charged  off  prior  to  March  1,  1913,  and  is  now  shown 
to  have  been  excessive,  and  also  any  depreciation  charged  ofT 
subsequent  to  March  1,  1913,  which  has  been  disallowed  by  the 
Bureau  of  Internal  Revenue. 

65.  An  individual  balance  sheet  shows  the  following  state- 
ment: 

Assets—  Liabilities— 

Cash 125,000       Capital  Account 1200,000 

Merchandise  75,000       Accts.  Payable ^ 100,000 

Accts.  Receivable 50,000 

Securities  150,000 

1300,000  1300,000 

The  securities  consist  entirely  of  municipal  bonds  and 
the  stock  of  domestic  corporations.    They  have  always 
been  carried  as  a  business  investment  and  are  continu- 
ally used  as  collateral.    What  is  the  invested  capital? 
$150,000   (assuming  that  due  allowance  has  been  made  for 
adjustments    in    the    capital    account).      The    securities    are 
inadmissible  assets  and  exceed  the  liabilities   (accounts  pay- 
able)  by  $50,000.     This  amount  should  be  entered  as  Item  7, 
Schedule  A  on  Form  1101,  and  is  to  be  subtracted  from  the 
adjusted  capital  account,  $200,000.     This  leaves  invested  cap- 
ital of  $150,000. 


March  19,  1918. 
EXCESS  PROFITS  TAX  SERIES— Letter  No.  11. 

NOTE. — Correction  in  Excess  Profits  Tax  Primer.— On  page 
15  (item  No.  1763,  page  517,  issue  of  March  19)  of  the  Primer 
under  Question  No.  46,  in  the  third  line  of  the  Answer,  the 
word  "before"  should  be  "after,"  so  that  the  second  sentence 
will  read  as  follows: 

"If  the  property  was  put  in  before  January  1, 
1914,  enter  the  value  as  of  that  date;  if  put  in  on 
or  after  that  date,  enter  the  value  as  of  the  time 
when  put  in." 

1361 


66.  A  partnership  engaged  in  the  practice  of  law  has  a  net 
income  of  $15,000.  One  partner  draws  a  salary  of  $3,000 
and  the  other  $6,000,  leaving  $6,000  net  for  the  partner- 
ship. The  deduction  for  the  partnership  is  $6,000,  leav- 
no  tax  to  be  paid.  The  $6,000  profits,  however,  is  paid 
to  the  partner  drawing  the  $6,000  salary.  Does  he  pay 
excess  profits  tax  on  the  basis  of  an  income  of  $12,000? 

No.  He  has  a  $6,000  deduction  which  covers  his  salary,  and 
the  $6,000  received  in  the  form  of  partnership  profits  is  not 
taxable  to  the  individual  partner  under  the  Excess  Profits 
Tax  Law.  In  the  above  case,  neither  the  partnership  nor  the 
individual  partners  will  have  any  excess  profits  tax  to  pay. 

67.  A  partnership  has  a  capital  of  $60,000,  including  $10,000 
invested  in  municipal  bonds  and  the  stock  of  domestic 
corporations.  The  dividends  and  interest  received  on 
the  stock  and  bonds  are  figured  as  a  part  of  the  partner- 
ship profits  for  the  year.  May  the  $10,000  be  included 
as  a  part  of  the  invested  capital? 

No.  The  income  from  this  investment  is  not  subject  to  the 
excess  profits  tax.  The  stocks  and  bonds  in  question  are  there- 
fore inadmissible  assets  and  may  not  be  included  in  the  in- 
vested capital. 

68.  A  corporation  having  a  capital  stock  of  $100,000  is  en- 
gaged in  the  buying  and  selling  of  securities.  During 
the  year  1917  an  average  of  $75,000  of  its  capital  was 
invested  in  municipal  bonds.  Interest  on  the  bonds 
amounted  to  $4,500;  profits  from  the  sale  of  the  bonds 
amounted  to  $18,000.  May  any  of  the  $75,000  invested 
in  these  bonds  be  included  in  invested  capital? 

Yes.  The  total  income  from  the  bonds  (interest  plus  trad- 
ing profits)  was  $22,500.  The  trading  profits  were  four-fifths 
of  this  amount.  Under  Article  45  of  Regulations  No.  41,  four- 
fifths  of  the  amount  ($75,000)  invested  in  the  bonds,  namely, 
$60,000,  may  be  included  in  the  invested  capital. 

69.  A  corporation  with  a  paid-up  capital  stock  of  $100,000 
had  accumulated  a  surplus  of  $20,000  on  December  31, 
1914.  In  1915  the  corporation  suffered  a  loss  through 
fire  amounting  to  $50,000.  Since  then  it  has  made  up 
$10,000  of  the  loss.  In  computing  invested  capital  must 
the  capital  be  reduced  by  the  amount  of  the  loss  which 
was  in  excess  of  the  surplus  and  which  has  not  yet  been 
made  up?  In  other  words,  will  the  invested  capital  now 
be  reduced  to  $80,000? 

No.  The  invested  capital  will  be  $100,000.  The  loss  must 
be  taken  into  account  only  to  the  extent  that  it  wiped  out 
the  surplus.  The  amount  of  the  original  cash  investment  need 
not  be  reduced  for  this  purpose.  However,  no  new  surplus  can 
be  included  in  the  invested  capital  until  the  full  loss  of  $30,000 
chargeable  against  the  capital  account  has  been  made  good. 

70.  When  adjustments  are  made  under  Schedule  B  or  C  of 
Form  1103,  must  the  corporation  change  its  books  ac- 
cordingly? 

It  is  not  necessary  that  the  books  be  changed,  provided 
some  permanent  record  of  the  adjustments  be  kept. 

71.  On  December  31,  1917,  a  corporation  set  aside  a  reserve 
of  $100,000  to  pay  the  excess  profits  tax  due  in  June, 
1918,  in  case  the  current  earnings  should  not  be  suffi- 
cient. May  this  $100,000  be  included  in  the  invested 
capital  as  of  January  1,  1918? 

1362 


Yes.     Although  set  aside  as  a  reserve  fund,  it  will  be  re- 
garded as  a  part  of  the  siirplus. 

72.   In  1914  a  corporation  acquired  a  secret  formula  valued 
at  that  time  at  $500,000,  issuing  therefor  $500,000  of 
capital  stock.     May  the  secret  formula  be  included  in 
invested  capital  at  this  figure? 
Not  if  this  amount  exceeds  20  per  cent  of  the  total  stock 
outstanding  March  3,  1917.     Secret  formulae  or  secret  proc- 
esses are  regarded  as  intangibles  and  are  subject  to  the  same 
limitations. 


March  22,  1918. 

EXCESS  PROFITS  TAX  SERIES— Letter  No.  13. 

73.  In  the  case  of  corporation  A,  the  percentage  deduction, 
carried  out  to  two  decimal  places,  is  8.69.  In  the  case  of 
corporation  B,  the  percentage  deduction  is  8.23.  Should 
A  take  9  per  cent  and  B  8  per  cent,  as  the  percentage  to 
to  be  used  in  computing  its  deduction?  In  other  words, 
should  the  decimal  part  be  disregarded  when  less  than 
half  of  1  per  cent  and  be  increased  to  1  per  cent,  when 
it  amounts  to  one-half  of  1  per  cent  or  more? 

No.  The  exact  percentage,  including  decimals,  should  be 
used.  In  figuring  the  percentage,  carry  out  the  result  to  as 
many  decimal  places  as  desired,  but  drop  the  remainder,  if 
any,  without  increasing  the  final  figure  of  the  percentage. 

74.  If  a  taxpayer  in  making  his  excess  profit  tax  return  for 
1917  wishes  to  be  relieved  from  computing  the  pre-war 
data  and  accepts  7  per  cent  as  his  percentage  deduction, 
will  he  be  precluded  in  subsequent  years  from  sub- 
mitting the  pre-war  data  and  taking  whatever  percent- 
age deduction  such  data  would  show  him  entitled  to? 

No. 

75.  A  corporation  has  a  gross  income  in  1917  amounting  to 
$4,000,  but  its  net  income  was  only  $2,800.  Will  it  be 
regarded  as  "having  an  income  for  the  taxable  year  of 
$3,000  or  over"  and  thus  be  required  to  file  an  excess 
profits  return? 

No.  Under  existing  regulations  (Article  10,  Regulations  No. 
41)  an  excess  profits  return  is  required  only  when  the  net 
income  is  $3,000  or  over. 

76.  A  domestic  corporation  has  a  net  income  of  $8,000  and 
an  invested  capital  of  $100,000.  It  will  be  entitled  to  a 
deduction  of  at  least  $10,000,  so  that  it  will  have  no 
excess  profits  tax  to  pay.   Must  it  file  a  return? 

Yes.  Whenever  the  net  income  is  $3,000  or  over,  the  excess 
profits  tax  return  will  be  required  regardless  of  the  amount 
of  the  deduction. 

77.  In  October,  1917,  a  corporation  invested  $200,000  of  its 

current  earnings  in  Liberty  bonds.    May  this  amount  be 
included  in  the  invested  capital  for  1917? 
No.     Although  the  Liberty  bonds  are  "admissable"  assets, 
their  acquisition  did  not  affect  the  invested  capital  for  1917. 
Profits  of  a  taxable  year,  even  though  carried  to  surplus  ac- 
count, cannot  be  included  in  invested  capital  for  that  year. 

1363 


78.   An  individual  dealer  in  bonds  began  business  in  Jan- 
uary, 1917,  with  a  capital  of  $20,000.    He  carried  on  an 
average  through  the  year  $700,000  municipal  bonds  and 
$100,000  corporate  bonds.    His  average  indebtedness  foi 
the  year  was  $600,000,  on  which  he  paid  interest  amount- 
ing to  $30,000.    His  corporate  bonds  yielded  interest  to 
the  amount  of  $5,000.    The  interest  received  from  mu- 
nicipal bonds  was  $21,000;  but  the  interest  paid  in  in- 
debtedness incurred  for  carrying  municipals  amounted 
to  $26,250,  leaving  a  deficit  of  $5,250.     The  municipals 
were  sold  at  a  loss  of  $8,000;  but  the  industrial  bonds 
were  sold  at  a  sufficient  figure  to  leave  the  dealer  net 
trading  profits  for  the  year — after  deducting  all  ex- 
penses other  than  interest— of  $48,000.    His  taxable  net 
income  then  consists  of  $53,000  (trading  profits  plus  in- 
terest on  corporate  bonds)  less  deductible  interest  paid 
($3,750),  or  $49,250;  but  since  the  non-deductible  interest 
paid    ($26,250)    exceeds  the  tax  free  interest  received 
($21,000),  his  net  income  as  computed  on  his  own  books 
is  only  $44,000,  and  he  is  in  effect  taxed  on  a  $5,250  loss. 
May  he  include  any  part  of  the  municipal  bonds  in  his 
invested  capital? 
No.     No  part  of  the  municipal  bonds  may  be  treated  as 
admissible  assets  under  Article  45  inasmuch  as  a  trade  loss 
and  not  a  gain  was  sustained  from  their  sale.     Moreover,  in- 
debtedness upon  which  an  interest  deduction  is  denied  cannot 
be  included  in  invested  capital  under  Article  44  when  incurred 
for  the  purchase  of  inadmissible  assets.    However,  under  cir- 
cumstances such  as  those  recited  above  application  for  assess- 
ment under  Section  210  (Article  52)  will  be  considered. 


1364 


Collection  Districts 

A  Complete  List  of  Collection  Districts,  with  the  Names 
and  Addresses  of  Collectors — 

(Numbers  of  districts  represent  the  results  of  numerous 
amendments  and  consolidations.  Unless  otherwise  mentioned, 
the  entire  State  or  Territory  is  included  within  the  district 
designated.) 

District  Collector  Address 

Alabama John  D.  McNeel  Birmingham 

(Includes  State  of  Mississippi.) 

Alaska  (see  Washington). 

Arizona  (see  New  Mexico). 

Arkansas Jack  Walker  Little  Rock 

1st  California Justus  S.  Wardell        San  Francisco 

(Includes  the  counties  of  Alameda,  Alpine,  Amador, 
Butte,  Calaveras,  Colusa,  Contra  Costa,  Del  Norte,  Eldorado, 
Fresno,  Glenn,  Humboldt,  Inyo,  Kings,  Lake,  Laasen, 
Madera,  Marin,  Mariposa,  Mendocino,  Merced,  Modoc,  Mono, 
Monterey,  Napa,  Nevada,  Placer,  Plumas,  Sacramento,  San 
Benito,  San  Francisco,  San  Joaquin,  San  Mateo,  Santa 
Clara,  Santa  Cruz,  Shasta,  Sierra,  Siskiyou,  Solano,  Sonoma, 
Stanislaus,  Sutter,  Tulare,  Tehama,  Trinity,  Tuolumne, 
Yolo,  Yuba;  also,  includes  State  of  Nevada.) 

6th  California John  P.  Carter  Los  Angeles 

(Includes  the  counties  of  Imperial,  Kern,  Los  Angeles, 
Orange,  Riverside,  San  Bernardino,  San  Diego,  San  Luis 
Obispo,  Santa  Barbara  and  Ventura.) 

Colorado Mark  A.  Skinner  Denver 

(Includes  State  of  Wyoming.) 

Connecticut ..     James  J.  Walsh  Hartford 

(Includes  State  of  Rhode  Island.) 

Delaware  (see  Maryland). 

Florida James  M.  Cathcart        Jacksonville 

Georgia Aaron  0.  Blalock  Atlanta 

Hawaii Howard  Hathaway  Honolulu 

Idaho   (see  Montana). 

Ist  Hlinois Julius  F.  Smietanka  Chicago 

(Including  the  counties  of  Boone,  Carroll,  Cook,  Dekalb, 
Dupage,  Grundy,  Jo  Daviess,  Kane,  Kankakee,  Kendall, 
Lake,  Lasalle,  Lee,  McHenry,  Ogle,  Stephenson,  Whiteside 
Will  and  Winnebago.) 

5th  Hlinois Edward  D.  MeCabe  Peoria 

(Including  the  counties  of  Bureau,  Henderson,  Henry, 
Knox,  Marshall,  Mercer,  Peoria,  Putnam,  Rock  Island, 
Stark  and  Warren.  Date  of  present  constitution  of  district, 
July  1,  1887.) 

1365 


District  Collector  Address 

8th  Illinois John  L.  Pickering  Springfield 

(Including  the  counties  of  Adams,  Bond,  Brown,  Callioun, 
Cass,  Cliampalgn,  Christian,  Coles,  Cumberland,  Dewitt, 
Douglas,  Edgar,  Ford,  Pulton,  Greene,  Hancock,  Iroquois, 
Jersey,  Livingston,  Logan,  McDonough,  McLean,  Macon, 
Macoupin,  Mason,  Menard,  Montgomery,  Morgan,  Moultrie, 
Piatt,  Pike,  Sangamon,  Schuyler,  Scott,  Shelby,  Tazewell, 
Vermilion  and  Woodford.) 

13th  Illinois John  M.  Rapp  East  St.  Louis 

(Including  the  counties  of  Alexander,  Clark,  Clay,  Clin- 
ton, Crawford,  Edwards,  Effingham,  Fayette,  Franklin, 
Gallatin.  Hamilton,  Hardin,  Jackson,  Jasper,  Jefferson, 
Johnson,  Lawrence,  Madison,  Marion,  Massac,  Monroe, 
Perry,  Pope,  Pulaski,  Randolph,  Richland,  St.  Clair,  Saline, 
Union,  Wabash,  Washington,  Wayne,  White  and  Will- 
iamson.) 

6th  Indiana Peter  J.  Kruyer  Indianapolis 

(Including  the  counties  of  Adams,  Allen,  Bartholomew, 
Benton,  Blackford,  Brown,  Cass,  Dearborn,  Decatur,  De- 
kalb, Delaware,  Elkhart,  Fayette,  Franklin,  Fulton,  Grant, 
Hamilton,  Hancock,  Hendricks,  Henry,  Howard,  Hunting- 
ton, Jackson,  Jasper,  Jay,  Jefferson,  Jennings,  Johnson, 
Kosciusko,  Lagrange,  Lake,  Laporte,  Lawrence,  Madison, 
Marion,  Marshall,  Miami,  Monroe,  Morgan,  Newton,  Noble, 
Ohio,  Porter,  Pulaski,  Randolph,  Ripley,  Rush,  St.  Joseph, 
Shelby,  Starke,  Steuben,  Switzerland,  Tipton,  Union,  Wa- 
bash,  Wayne,  Wells,  White  and  Whitley.) 

7th  Indiana Isaac  R.  Strouse  Terre  Haute 

(Including  the  counties  of  Boone,  Carroll,  Clark,  Clay, 
Clinton,  Crawford,  Davies,  Dubois,  Floyd,  Fountain,  Gib- 
son, Greene,  Harrison,  Knox,  Martin,  Montgomery,  Orange, 
Owen,  Parke,  Perry,  Pike,  Posey,  Putnam,  Scott.  Spencer, 
Sullivan,  Tippecanoe,  Vanderburg,  Vermilion,  Vigo,  War- 
ren, Warrick  and  Washington.) 

3d  Iowa Louis  Murphy  Dubuque 

Kansas Wm.  H.  L.  Pepperell  Wichita 

2d  Kentucky Josh  T.  Griffith  Owensboro 

(Including  the  counties  of  Allen,  Ballard,  Barren,  Breck- 
enridge.  But,  Caldwell,  Calloway,  Carlisle,  Christian,  Clin- 
ton, Crittenden,  Cumberland,  Davies,  Edmonson,  Fulton, 
Graves,  Grayson,  Hancock,  Hart,  Henderson,  Hickman, 
Hopkins,  Livingston,  Logan,  Lyon,  McCracken,  McLean, 
Marshall,  Metcalfe,  Monroe,  Muhlenberg,  Ohio,  Russell, 
Simpson,   Todd,   Trigg,   Union,   Warren   and   Webster.) 

6th  Kentucky ^     Thomas  Scott  Mayes         Louisville 

(Including  the  city  of  Louisville  and  the  counties  of 
Adair,  Bullitt,  Casey,  Green,  Hardin,  Henry,  Jefferson, 
Larue,  Marion,  Meade,  Nelson,  Oldham,  Owen,  Shelby, 
Spencer,  Taylor  and  Washington.) 

6th  Kentucky Charlton  B.  Thompson      Covington 

(Including  the  counties  of  Boone,  Bracken,  Campbell, 
Carroll,  Gallatin,  Grant,  Harrison,  Kenton,  Pendleton, 
Robertson  and  Trimble.) 

7th  Kentucky William  P.  D.  Haly  Lexington 

(Including  the  counties  of  Bath,  Bourbon,  Boyd,  Carter, 
Clark,  Elliott,  Fayette,  Fleming,  Franklin,  Greenup,  John- 
son, Lawrence,  Lewis,  Martin,  Mason,  Menifee,  Mont- 
gomery, Morgan,  Nicholas,  Powell,  Rowan,  Scott  and 
Woodford.) 

8th  Kentucky John  W.  Hughes   .  Danville 

(Including  the  counties  of  Anderson,  Bell,  Boyle,  Brea- 
thitt, Clay,  Estill,  Floyd,  Garrard,  Harlan,  Jackson,  Jessa- 
mine, Knott,  Knox,  Laurel,  Lee,  Leslie,  Letcher,  Lincoln, 
Madison,  Magoffin,  Mercer,  McCreary,  Owsley,  Perry,  Pike, 
Pulaski,  Rockcastle,  Wayne,  Whitley  and  Wolfe.) 

Louisiana John  Y.  Fauntleroy       New  Orleans 

1366 


District  Collector  AddresB 

Maine    (see  New  Hampshire). 

Maryland Joshua  W.  Miles  Baltimore 

(Including  the  States  of  Maryland  and  Delaware,  the 
District  of  Columbia,  and  the  counties  of  Accomac  and 
Northampton  of  the  State  of  Virginia.) 

3d  Massachusetts John  F.  Malley  Boston 

1st  Michigan James  J.  Brady  Detroit 

(Including  counties  of  Alcona,  Alpena,  Arenac,  Bay, 
Branch,  Calhoun,  Cheboygan,  Clare,  Clinton,  Crawford, 
Genesee,  Gladwin,  Gratiot,  Hillsdale,  Huron,  Ingham,  Iosco, 
Isabella,  Jackson,  Lapeer,  Lenawee,  Livingston,  Macomb, 
Midland,  Monroe,  Montmorency,  Oakland,  Ogemaw,  Oscoda, 
Otsego,  Presque  Isle,  Roscommon,  Saginaw,  Sanilac,  Shia- 
wassee, St.  Clair,  Tuscola,  Washtenaw  and  Wayne.) 

4th  Michigan Emanuel  J.  Doyle        Grand  Rapids 

(Including  counties  of  Alger,  Allegan,  Antrim,  Baraga, 
Barry,  Benzie,  Berrien,  Cass,  Charlevoix,  Chippewa,  Delta, 
Dickinson,  Eaton,  Emmet,  Gogebic,  Grand  Traverse,  Hough- 
ton, Ionia,  Iron,  Kalamazoo,  Kalkaska,  Kent,  Keweenaw, 
Lake,  Leelanau,  Luce,  Mackinac,  Manistee,  Marquette, 
Mason,  Mecosta,  Menominee,  Missaukee,  Montcalm,  Muske- 
gon, Newaygo,  Oceana,  Ontonagon,  Osceola,  Ottawa,  St. 
Joseph,  Schoolcraft,  Van  Buren  and  Wexford.) 

Minnesota  Edward  J.  Lynch  St.  Paul 

Mississippi  (see  Alabama). 

1st  Missouri Geo.  H.  Moore  St.  Louis 

(Including  the  counties  of  Adair,  Audrian,  Bollinger, 
Boone,  Butler,  Callaway,  Cape  Girardeau,  Carter,  Clark, 
Crawford,  Dent,  Dunklin,  Franklin,  Gasconade,  Howard, 
Iron,  Jefferson,  Knox,  Lewis,  Lincoln,  Linn,  Macon,  Madi- 
son, Maries,  Marion,  Mississippi,  Montgomery,  Monroe,  New 
Madrid,  Oregon,  Osage,  Pemiscot,  Perry,  Phelps,  Pike, 
Pulaski,  Ralls.  Randolph,  Reynolds,  Ripley,  St.  Charles, 
St.  Francois,  Ste.  Genevieve,  St.  Louis,  Schuyler,  Scotland, 
Scott,  Shannon,  Shelby,  Stoddard,  Warren,  Washington  and 
Wayne.) 

6th  Missouri Edgar  M.  Harbor  Kansas  City 

(Including  the  counties  of  Andrew,  Atchison,  Barry, 
Barton,  Bates,  Benton,  Buchanan,  Caldwell,  Camden, 
Carroll,  Cass,  Cedar,  Chariton,  Christian,  Clay,  Clinton, 
Cole,  Cooper,  Dade,  Dallas,  Daviess,  Dekalb,  Douglas, 
Gentry,  Greene,  Grundy,  Harrison,  Henry,  Hickory,  Holt, 
Howell,  Jackson,  Jasper,  Johnson,  Laclede,  Lafayette, 
Lawrence,  Livingston,  McDonald,  Mercer,  Miller,  Moniteau, 
Morgan,  Newton,  Nodaway,  Ozark,  Pettis,  Platte,  Polk, 
Putnam,  Ray,  St.  Clair,  Saline,  Stone,  Sullivan,  Taney, 
Texas,  Vernon,  Webster,  Worth  and  Wright.) 

Montana William  C.  Whaley  Helena 

(Includes  States  of  Idaho  and  Utah.) 

Nebraska Geo.  L.  Loomis  Omaha 

Nevada  (see  1st  California). 

New  Hampshire Seth  W.  Jones  Portsmouth 

(Includes  States  of  Maine  and  Vermont.) 

Ist  New  Jersey ,      Samuel  Iredell  Camden 

(Including  the  counties  of  Atlantic,  Burlington,  Camden, 
Cape  May,  Cumberland,  Gloucester,  Mercer,  Monmouth, 
Ocean  and  Salem.) 

6th  New  Jersey -     Charles  V.  Duffy  Newark 

(Including  the  counties  of  Bergen,  Essex,  Hudson, 
Hunterdon,  Middlesex,  Morris,  Passaic,  Somerset,  Sussex, 
Union  and  Warren.) 

1367 


District  Collector  Address 

New  Mexico Lewis  T.  Carpenter      Phoenix,  Ariz. 

(Includes  State  of  Arizona.) 

1st  New  York Bertram  Gardner  (Acting)  Brooklyn 

(Including  the  counties  of  Kings,  Nassau,  Queens,  Rich- 
mond and  Suffolk.) 

2d  New  York Wm.  H.  Edwards       New  York  City 

(Including  the  first,  second,  third,  fourth,  fifth,  sixth, 
eighth,  ninth  and  fifteenth  wards  of  New  York  City;  that 
portion  of  the  fourteenth  ward  lying  west  of  the  centre  of 
Mott  Street ;  that  portion  of  the  sixteenth  ward  lying  south 
ot  the  centre  of  West  Twenty-fourth  Street,  and  Governors 
Isiand). 

3d  New  York Mark  Eisner  New  York  City 

(Including  the  seventh,  tenth,  eleventh,  twelfth,  thirtenth, 
seventeenth,  eighteenth,  nineteenth,  twentieth,  twenty-first 
and  twenty-second  wards  of  New  York  City ;  that  part  of 
the  fourteenth  ward  lying  east  of  the  centre  of  Mott  Street ; 
that  part  of  the  sixteenth  ward  lying  north  of  the  centre 
of  West  Twenty-fourth  Street,  and  Blackwells,  Randalls 
and  Wards  Islands.) 

14th  New  York Roscoe  Irwin  Albany 

(Including  the  counties  of  Albany,  Clinton,  Columbia, 
Dutchess,  Essex,  Fulton,  Greene,  Hamilton,  Montgomery, 
Orange,  Putnam,  Rensselaer,  Rockland,  Saratoga,  Schenec- 
tady, Schoharie,  Sullivan,  Ulster,  Warren,  Washington  and 
Westchester,  and  the  twenty-third  and  twenty-fourth  wards 
of  New  York  City.) 

21st  New  York Neal  Brewster  Syracuse 

(Including  the  counties  of  Broome,  Cayuga,  Chenango, 
Cortland,  Delaware,  Franklin,  Herkimer,  Jefferson,  Lewis, 
Madison,  Oneida,  Onondaga,  Oswego,  Otsego,  St.  Lawrence, 
Schuyler,  Seneca,  Tioga,  Tompkins  and  Wayne.) 

28th  New  York Vincent  H.  Riordan  Buffalo 

(Including  the  counties  of  Allegany,  Cattaraugus,  Chau- 
tauqua, Chemung,  Brie,  Genesee,  Livingston,  Monroe, 
Niagara,  Ontario,  Orleans,  Steuben,  Wyoming  and  Yates.) 

4th  North  Carolina Joshua  W.  Bailey  Raleigh 

(Including  the  counties  of  Alamance,  Beaufort,  Bertie, 
Bladen,  Brunswick,  Camden,  Carteret,  Caswell,  Chatham, 
Chowan,  Columbus,  Craven,  Cumberland,  Currituck,  Dare, 
Duplin,  Durham,  Edgecombe,  Franklin,  Gates,  Granville, 
Greene,  Halifax,  Harnett,  Hertford,  Hyde,  Johnston,  Jones, 
Lenoir,  Martin,  Montgomery,  Moore,  Nash,  New  Hanover, 
Northampton,  Onslow,  Orange,  Pamlico,  Pasquotank, 
Pender,  Perquimans,  Person,  Pitt,  Richmond,  Robeson, 
Sampson,  Scotland,  Tyrrell,  Vance,  Wake,  Warren,  Wash- 
ington, Wayne  and  Wilson.) 

6th  North  Carolina Alston  D.  Watts  Statesville 

(Including  the  counties  of  Alexander,  Allegany,  Anson, 
Ashe,  Buncombe,  Burke,  Cabarrus,  Caldwell,  Catawba, 
Cherokee,  Clay,  Cleveland,  Davidson,  Davie,  Forsyth,  Gas- 
ton, Graham,  Guilford,  Haywood,  Henderson,  Iredell,  Jack- 
son, Lincoln,  McDowell,  Macon.  Madison,  Mecklenburg, 
Mitchell,  Polk,  Randolph,  Rockingham,  Rowan,  Ruther- 
ford, Stanly,  Stokes,  Surry,  Swain,  Transylvania,  Union, 
Watauga,  Wilkes,  Yadkin  and  Yancey.) 

No.  &  So.  Dakota James  Coffey  Aberdeen,  S.  D. 

(Including  States  of  North  Dakota  and  South  Dakota 
detached  from  District  of  Nebraska  and  constituted  one 
district,  to  be  known  as  the  District  of  North  and  South 

1st  Ohio Andrew  C.  Gilligan  Cincinnati 

(Including  the  counties  of  Brown,  Butler,  Clarke,  Cler- 
mont, Clinton,  Fayette,  Greene,  Hamilton,  Highland,  Miami, 
Montgomery,  Preble  and  Warren.) 

1368 


District  Collector  Address 

10th  Ohio Frank  B.  Niles  Toledo 

(Including  the  counties  of  Allen,  Auglaize,  Champaign, 
Crawford,  Darke,  Defiance,  Erie,  Fulton,  Hancock,  Hardin, 
Henry,  Huron,  Logan,  Lucas,  Mercer,  Ottawa,  Paulding, 
Putnam,  Sandusky,  Seneca,  Shelby,  Van  Wert,  Williams, 
Wood  and  Wyandot.) 

11th  Ohio Beriah  E.  Williams  Columbus 

(Including  the  counties  of  Adams,  Athens,  Coshocton, 
Delaware,  Fairfield,  Franklin,  Gallia,  Guernsey,  Hocking, 
Jackson,  Knox,  Lawrence,  Licking,  Madison,  Marion,  Meigs, 
Morgan,  Muskingum,  Noble,  Perry,  Pickaway,  Pike,  Ross, 
Scioto,  Union,  Vinton  and  Washington.) 

18th  Ohio -    Harry  H.  Weiss  Cleveland 

(Including  the  counties  of  Ashland,  Ashtabula,  Belmont, 
Carroll,  Columbiana,  Cuyahoga,  Geauga,  Harrison,  Holmes, 
Jefferson,  Lake,  Lorain,  Mahoning,  Medina,  Monroe,  Port- 
age, Richland,  Stark,  Summit,  Trumbull,  Tuscarawas  and 
Wayne.) 

Oklahoma Hubert  L.  Bolen         Oklahoma  City 

Oregon,  Milton  A.  Miller  Portland 

Ist  Pennsylvania Ephraim  Lederer  Philadelphia 

(Including  the  counties  of  Berks,  Bucks,  Chester,  Dela- 
ware, Lehigh,  Montgomery,  Philadelphia  and  Schuylkill.) 

9th  Pennsylvania Benjamin  F.  Davis  Lancaster 

(Including  the  counties  of  Adams,  Bedford,  Blair, 
Cumberland,  Dauphin,  Franklin,  Fulton,  Huntingdon, 
Juniata,  Lancaster,  Lebanon,  Mifflin,  Perry,  Snyder  and 
York.) 

12th  Pennsylvania Fred  C.  Kirkendall  Scranton 

(Including  the  counties  of  Bradford,  Carbon,  Centre, 
Clinton,  Columbia,  Lackawanna,  Luzerne,  Lycoming,  Mon- 
roe, Montour,  Northampton,  Northumberland,  Pike,  Potter, 
Sullivan,  Susquehanna,  Tioga,  Union,  Wayne  and  Wy- 
oming.) 

23d  Pennsylvania C.  Gregg  Lewellyn  Pittsburgh 

(Including  the  counties  of  Allegheny,  Armstrong,  Beaver, 
Butler,  Cambria,  Cameron,  Clarion,  Clearfield,  Crawford, 
Elk,  Erie,  Fayette,  Forest,  Greene,  Indiana,  Jefferson, 
Lawrence,  McKean,  Mercer,  Somerset,  Venango,  Warren, 
Washington  and  Westmoreland.) 

Rhode  Island  (see  Connecticut). 

South  Carolina Duncan  C.  Hayward  Columbia 

South  Dakota   (see  North  and  South  Dakota). 

Tennessee Edward  B.  Craig  Nashville 

3d  Texas Alexander  S.  Walker  Austin 

Utah  (see  Montana). 

Vermont  (see  New  Hampshire). 

2d  Virginia Richard  C.  L.  Moncure       Richmond 

(Including  the  counties  of  Amelia,  Appomattox,  Bruns- 
wick, Buckingham.  Caroline,  Charles  City,  Chesterfield, 
Cumberland,  Dinwiddle,  Elizabeth  City,  Essex,  Fluvanna, 
Gloucester,  Goochland,  Greensville,  Hanover,  Henrico,  Isle 
of  Wight,  James  City,  King  and  Queen,  King  George,  King 
William,  Lancaster,  Louisa,  Lunenburg,  Mathews,  Middle- 
sex, Nansemond,  New  Kent,  Norfolk,  Northumberland, 
Nottoway,  Powhatan,  Prince  Edward,  Prince  George, 
Princess  Anne,  Richmond,  Stafford,  Southampton,  Spott- 
Bylvania,  Surry,  Sussex,  Warwick,  Westmoreland  and 
York.) 

1369 


District  Collector  Address 

6th  Virginia John  M.  Hart  Roanoke 

(Including  the  counties  of  Albemarle,  Alexandria,  Alle- 
ghany, Amherst,  Augusta,  Bath,  Bedford,  Bland,  Bote- 
tourt, Buchanan,  Campbell,  Carroll,  Charlotte,  Clarke, 
Craig,  Culpeper,  Dickenson,  Fairfax,  Fauquier,  Floyd, 
Franklin,  Frederick,  Giles,  Grayson,  Greene,  Halifax,  Henry, 
Highland,  Lee,  Loudoun,  Madison,  Mecklenburg,  Mont- 
gomery, Nelson,  Orange,  Page,  Patrick,  Pittsylvania, 
Prince  William,  Pulaski,  Rappahannock,  Roanoke,  Rock- 
bridge, Rockingham,  Russell,  Scott,  Shenandoah,  Smyth, 
Tazewell,   Warren,   Washington,   Wise  and   Wythe.) 

Virginia  (for  Accomac  &  Northampton  counties,  see  Maryland) 

Washington David  J.  Williams  Tacoma 

(Includes  Territory  of  Alaska.) 

West  Virginia Samuel  A.  Hays  Farkersburg 

1st  Wisconsin Paul  A.  Hemmy  Milwaukee 

(Including  counties  of  Brown,  Calumet,  Dodge,  Door, 
Florence,  Fond  du  Lac,  Forest,  Green  Lake,  Kenosha, 
Kewaunee,  Manitowoc,  Marinette,  Marquette,  Milwaukee, 
Oconto,  Outagamie,  Ozaukee,  Racine,  Shawano,  Sheboygan, 
Walworth,  Washington,  Waukesha,  Waupaca,  Waushara, 
Winnebago,  and  county  of  Langlade  with  exception  of  the 
eight  townships  of  said  county  which  were  formerly  in 
Lincoln  County.) 

2d  Wisconsin Burt  Williams  Madison 

(Including  the  counties  of  Adams,  Ashland,  Barron,  Bay- 
field, Buffalo,  Burnett,  Chippewa,  Clark,  Columbia,  Craw- 
ford, Dane,  Douglas,  Dunn,  Eau  Claire,  Grant,  Greene, 
Iowa,  Iron,  Jackson,  Jefferson,  Juneau,  La  Crosse,  Lafay- 
ette, Lincoln,  Marathon,  Monroe,  Oneida,  Pepin,  Pierce, 
Polk,  Portage,  Price,  Richland,  Rock,  Rusk,  St.  Croix, 
Sauk,  Sawyer,  Taylor,  Trempealeau,  Vernon,  Vilas,  Wash- 
burn, Wood,  and  the  eight  townships  in  the  western  part 
of  Langlade  County,  which  were  formerly  In  Lincoln 
County.) 

Wyoming  (gee  Colorado). 


1370 


Additional  Tax  Schedules 
For  Previous  Tax  Years 


The  tables  following  show  the  amount 
of  the  additional  taxes  imposed  under 
the  Act  of  October  3, 1913,  for  the  years 
1913,  1914  and  1915,  the  Act  of  Sep- 
tember 8,  1916,  and  the  Act  of  Septem- 
ber 8,  1916,  as  amended  for  the  years 
1916  and  1917,  the  latter  two  additional 
taxes  being  the  same;  the  Act  of  Octo- 
ber 3,  1917  (War  Income  Tax) ,  for  the 
year  1917. 

There  is  also  given  a  combined  table 
of  the  additional  taxes  due  under  the 
Act  of  September  8,  1916,  as  amended, 
and  thei  Act  of  October  3,  1917  (War 
Income  Tax),  for  the  year  1917. 


1371 


ADDITIONAL  TAXES  FOR  THE  YEARS 
1913,  1914  AND  1915. 

The  additional  taxes  imposed  on  net  incomes  of  more  than 
$20,000,  according  to  the  provisions  of  the  Act  of  October 
3,  1913,  for  the  years  1913,  1914  and  1915,  are  as  follows: 

,;  Annual 

Additional 
Tax 

Income  of  over  ?20,000  and  not  over  $50,000 1% 

Income  of  over     50,000  and  not  over     75,000 2% 

Income  of  over     75,000  and  not  over  100,000 3% 

Income  of  over  100,000  and  not  over  250,000 4% 

Income  of  over  250,000  and  not  over  500,000 5% 

Income  of  over  500,000 6% 


ADDITIONAL  TAXES  FOR  THE  YEARS 
1916  AND  1917. 

The  additional  taxes  imposed  on  net  incomes  of  more  than 
$20,000  for  the  year  1916,  in  accordance  with  the  Act  of 
September  8,  1916,  and  for  the  year  1917  under  the  Act 
of  September  8,  1916,  as  amended,  are  as  follows: 

Annual 
Additional 
Tax 

Income  of  over     $20,000  and  not  over     $40,000 1% 

Income  of  over       40,000  and  not  over       60,000 2% 

Income  of  over        60,000  and  not  over        80,000 3% 

Income  of  over        80,000  and  not  over      100,000 4% 

Income  of  over      100,000  and  not  over      150,000 5% 

Income  of  over      150,000  and  not  over      200,000 6% 

Income  of  over      200,000  and  not  over     250,000 7% 

Income  of  over      250,000  and  not  over      300,000 8% 

Income  of  over      300,000  and  not  over      500,000 9% 

Income  of  over      500,000  and  not  over  1,000,000 10% 

Income  of  over  1,000,000  and  not  over  1,500,000 11% 

Income  of  over  1,500,000  and  not  over  2,000,000 12% 

Income  of  over  2,000,000 13% 

1373 


ADDITIONAL  TAXES  FOR  THE  YEAR  1917. 

The  additional  taxes  for  the  year  1917  imposed  by  the 
War  Income  Tax  (Act  of  October  3,  1917)  in  excess  of 
$5,000  are  as  follows : 

Annual 
Additional 
Tax 

Income  of  over        $5,000  and  not  over        $7,500 1%  . 

Income  of  over         7,500  and  not  over        10,000 2% 

Income  of  over        10,000  and  not  over        12,500 3% 

Income  of  over        12,000  and  not  over        15,000 4% 

Income  of  over        15,000  and  not  over        20,000 5% 

Income  of  over       20,000  and  not  over        40,000 7% 

Income  of  over       40,000  and  not  over        60,000 10% 

Income  fo  over       60,000  and  not  over        80,000 14% 

Income  of  over        80,000  and  not  over      100,000 18% 

Income  of  over      100,000  and  not  over      150,000 22% 

Income  of  over      150,000  and  not  over      200,000 25% 

Income  of  over      200,000  and  not  over      250,000 30% 

Income  of  over      250,000  and  not  over      300,000 347o 

Income  of  over      300,000  and  not  over      500,000 37% 

Income  of  over      500,000  and  not  over      750,000 40% 

Income  of  over      750,000  and  not  over  1,000,000 45% 

Income  of  over  1,000,000 50% 


COMBINED  ADDITIONAL  TAXES 
FOR  THE  YEAR  1917. 


Combined  tabulation  of  the  additional  taxes  for  the  year 
1917,  computed  under  the  Act  of  September  8,  1916,  as 
amended,  and  the  Act  of  October  3,  1917  (War  Income 
Tax). 

Rate  of 
Additional 
Tax 

Income  of  over       $5,000  and  not  over       $7,500 1% 

Income  of  over         7,500  and  not  over        10,000 2% 

Income  of  over       10,000  and  not  over        12,500 3% 

Income  of  over        12,500  and  not  over        15,000 4% 

Income  of  over        15,000  and  not  over        20,000 5% 

Income  of  over       20,000  and  not  over        40,000 8% 

Income  of  over       40,000  and  not  over        60,000 ^ 12% 

Income  of  over       60,000  and  not  over        80.000 - 17% 

Income  of  over       80,000  and  not  over      100,000 22% 

Income  of  over     100,000  and  not  over      150,000 27% 

Income  of  over      150,000  and  not  over      200,000 31% 

Income  of  over      200,000  and  not  over      250,000 37% 

Income  of  over      250,000  and  not  over      300,000 42% 

Income  of  over      300,000  and  not  over      500,000— 46% 

Income  of  over      500,000  and  not  over      750,000 50% 

Income  of  over      750,000  and  not  over  1,000,000 55% 

Income  of  over  1,000,000  and  not  over  1,500,000 61% 

Income  of  over  1,500,000  and  not  over  2,000,000 62% 

Income  of  over  2,000,000 63% 

1374 


status  of  Bonds 

"Under  th© 

Federal  IncomeTax! 


me  lax"' 

1919  Edition 


A  recent  ruling  of  the  Department 
of  Internal  Revenue  has  completely 
changed  the  tax  status  of  interest 
from  corporation  bonds. 


Under  this  ruling  the  Government  cannot  accept  payment 
of  taxes  by  a  bond-issuing  corporation  in  behalf  of  a 
bondholder  where  such  bond  does  not  contain  a  tax-free 
covenant. 

Yet  here  are  some  startling  facts,  based  upon  official 
information : 

(1)  Not  all  corporations  issuing  bonds  with  a  so-called 
tax-free  covenant  are  observing  the  apparent  terms 
of  such  covenant. 

(2)  Many  corporations  issuing  bonds  without  a  tax-free 
covenant  are  reimbursing  the  holder  for  a  tax  of 
2%  or  more. 

(3)  Some  corporations  issuing  bonds  with  a  tax-free 
covenant  are  assuming  more  than  the  2%  tax  which 
by  law  they  are  required  to  retain  and  pay  in  behalf 
of  the  bondholder. 

(4)  Other  corporations  are  paying  coupons  without 
deduction  of  the  2%  tax  only  where  a  certificate 
of  ownership  is  filed  showing  that  the  holder  is 
not  exempt  from  the  tax. 

1375 


What  the  Bondholder  Must  Know 

It  is  no  longer  sufficient,  therefore,  that  a  bondholder 
know  merely  whether  or  not  his  bond  contains  a  tax-free 
covenant. 

He  must  know  also: 

(a)  In  the  case  of  a  tax-free  bond,  what  amount  of  tax, 
if  any,  will  be  assumed  by  the  issuing  corporation. 

(b)  In  the  case  of  bonds  without  a  tax-free  covenant, 
to  what  amount,  if  any,  will  the  issuing  corporation 
reimburse  the  bondholder. 

Without  definite  knowledge  of  these  things  there  can 
be  no  certainty  that  the  bondholder  is  not  either  overpaying 
his  taxes  or  withholding  payment  legally  due,  and  inno- 
cently making  himself  liable  to  Government  action. 

How  Your  Tax  is  Made  Up 

The  reason  why  the  bondholder  must  know  these  several 
points  is  that  the  annual  income  tax  return  of  an  individual 
is  composed  of  two  items: 

(a)  The  net  income  upon  which  taxes  are  to  be  paid 
directly  to  the  Government. 

(b)  The  net  income  on  which  part  of  the  tax  is  paid  for 
him  at  the  source  of  such  income. 

From  this  second  item  springs  a  multitude  of  puzzling 
questions.  According  to  law,  the  only  part  of  the  tax  to  be 
paid  on  behalf  of  the  individual  at  its  source  is  a  tax  of  2% 
on  the  interest  from  those  corporation  bonds  which  contain 
a  so-called  tax-free  covenant.  A  tax-free  covenant  is  an 
apparent  agreement  that  the  issuing  corporation  is  to 
assume,  in  whole  or  in  part,  the  specified  tax  against  such 
interest. 

But  to  further  comphcate  the  matter,  this  tax  of  2% 
is  only  a  part  of  the  tax  assessed  against  the  interest  from 
bonds  and  other  corporate  obligations. 

So  each  different  issue  of  corporation  bonds  presents  a 
new  problem  to  the  bondholder  in  the  work  of  making  out 
an  income  tax  return. 

1376 


The  reason  for  this  is  the  difference  between  the  apparent 
meaning  of  certain  clauses,  such  as  the  so-called  tax-free 
covenants,  and  the  actual  interpretation  given  them  by  the 
issuing  corporation  or  its  paying  agents. 

This  confusion  results  in  underpaying  or  overpaying, 
neglecting  to  pay  entirely,  or  paying  unnecessarily  the 
bondholders'  income  tax.  In  attempting  to  apply  the 
provisions  of  the  present  Federal  Income  Tax  Law,  the 
bondholders  simply  cannot  know,  without  reference  to  the 
issuing  corporation  or  its  paying  agents,  the  policy  adopted 
by  the  corporation  to  govern  its  payment  of  taxes  on 
interest.  The  real  intent  of  the  issuer  is  often  exactly 
opposite  to  the  seeming  intent  as  expressed  in  the  bond. 


In  many  cases  a  radical  change  in  policy  was 
revealed  through  our  work  of  gathering  data,  and 
many  surprises  are  brought  to  light.  There  are 
hundreds  of  cases  which  show  a  complete  reversal 
of  interpretations  since  last  year  on  the  part  of 
issuing  corporations. 


It  is  this  necessary  information,  not  to  be  obtained  from 
any  other  source,  that  is  offered  you  in  the  "Status  of  Bonds 
Under  the  Federal  Income  Tax,"  1919  Edition.  It  furnishes 
this  data  definitely,  concisely  and  authoritatively  on  about 
10,000  bonds,  the  issuing  corporations  or  paying  agents  of 
which  having  contributed  the  information.  (See  specimen 
on  last  page.) 

The  Safe  Way  for  the  Bondholder 

The  1919  Edition  of  "Status  of  Bonds  Under  the  Federal 
Income  Tax,"  containing  the  officially  revised  Hst  of  over 
10,000  bonds,  is  as  complete,  accurate  and  up-to-date  as  it 
is  possible  for  experienced  statisticians  to  make  it. 

No  expense  has  been  spared  in  compiling  it.  The  in- 
formation it  contains  involves  the  querying  of  thousands 
of  bond-issuing  corporations  and  paying  agents.  In  almost 
every  case  the  data  before  reaching  us  was  checked  and 
signed  by  either  an  official  of  the  issuing  corporation  or 
by  the  corporation's  fiscal  agent. 

1377 


In  the  few  cases  where  it  was  impossible  to  obtain  direct 
replies  to  inquiries,  or  where  the  information  sought  was 
not  available,  the  best  unofficial  data  was  utilized.  In  each 
case  of  this  kind  the  tax  clause  of  the  mortgage  appears  to 
corroborate  the  information  given  in  the  book. 

For  individuals  owning  bonds,  for  investing  corporations, 
for  banks,  for  lawyers  and  for  trustees  and  administrators 
of  estates  the  ''Status  of  Bonds  Under  the  Federal  Income 
Tax"  is  a  necessity  to  safe,  accurate  return  of  taxes.  There 
is  no  substitute  for  it  and  no  other  collection  of  similar 
information.  It  is  of  the  utmost  usefulness  not  only  in  mak- 
ing an  income  tax  return  but  also  as  a  reference  book  in  the 
making  of  new  investments.  This  book  gives  information 
not  available  to  you  except  through  the  arduous  labor  in 
assembling  it  and  in  making  certain  of  its  accuracy.  It  is 
offered  you  complete,  correct,  compact,  and  in  a  form  for 
instant  reference. 

Price  List 

Many  users  of  past  editions  of  the  book  bought  them  in 
quantity  for  distribution  among  their  customers  or  clients. 
A  reduction  in  price  is  made  for  books 
furnished  in  quantity,  and  arrange- 
ments are  made  to  print  the 
name  of  the  distributing  com- 
pany in  gold  letters  on  the 
cover.  Note  the  following 
price  list: 

Single  copies,  $5.00  each 

5  to    9  copies,     4.75  each 

10  to  19  copies,     4.50  each 

20  to  49  copies,    4.00  each 

Special  prices  will  be  quoted  upon 
request  on  100  copies  and  over.  For 
stamping  your  name  in  gold  on  covers 
in  lots  of  over  9  and  less  than  100 
a  charge  of  35  cents  per  copy  will  be 
made.  In  lots  of  100  or  over  there 
will  be  no  extra  charge  for  stamping. 

Standard  Statistics  Company,  Inc. 

47-49  West  Street,  New  York  City 

1378 


Specimen  Page 


Showing  how  the  information  is  compiled  in  the  "Status  of  Bonds  Under 
the  Federal  Income  Tax." 

Note   the   contradictory   information   indicated   by     Does  Bond  WhatAmt. 

thp  fi<!t«?   MS mM\                                                                         Contain  (If  Any) 

me  iibL^   [mm       m;.                                                                         Tax-Free  Does  Corp. 

Covenant?  Assume? 

Aslmelot  Gas  &  Electric  Co.  1st  5s,  1939 Yes  2% 

Associated  Gas  &  Electric  Co.  1st  &  Col.  5s,  1939 Yes  2% 

Associated  Gas  &  Electric  Co.  Col.  Tr.  6s,  1941 Yes  2% 

Associated  Gas  &  Electric  Co.  Deb.  6,  1949 Yes  2% 

Associated  Oil  Co.  1st  5s,  1922 No  None 

Associated  Oil  Co.  1st  R<^f.  5s,  1930 Yes  2% 

Associated  Simmons  Hardware  Co.  5%  Sec.  Notes,  1917-21—  Yes  2% 

Astoria  Veneer  Mills  &  Dock  Co.  1st  6s,  1941 Yes  2% 

Atares  Wharf  &  Warehouse  Co.  1st  6s,  1930 No  None 

Atchison  &  Eastern  Bridge  Co.  1st  4s,  1928 Yes  2% 

Atchison  Ry.,  Light  &  Power  Co.  1st  5s,  1935 Yes  2% 

Atchison,  Topeka  &  Santa  Fe  Ry.  Co.  1st  4s,  1928— 

East.  Okla.  Div. Yes  2% 

Atchison,  Topeka  &  Santa  Fe  Conv.  4s,  1955   (1905) Yes  2% 

Atchison,  Topeka  &  Santa  Fe  Ry.  Co.  Conv.  4s,  1955  (1909)—  Yes  2% 
Atchison,    Topeka    &    Santa    Fe    Ry.    Co. — Transcontinental 

Short  Line  1st  43,  1958 Yes  2% 

Atchison,  Topeka  &  Santa  Fe  Ry.  Co.  Conv.  4s,  1960 Yes  2% 

Atchison,  Topeka  &  Santa  Fe  Ry.  Co.  1st  &  Ref.  4y2S,  1962 

Cal.-Ai'iz.  Lines   Yes  2% 

Atchison,  Topeka  &  Santa  Fe  Ry.  Co.  Adj.  4s,  1995 Yes  2% 

Atchison,  Topeka  &  Santa  Fe  Ry.  Co.  Gen.  4s,  1995 Yes  2% 

Atchison,  Topeka  &  Santa  Fe  Ry. — ^Rocky  Mountain  Division 

1st  4s,  1965,  Ser.  "A" No  None 

Athens  Electric  Railway  Co.  1st  6s,  1931 Yes  2% 

Athens  Gas  Light  &  Fuel  Co.  1st  5s,  1942 Yes  2% 

Athens  Railway  &  Electric  Co.  1st  &  Ref.  5s,  1950 Yes  2% 

Athens  Terminal  Co.  1st  5s,  1937 Yes  2%  . 

pAthol  Gas  &  Electric  Co.  1st  5s,  1921 Yes  None- 

Atlanta,  Birmingham  &  Atlantic  Ry.  1st  &  Ref.  6s,  1945 No  None 

Atlanta,  Birmingham  &  Atlantic  Ry.  Co.,  Inc.,  58,  1930 No  None 

Atlanta  &  Char.  Air  Line  Ry.  Co.  1st  Ser.  "A,"  41/28,  &  "B," 

5s,  1944 No  None 

Atlanta  Consolidated  St.  Ry.  1st  Cons.  5s,  1939 Yes  2% 

Atlanta  Gas  Light  Co.  1st  5s,  1947 Yes  2% 

Atlanta,  Knoxville  &  Northern  Ry.  1st  5s,  1946 Yes  2% 

Atlanta,  Knoxville  &  Northern  Ry.  Co.  1st  4s,  2002 Yes  2% 

Atlanta  Northern  Ry.  Co.  1st  5s,  1954 Yes  2% 

Atlanta  Street  R.  R.  Co.  1st  6s,  1930 Yes  2% 

r  Atlanta  Tel.  &  Tel.  Co.  1st  5s,  1923 No  2%     ' 

r  Atlanta  Tel.  &  Tel.  Co.  Ss,  1927 No  2%     • 

Atlanta  Terminal  Co.  1st  4s,  1953 Yes  2% 

Atlanta  Water  &  Electric  Power  Co.  Ist  5s,  1943 Yes  2% 

1379 


UNIVERSITY  OF  CALIFORNIA  LIBRARY, 
BERKELEY 


THIS  BOOK  IS  DUE  ON  THE  LAST  DATE 

STAMPED  BELOW 

Books  not  returned  on  time  are  subject  to  a  fine  of 
50c  per  volume  after  the  third  day  overdue,  increasing 
to  $1.00  per  volume  after  the  sixth  day.  Books  not  in 
demand  may  be  renewed  if  application  is  made  before 
expiration  of  loan  period. 


um  iQim 


Am    6   1921 


»»o 


V  2  0  1944 


20m-ll,'20 


UNIVERSITY  OF  CALIFORNIA  LIBRARY  V; 

\  ■■fi 


